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Contextual advertising is a form of targeted advertising for advertisements appearing on websites or other media, such as content displayed in mobile browsers. The advertisements themselves are selected and served by automated systems based on the content displayed to the user.
How contextual advertising works
A contextual advertising system scans the text of a website for keywords and returns advertisements to the webpage based on what the user is viewing. The advertisements may be displayed on the webpage or as pop-up ads. For example, if the user is viewing a website pertaining to sports and that website uses contextual advertising, the user may see advertisements for sports-related companies, such as memorabilia dealers or ticket sellers. Contextual advertising is also used by search engines to display advertisements on their search results pages based on the keywords in the user's query.
Service providers
Google AdSense was the first major contextual advertising program. It works by providing webmasters with JavaScript code that, when inserted into webpages, displays relevant advertisements from the Google inventory of advertisers. The relevance is calculated by a separate Google bot, Mediabot, that indexes the content of a webpage. Recent technology/service providers have emerged with more sophisticated systems that use language-independent proximity pattern matching algorithm to increase matching accuracy.
Since the advent of AdSense, Yahoo! Publisher Network, Microsoft adCenter, AOL Sponsored Listings and others have been gearing up to make similar offerings.
Impact
Automatically generated contextual ads sometimes fail to deliver the products they describe
Contextual advertising has made a major impact on earnings of many websites. Because the advertisements are more targeted, they are more likely to be clicked, thus generating revenue for the owner of the website (and the server of the advertisement). A large part of Google's earnings is from its share of the contextual advertisements served on the millions of webpages running the AdSense program.
Contextual advertising has attracted some controversy through the use of techniques such as third-party hyperlinking, where a third-party installs software onto a user's computer that interacts with the Web browser. Keywords on a webpage are displayed as hyperlinks that lead to advertisers.
Agency roles
There are several advertising agencies that help brands understand how contextual advertising options affect their advertising plans. There are three main components to online advertising:
- creation — what the advertisement looks like
- media planning — where the advertisements are to be run
- media buying — how the advertisements are paid for
Contextual advertising replaces the media planning component. Instead of humans choosing placement options, that function is replaced with computers facilitating the placement across thousands of websites.
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