The Future of Targeting is Contextual for Streaming Advertisers

Behavioral targeting is under attack.  

As defined by the ANA, behavioral targeting enables advertisers to show ads customized to consumers based on their online behavior, including browsing history, searches, and clicks. This targeting method depends on third-party cookies and, as a result, has been threatened by the looming loss of cookies due to changing privacy regulations. 

But now, behavioral targeting’s effectiveness is also being questioned. Earlier this year, the Global Head of Media at HP spoke about how they had long believed behavioral targeting enabled them to reach the exact right people (IT decision-makers) at the right time (when they were ready to buy). But slowly, skepticism grew. Partnering with MIT and the University of Melbourne, HP set out to evaluate how well they were really reaching their preferred audience with hyper-targeted digital ads.  

• Only 8% of the people they targeted worked in IT.  

• 63% were unemployed.  

• Despite targeting enterprise, 66% worked at small and medium-sized businesses.  

Many of the targeting segments performed worse than if HP had not targeted at all. Their best-performing segment targeted only by age, reaching people 45-54.  

That’s not good news for advertisers, but consumers have also grown vocal about disliking the “creepy” ads that seem to know too much. The New York Times even recently reviewed a study that found behavioral targeting harms consumers.   

Moving away from behavioral targeting is a shift for all digital advertisers, but it poses an extra challenge for streaming and CTV advertisers who are still determining best practices for targeting and attribution. Many brands turned to streaming specifically because of its promised targeting capabilities. Now, as privacy regulations heat up, those capabilities seem less impactful. 

The good news: there are other ways to target likely customers.  
 

Let's talk about contextual targeting. 

Contextual targeting refers to targeting audiences based on the content they consume. In the early days of the internet, advertisers realized they could target paid search ads to people based on the keywords they were searching for. This was the birth of contextual—at least formally. The basic concept of reaching people with ads related to their interests has been around much longer. At a high level, this is how the Mad Men would’ve targeted. 

Over time, contextual advertising evolved to include a variety of different ad formats, including display, mobile, and video ads. For a consumer, this looks like viewing a commercial for California Closets while watching HGTV. Or getting a display ad for Adidas when scrolling through a fitness blog. The consumer wasn’t looking for a new pair of running shoes, but it’s probably at least tangentially related to their purpose for visiting the site.  

And what may surprise those lamenting the loss of the third-party cookie is contextual targeting can actually improve campaign effectiveness compared to campaigns reliant on behavioral targeting. 
  

What are the benefits of contextual targeting? 

1. Contextual targeting is a cost-effective solution. Unlike with behavioral targeting, there are no pricey targeting fees involved in contextual targeting. Rather, advertisers simply place ads within appropriate content, ensuring they’re seen by relevant audiences, but without breaking the bank. Best of all, spending less on targeting fees means campaigns achieve a greater ROI.

2. Contextual targeting protects consumer privacy. A growing concern in today's digital landscape, privacy regulations are complex and still evolving. Brands can avoid even the risk of misusing personal data when leveraging contextual targeting—mitigating both privacy concerns and legal complications. Plus, your prospects won’t worry you’re creepily stalking them online.

3. Contextual targeting promotes understanding of your target audience. Contextual targeting doesn’t work if you don’t know what type of content your customer consumes. By learning about content that aligns with customers’ preferences and interests, marketers gain deeper insight into their audience. This understanding not only helps marketers better reach the right people but enables brands to create more compelling and engaging work across all channels.   

How does contextual targeting work for streaming campaigns? 

Industry changes are making contextual increasingly accessible for video advertisers. For example, the Interactive Advertising Bureau (IAB) recently created a new video classification that allows for accompanying content. This means it’s easier than ever for publishers and advertisers to match ads with related content. And contextual targeting has a long history with traditional TV advertising. It was essentially how TV advertisers confirmed their ads would show only during “safe” content. 

For streaming and CTV advertisers, however, contextual targeting may feel counter-intuitive. Many of the advertisers drawn to CTV in the last few years—CTV ad spend has increased more than 250% since 2019—were excited most by the idea of combining TV’s prestige with 1-1 targeting. 

But as a TV agency with experience in both linear and streaming, we knew contextual possessed advantages that, depending on the client and their audience, could make the targeting approach worth exploring for streaming campaigns.  

1. One of the greatest challenges for streaming advertisers is high CPMs compared to linear TV. Built into those CPMs are a number of tech and targeting fees, inflating the advertiser cost. With contextual, advertisers can sidestep the targeting fees at least and pay a lower overall price for their media. For advertisers with reasonably broad audiences, this is an ideal alternative.

2. Contextual targeting makes extra sense for advertisers in highly regulated industries. Finance and healthcare companies, for example, often prioritize TV in their marketing mix because of the trust the channel develops with their audiences. These brands must be especially careful about how they use consumer data so contextual targeting provides peace of mind they’re not violating HIPAA or other consumer protection laws.

3. And finally, successful TV advertisers already have a strong understanding of their target audience, as campaigns require a clearly defined audience and messaging strategy. This positions these brands to transition streaming campaigns to contextual targeting more easily. 

Why contextual, why now?  

Contextual isn’t the only targeting method that works for streaming. And it might not even make sense for some brands. But as both privacy regulations and best practices evolve, contextual targeting offers many streaming advertisers a place to start discovering performance success on the channel.  

Plus, the future of contextual targeting promises exciting possibilities. Companies that specialize in contextual advertising are leaning into AI to analyze vast amounts of content, enabling them to create more nuanced targeting strategies. Others are exploring hybrid approaches that combine contextual targeting with personalized 1-1 targeting for advertisers that want to get the best of both targeting methods. 

But for now, contextual helps advertisers reach relevant audiences without the challenges that come with navigating the privacy landscape. And that might be reason enough to consider testing the approach. 

Interested in learning more about targeting for streaming campaigns? 

Check out this article from Director of Advanced TV Marrika Zapiler on why setting your CTV campaign up for success requires putting your audience first.