Study suggests contextual ads are more cost-efficient than behavioral advertising
Ad tech company GumGum sought to answer a question about as old as digital advertising itself: Is behavioral targeting more efficient than contextual targeting?
The question isn't new, though finding an answer to it has garnered significant interest in the last year. Increasing consumer privacy regulation coupled with dwindling of the third-party cookie has prompted marketers to search for viable alternatives that can achieve both scale and compliance. Apple and Firefox have already eliminated third-party cookies — the primary ingredient in behavioral targeting — from their respective browsers. And Google Chrome says it will follow suit next year. Meanwhile, more than a dozen states have passed some sort of consumer privacy legislation, most notably the Golden State with its California Consumer Privacy Protection Act, which became enforceable last July.
Before we get to the results, some specifics worth pointing out: GumGum is very much in the business of selling marketers its contextual advertising tools, but the company says it took significant steps to make sure it created an unbiased study.
The company worked with Dentsu Aegis Network over six months to find four different brands—Sephora, a major technology company, a big box retailer and a direct-to-consumer retailer—to participate in the study. The study overall served 1 million impressions: 200,000 to a behavioral ad line, and 200,000 to each of the contextual ad lines (GumGum Verity, Vendor A, Vendor B, Vendor C). The comparison for the cost-effectiveness of contextual vs. behavioral was comparing the 200,000 behavioral impressions against each of the 200,000 contextual ad lines independently. The ad units (728 x 90) also remained the same throughout, meaning no optimizations were made.
The brands provided descriptions of their intended audience, as well as contextually relevant categories for their campaign. GumGum also hired an independent research consultant, Michele Madansky, to oversee the design, implementation, reporting and analysis of the study.
“This was a really rigorous process,” says Madansky, who previously worked at companies such as Pinterest, Twitter, The New York Times, BuzzFeed, ESPN and YouTube. “We had to find advertisers who were willing to participate, make sure we could [activate all of their campaigns] during the same time period, get the creative and then do the analysis."
“The results are valid," Madansky says.
Contextual targeting was more efficient than behavioral targeting in cost-per-click (CPC); cost-per-viewable impression (vCPM); and the cost associated with reaching the intended demographic of the brand (eCPM), according to the study; “CPM” refers to the cost of showing an ad a thousand times.
Specifically, the average CPC cost was $.80, while CPCs for behavioral targeting came in at $1.53 — a 48 percent delta, according to the study. The cost-per-viewable impression was also 41 percent less than behavioral targeted ads ($5.85 versus $3.44 on a vCPM basis). Meanwhile, contextual eCPMs on average cost $4.36 — about 36 percent lower than behavioral eCPMs ($6.85).
Allison Schulte, senior VP of product at Dentsu Aegis Network, declined to say whether Dentsu would dedicate more ad spend toward contextual advertising, but says the study validates contextual "as a formidable option compared to cookie and user targeting."
"Every client will want to have a range of options," Schulte adds. "Contextual can deliver the same strong performance results as behavioral targeting."
Recent advancements in ad tech have certainly beefed up contextual targeting capabilities. Companies such as GumGum and others are now offering what they call “contextual intelligence,” which in GumGum’s case means using artificial intelligence and computer vision to “read” the content on a page, or “watch” a video to determine context. The benefit, according to GumGum, is that a brand such as Adidas can target basketball content on publications that aren’t necessarily all about sports (i.e. ESPN). That often translates to lower CPMs, the company says.