Is contextual targeting the future of digital display advertising?

Behavioural methods of targeting display ads, reliant on third-party cookies to track individual users’ browsing habits, have long been a bedrock of digital display advertising. However, as the industry shifts towards privacy regulation and data control, the era of indiscriminate data collection is coming to an end.

Browser and device-level protections such as Apple's ATT and Google Chrome's upcoming Privacy Sandbox are clear indications that the future of digital ad targeting is not going to be business-as-usual. The clampdown on third-party cookies and cross-site tracking is likely to be the start of a longer-term pivot away from behavioural ad targeting and towards contextual targeting; a strategy that delivers ads based on the content of the web page rather than the user's personal data. This transition will reshape the digital ads industry into one that prioritizes user privacy while striving to maintain advertisers' ability to deliver relevant messages.

A 'Topic' for debate?

You may have heard that Google Chrome is working on a replacement for cookie-based behavioural targeting in the form of Topics API, part of the Privacy Sandbox initiative. While it is true that Chrome is introducing Topics API for ad targeting, I would argue the API is more like another arrow in the quiver of contextual targeting, than a replacement for behavioural targeting.

This is because fundamentally Topics API uses stored contextual data to target ads. Using the API, the list of ‘topics’ users are deemed to be interested in is based solely on websites they have recently visited, with each domain registering a single topic. This means that, at its base level, Topics is contextual targeting with a bit of a lag factored in.

For example, let’s say you visit a blog about shoes. Topics API sees this and assigns your browser the ‘shoes’ topic. Later you visit a site selling houseplants. Because your browser has the ‘shoes’ topic stored, you’re served a display ad for some new footwear on the site selling houseplants.

Context is king

The Topics API essentially enables coarse ‘contextualish’ targeting based on unique domains users have recently visited. In its current form, this makes the Topics API closer to contextual targeting than behavioural targeting, because no data about the individual user’s behaviour is used to inform the ad targeting. As such, the removal of third-party cookies from Chrome probably represents the beginning of the end for granular behavioural targeting strategies as we know them – at least for digital display campaigns focused on prospecting and brand awareness.

Because of this, it seems unlikely the Topics API is going to be a like for like replacement for behavioural targeting strategies. Instead, Topics is probably going to act as an important strategy to accompany more curated contextual targeting, which more accurately considers the advertiser’s target audiences and the websites they are likely to be visiting.

Sowing the seeds for future success

For any advertisers still reliant on prospecting strategies involving third-party data, it is important to get started on testing alternatives as soon as possible, rather than waiting for third-party cookies to be phased out next year. After all, it will be necessary to test your replacement strategies thoroughly and optimise performance in order to maintain consistent results after third-party cookies are phased out.

When it comes to contextual targeting, there can be additional benefits to testing your site and app lists before third-party cookies are eliminated. By digging into the performance data of your existing third-party strategies, you can identify URLs and apps which are performing well and use them as a basis for your contextual targeting whitelists. When doing this, it’s important not just to copy and paste URLs into your whitelists, but to research the top performing sites and apps and ask yourself why those ad placements are leading to higher volumes of clicks or conversions. This can help you to identify your audience’s interests and find similar sites to include in your whitelists.

Act Now!

Without third-party cookies available to inform audience lists, behavioural targeting strategies will soon become much more difficult for advertisers to implement. The Topics API is not a silver bullet which will preserve behavioural targeting – instead, it is the outcome of an overarching shift towards ad targeting rooted in contextual data and user privacy. Now is the time to start testing your own contextual targeting strategies, preparing effective, durable, and privacy-centric digital display campaigns capable of withstanding the coming changes in the ad tech industry.

If you are an advertiser or business interested in developing futureproof targeting strategies for your digital ad campaigns, get in touch now to find out how equimedia can help!