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Contextual Advertising

Contextual advertising is the online placement of ads that are based on the contextual relevancy of an advertiser's product or service and the matching online content. In effect, contextual advertising works much like the placement of products within a relevant scene in a movie or television program. With contextual advertising, relevancy is determined by the keywords that appear in the online content, which are then matched to the keywords listed in the advertiser's ad.

Contextual advertising is keyword-based. An advertiser designs an ad, selects the relevant keywords on which the ad will be based, and then places the ad through the web site publisher or advertising network (e.g., Kontera, AdSense). The ad is inserted into specific web pages based on the matching keywords of those pages. Optionally, the ad may be excluded for pages containing irrelevant or competitor keywords. When a user performs a keyword search through a search engine, the ads that are relevant to that search are shown on the search engine results page (SERP). Unlike search or sponsored ads, however, contextual ads are not shown directly on the SERP. Rather, they lie embedded within the content of the relevant web site results.

Benefits Of Contextual Advertising

There are several benefits to contextual advertising. The content with which contextual ads are associated is usually relevant to the ads' intents and purposes. This makes the ads meaningful and even helpful to users who are trying to better understand the content that they are reading. Also, users scanning through specific web content are often informed consumers who are highly likely to buy the product or service about which they are reading. So, an ad placed into the appropriate content has a higher than average conversion rate. Finally, contextual ads have a lower cost than typical PPC or web ads because of their lower, yet more specific, click-through rate (CTR). This is of advantage to advertisers who do not have big advertising budgets yet still want to attract targeted traffic and minimize irrelevant clicks.

Ad placement

Placement of contextual ads follows one or more of the following three methods: adjacent, related, and in-text. Adjacent ads are typically located to the right side of the page content, but may sometimes appear in the content itself, with wording wrapped around the ad. Related search ads often appear at the top left of the web page and may be grouped into categories of similar ads. They are sometimes presented as additional search engine results, even though no search engine has queried these ads directly. In-text ads appear only as double underlined words in the web content. By hovering over such a word or clicking on it, the user is shown the ad's profile and is taken to its landing page or web site.

Pricing

Contextual ad pricing generally operates through either a cost-per-click (CPC) or cost-per-impression (CPM) format. With CPC, the ad is displayed within its related content and the advertiser is charged only when users click on the ad. This format is useful to advertisers who wish to build brand recognition and product awareness without having to pay for "non-profit" ad impressions. With CPM, the ad is charged a fixed rate per one thousand impressions instead of each individual click. This format is of benefit to the advertiser who wishes to sell popular or low profit margin items and would rather not pay a CPC charge for every click-through and/or sale, or whose CPC would be unusually high due to the keywords used.

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