Why contextual targeting is the future of digital advertising

Just a few months ago, the 2020s loomed as a decade of significant transformation for the advertising industry. Less than two years after the European Union implemented the GDPR to address consumer concerns about access to personal data, the California Consumer Privacy Act (CCPA) went into effect on Jan. 1, leaving brands, ad tech vendors and publishers scrambling to figure out what they need to do to comply. Then, a couple of weeks later, Google announced that its Chrome web browser, following similar moves by Safari and Firefox, would eliminate cookies by January 2022, further complicating how, in the not-too-distant future, digital advertising would reach customers without access to the third-party data that had become the standard for programmatic initiatives.

That, of course, was just the beginning.

The major upheaval caused by the global coronavirus pandemic has upended the advertising and marketing industry for the foreseeable future. As brands and marketers hunker down to retool plans in response to the current reality and in anticipation of eventually emerging from this crisis, content sites are attracting more visitors than ever—users eager to get the latest pandemic information but also distractions through entertainment, lifestyle and other lighter content.

COVID-19 has been compared to a war or to 9/11, and advertisers wary of associating their brands with bad news have deemed most coronavirus-related content untouchable. With access to huge troves of third-party data declining due to various privacy regulations and the soon-to-come cookie-less future, a more refined version of contextual targeting, a.k.a. contextual intelligence, is getting a strong second look.

"Cognitextual: A Neuroanalytic Study of Contextual Ad Effectiveness," a new study by GumGum in partnership with the neuroanalytics firm SPARK Neuro, explores why ads that are contextually relevant are more engaging, more memorable and more likely to drive purchase intent than ones that aren’t. As advertisers adjust to the new landscape and prepare for other unforeseen challenges, contextual intelligence will be an even more essential tool for expanding brand reach while ensuring brand safety.

The road ahead

Just before sheltering in place became the new normal, GumGum partnered with Ad Age for a series of breakfast events to discuss the upcoming changes to the digital ad community. The Ad Age Road Trip stretched from Chicago on Feb. 25 to Dallas on Feb. 27 to Washington, D.C., on March 5, and featured speakers such as Bill Simmons, VP of product management at Roku; Kolin Kleveno, senior VP and head of programmatic at 360i; Justin Scarborough, programmatic media director at PMG; Damon Gochneaur, director of media at The Marketing Arm; Eran Metzer, executive director of data and marketing technology at Hearts & Science; Roy Schwartz, president and co-founder of Axios; and Ben Plomion, GumGum's chief growth officer.

The wide-ranging Road Trip panels offered three key takeaways:

1. CCPA is here, it's complicated and we need to know how to comply with it.
2. A cookie-less internet is a rapidly approaching reality. While some may procrastinate because they're focused on the short-term bottom line, everyone will have to develop new strategies—soon.
3. Contextual targeting has brushed off as a dated strategy, but it has evolved over the last few years and is uniquely positioned to offer a richer portrait of customers when combined with first-person data.

Why everyone should care about CCPA

Although CCPA technically went into effect on New Year's Day, California announced that it would not enforce it until July of this year. Recently, numerous trade groups petitioned the state attorney general requesting that enforcement be delayed until January 2021 due to coronavirus disruptions. Still, it is imperative for anyone who wants to do business in the largest state in the U.S. to learn the ins and outs of the law and work to get in compliance ASAP.

At the Dallas breakfast, GumGum's Plomion discussed ambiguities in the law that brands and publishers may not have considered. For example, retailers are very concerned that privacy regulations can be detrimental because their e-commerce business has been built on one-to-one relationships with customers and the ability to retarget and message. Under CCPA, Walmart is technically the "publisher" of walmart.com, but since it is not an ad network, it has to register as a "data seller," requiring the company to reveal how it has processed customer data, how it's stored and how it's priced. "Imagine doing that for a big retailer like Walmart,” Plomion said. “How do you handle millions of people coming to your store and asking about data pricing?"

Then there's the lack of a national standard regarding data privacy, as PMG's Scarborough pointed out at the Dallas event. "What concerns us the most is, beginning with CCPA, we're looking at patchwork state-by-state legislation, which is a total nightmare. And I have very low confidence that, at the federal level, that's going to get sorted out anytime soon."

Not that the EU’s standardized GDPR has been a cure-all. One of its unintended consequences has been that more media dollars are going to the walled gardens of Google, Facebook and Amazon, Plomion said. Similar results are expected in the U.S. with a couple of caveats: trust and cost. Studies have shown that consumers trust these walled gardens less and less. And their CPMs and CPCs are so high that they may be cost prohibitive to advertisers. But research has also shown that almost nine out of 10 consumers would not share their data on any site if given the choice, so brands, publishers and third-party vendors would be less likely to benefit from the increasing lack of trust in the big tech players.

Back to the future: The cookie-less internet

While third-party cookies have never been the ideal customer identifier, they became the foundation for programmatic advertising because they enabled advertisers and publishers to track user behavior and cross-device usage, measure conversions and target. "As an industry we relied on the cookie not only to be able to reach specific audiences, but to act as a kind of container to catch all these touch points with consumers," said Hearts & Science's Metzer at the Washington, D.C., breakfast.

With cookies being phased out, "marketers need to think about different ways to get to the same behavior and look at integrating different attribution to achieve similar results," said The Marketing Arm's Gochneaur at the Dallas event.

One of the biggest hurdles is getting brands, ad tech companies and publishers on the same page to prepare for a cookie-less future. Sensing that 2022 is farther off than it actually is, many marketers continue to work the old way simply because they need the revenue, especially now.

And then there are those who welcome the cookie-less future with open arms. "The downfall of programmatic advertising is a win for premium publishers with niche audiences," said Axios' Schwartz at the D.C. breakfast. "Even if you have no data on your audience, the topics that you cover are so contextually aligned with what the advertiser is trying to do. ... Advertisers will go away from the middle and toward true niche publications that have distinct content so that you can align your messaging very directly."

From contextual targeting to contextual intelligence

For advertisers, the holy grail remains digital’s tantalizing promise of the right ad, for the right person, at the right time. The industry has looked to third-party cookies and programmatic to try to achieve this, with varying levels of success, for years.

But as brands, ad tech firms and publishers prepare for the next iteration of digital advertising, the intelligence offered by contextual targeting is attracting more interest specifically because it relies directly on the text, photos and videos already on the page of content being consumed. For example, a third-party programmatic vendor may automatically blacklist any content that merely mentions coronavirus or COVID-19—but what if the story were "10 Most Binge-Worthy Shows on Netflix During the Coronavirus Quarantine" or "12 Best Products for Self-Caring While Sheltering in Place"? With programmatic, advertisers that want to reach the audience that would click on those articles would be out of luck.

GumGum's mission for the past decade has been to apply contextual targeting—or contextual intelligence—to focus on the visual components of web pages, using proprietary computer vision technology to capture visual details and marry it with the text to provide crucial insights into the context in which brands advertise. When properly combined with the first-party data that advertisers and publishers already have, contextual intelligence is just as powerful as third-party data, if not more so. What's more, brand safety is inherently a function of contextual targeting.

Contextual with brand safety and a true understanding at the page level of images and content will open up the internet and present more advertising opportunities for publishers and publications that have great content—even hard news, which often gets blocked wholesale.

Yet content isn’t the only context to consider: The media platform, device, time and even location where consumers view an ad can also affect their response to it. It’s important for marketers to understand not just if but why consumers connect to particular content in order to use what the Advertising Research Foundation calls emotional targeting. By exploring what drives preferences for platforms, content and interest in the brand itself, advertisers have an opportunity to connect with consumers on a deeper level.

To download "Cognitextual: A Neuroanalytic Study of Contextual Ad Effectiveness," the new study by GumGum in partnership with SPARK Neuro, click here.