Three reasons why programmatic contextual advertising is only part of the future of internet advertising

16th December  |  
4 minutes

In the wake of global privacy regulations and changing consumer attitudes regarding how they are targeted for digital advertising, third-party tracking cookies and mobile device IDs are being withdrawn. Publishers therefore need to find a new way to create audiences at scale to sell to advertisers for personalised digital advertising.  

Contextual programmatic advertising is being discussed as one such alternative. However, while contextual programmatic advertising will play a role in the privacy-first advertising ecosystem of tomorrow, the approach is not in itself sufficient to deliver the reach and scale required by brands and agencies. Here’s a reminder of how programmatic contextual advertising works. 

What is programmatic contextual advertising? 

Contextual advertising allows advertisers and agencies to match the content of a publisher’s webpage to that of their promotional content. The approach does not use consumer data and therefore performs well from a privacy standpoint.  

In programmatic advertising, brands and agencies use audience segmentation data provided by publishers to deliver ads to consumers based on context. Advertisers can increase their ad budget by bidding on high-value impressions, drive CTR (click-through rate) improvements, and increase ROI. Contextual programmatic advertising can help enhance campaign performance by delivering relevant content across a broad range of platforms. 

What are Seller-Defined Audiences? 

Seller-Defined Audiences (SDAs) are a recent addition to programmatic contextual (although they can also be used for behavioural approaches). SDAs are “a technical specification that outlines a method for communicating first-party audience attributes in an OpenRTB bid request without revealing user identity.” Published by the IAB Tech Lab, Seller-Defined Audiences enable publishers to bring their audiences together in standardised demographic, context, or behavioural audience groupings that they will communicate in bid requests to a Demand-Side Platform bidding on their inventory. 

The benefits of contextual programmatic advertising 

The key benefit of contextual programmatic is that it is a privacy-centric approach. By matching creative to the context of a publisher site, advertisers can be reasonably sure that they are reaching appropriate audiences without needing to track users on the internet or transmit personally identifiable information (PII). Advertisers and brands can also better ensure brand safety, as they know the context in which their content appears.  

SDAs, meanwhile, enable publishers to leverage consented first-party data to create audiences without needing to work with third parties or risk data leakage. Unlike purely contextual advertising. SDAs also enable publishers to offer granular segments based on purchase intent, interest, and demographics. 

Three reasons why programmatic contextual advertising is only part of the future of internet advertising 

However, while contextual programmatic advertising has much to offer brands and agencies in the post-tracking-cookie ecosystem, it will not be a sufficient replacement. Similarly, SDAs will only answer part of the challenge. As the IAB notes: “SDA makes no claims of being a silver bullet for the industry, but should be a valuable tool in our toolbox.” 

The critical challenges around contextual programmatic are: 

  • Accuracy. Context-based approaches require brands to make assumptions based on the content of a publisher’s site(s) concerning who is visiting that site. Contextual targeting is therefore less precise than alternatives based on first-party intelligence. 
  • Scale. SDAs are limited to the consented first-party intelligence that publishers can gather from their owned sites. It does not therefore scale to the whole of the open web and therefore offers less reach than advertisers demand.  
  • Blacklisting. Contextual programmatic runs into problems as publishers may have difficulty selling inventory if brands blacklist negative news items. 

Beyond contextual programmatic  

Publishers must therefore look to other tools to ensure they can offer advertisers the reach, scale, and accuracy they demand. The most promising method is for publishers to unite a range of approaches on an interoperable platform, such as Novatiq’s Fusion platform. This would include contextual and SDAs and other approaches such as telco-verified IDs.  

The latter include publisher-owned identifiers based on their first-party intelligence. Unlike  SDAs, the IDs are subsequently verified behind secure telco networks so that publishers can verify users across any device and anywhere on the open web. The approach is privacy-first as no PII is transacted and the process is used only to build profiles of anonymous users rather than known individuals. These profiles are then activated with a dynamic transactional ID so brands and agencies can leverage audiences at scale for personalised advertising. 

As the advertising ecosystem charts a course into the future it’s increasingly clear that there will not be a single solution to the end of tracking cookies. Instead, brought together on a common platform, publishers and brands will use a variety of approaches. The result will be that publishers can maintain their business models while user privacy is guaranteed.  

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