What is contextual targeting and how can it help a business?

By Indeed Editorial Team

Published 20 September 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Contextual targeting is a form of personalised advertising that delivers targeted ads to users based on the content they're consuming. A desirable feature of this advertising is that it's typically less intrusive than other types of targeted advertising. If you work in this field, learning about contextual advertising solutions may be beneficial, as these often receive a higher engagement rate. In this article, we explain how this type of advertising works, describe how it differs from behavioural marketing, outline its benefits and provide examples of how businesses can use it.

Related: How to effectively advertise online (a step-by-step guide)

What is contextual targeting?

Contextual targeting is when an advertisement appears within a piece of content that's contextually relevant to what the ad is selling. For example, an advertisement for kitchen knives may appear on a cooking blog. This contrasts with other forms of targeted advertising, which consider a user's previous digital behaviour to determine which advertisements to display.

Native advertising is a type of contextual advertising that aims to blend in with the surrounding content. At first glance, native adverts often appear to be part of the content. It's common to see contextual advertising solutions on websites, including news sites, search engines and blogs, but other digital media use them also, including:

  • online videos

  • computer games

  • phone games

  • podcasts

  • apps

Related: What is a mobile app? (With definition, types and examples)

How contextual targeting differs from behavioural targeting

Behavioural targeting shows advertisements based on a user's previous online activity. It looks at the user's digital behaviour, such as the websites they visit, the searches they make, the links they click on and the products they purchase. For example, searching for 'flights to New York' may result in advertisements for flight comparison companies appearing on the following websites that a user visits. The user may see that ad regardless of the content on the website they're currently on. Contextual targeting differs from behavioural targeting by only displaying advertisements that are contextually relevant to the content on the page.

Related: 8 different types of advertising (digital and traditional)

How does contextual targeting work?

Contextual solutions work by using algorithms that match advertisements to relevant content through the use of parameters. There are three main steps in this process:

1. The advertiser sets the parameters for an advertisement

Setting the contextual targeting parameters for an ad usually involves selecting keywords or categories that are relevant to the product or service being advertised:

Keywords: Content keywords can be as specific or general as an advertiser wants. For example, someone advertising a sports shoe store could use keywords like 'trainers', 'tennis shoes', 'football boots' and 'women's running shoes'.

Categories: These are more general than keywords and are useful when an advertiser wants to target a range of content that covers a broad topic. For example, an advertiser selling skincare products may select the category 'health and beauty'.

Read more: How to find your target audience (with types and benefits)

2. The contextual advertising solution scans content for the selected parameters

A third-party contextual advertising solution scans the chosen content for the advertisement's parameters. For example, while looking for websites to target for a sports shoe store advertisement, it would scan website and blog post content for the selected keywords. To find websites in the 'health and beauty' category for a skincare product, it would look at the website's category tags.

Related: What is social media advertising? (Plus types of ads)

3. The targeting solution displays the advertisement

When the advertising solution identifies content that matches an advertisement's parameters, it displays the ad within that content. So, someone using an online running forum might see an ad for a sports shoe store, while someone reading a beauty blog might see an ad for skincare products. The advertisements always appear in content that relates to the advertised product or service.

Related: What is pay per click in advertising? (Types and steps)

Benefits of contextual targeting

There are several benefits to this type of advertising that make it an attractive option for marketers. Some of these benefits include:

  • Allows marketers to target a specific market: By choosing relevant keywords and categories, marketers can reach individuals who are most likely to be interested in what they're selling.

  • Complies with privacy legislation: Contextual advertising doesn't use cookies to track people's online behaviour. By not storing such data, it remains compliant with privacy legislation, such as the General Data Protection Regulation (GDPR).

  • Appears less intrusive than other types of advertising: Potential customers are less likely to consider contextual ads to be intrusive. One reason for this is that they don't appear to follow users from one website to another like other types of advertising.

  • Can work in combination with other targeting methods: Contextual targeting can work alongside other methods, such as geotargeting and demographic targeting. This enables marketers to create more targeted and effective advertising campaigns.

  • Is a cost-effective way to reach potential customers: Many contextual advertising approaches only charge advertisers when someone clicks on an ad. This is known as 'pay per click' (PPC) advertising.

  • Often has a higher click-through rate: As contextual ads only appear within online content that their target market pursues, users are more likely to be receptive to them. This can result in a higher click-through rate (CTR) than other types of advertising.

  • Straightforward to set up and manage: Many contextual advertising solutions provide self-service tools that enable marketers to create and manage their campaigns. These promotions require little ongoing management, and analytics often make it easy to track their performance.

  • Saves time: As much of the process uses automated technology, contextual targeting can save time. This frees advertisers from the task of locating websites and manually placing their ads.

Related: How to do video advertising and what makes it important

Examples of contextual targeting

A variety of businesses can use contextual targeting to reach their intended market. Here are four examples of how organisations can use this approach:

Example 1

Company A sells and delivers healthy meal kits. It wants to target people who have an interest in healthy eating but don't have time to shop and cook with fresh ingredients. It could use contextual targeting to display advertising in the following contexts:

  • on websites that provide recipes or health and nutrition advice

  • on videos about healthy eating, cooking and exercise

  • on podcasts promoting health and wellness

  • on apps that track diet and fitness

Related: A guide to how to sell online and why it's a good idea

Example 2

Company B sells children's study desks that are ergonomic and use sustainably sourced wood. It wants to target parents who buy well-made and eco-friendly products for their children's education. It could use contextual targeting to display advertising in the following contexts:

  • on parenting and environmental education websites

  • on home-schooling blogs and podcasts

  • on videos that offer design ideas for children's bedrooms and playrooms

  • in social media groups for families who are eco-conscious and interested in sustainable living

Related: What is a digital content manager? (With skills and duties)

Example 3

Company C has developed a puzzle-style mobile phone game. It wants to target young people who like playing mobile games that are challenging and require strategic thinking. It could use contextual targeting to display advertising in the following contexts:

  • on videos that show tips and tricks for popular mobile games

  • on other puzzle-style mobile phone games

  • on social media apps that are popular with young people

  • on music streaming apps that attract younger users

Read more: Mobile advertising: definition, types, tips and benefits

Example 4

Company D manufactures and sells hiking and camping gear. It wants to advertise its products to active people who camp and spend time outdoors. It could use contextual targeting to display advertising in the following contexts:

  • on blogs and forums about camping

  • in videos that show outdoor and survival skills

  • in social media groups for people who love the outdoors

  • on GPS and mapping apps that display hiking trails

Explore more articles