Marketers Split on Contextual Ad Effectiveness

  |  March 10, 2005   |  Comments

Contextual ads aren't search ads, but marketers who recognize the differences are taking advantage.

Despite early criticism of contextual ads, more marketers are turning to them to extend the reach of their search campaigns. But experts warn there are pitfalls if the campaign is not managed properly.

"We've seen a shift in perception and performance. We were bullish on the idea originally, but disappointed with the results out of the gates," said Ron Belanger, VP of search marketing at Carat Interactive. "We expected traditional search conversion rates, but what we got was much lower."

Still, Carat Interactive now uses contextual ads for about half its clients, mostly as a supplemental tool for incremental reach. Belanger will use contextual ads to create awareness, mostly for things like product launches or branding campaigns that are not tied to specific performance metrics. He suggests avoiding the technique for newer campaigns or keywords that are ultra-competitive, where there's a thin margin.

"At the end of the day, you have to look at whether it is the best use of your marketing dollars. With contextual ads, the click-through rate and conversion are lower, but it's still a good buy in some cases," Belanger said.

Some advertisers have found contextual ads to be useful in certain situations, for certain clients, or when used in certain ways. A common use of contextual ads is to extend the reach of a search campaign that has "hit a wall" of traffic on relevant keywords.

"Contextual is not search, but it's still targeted. It's a way to get more volume for a proven ad, through the same interface," said Andrew Goodman, principal at SEM firm Page Zero Media. "If you understand that contextual inventory behaves differently, and monitor and track the campaign separately, it can be useful."

Goodman said he includes contextual ads as part of the mix for 75 percent of his clients. In his experience, the core keywords that perform best in search are the ones that perform worst in contextual. In contrast, Goodman said the "tail words" -- keywords that have less volume but still draw incremental traffic -- can perform more than 200 times better in contextual than in search, in some cases.

Fred Rubin, director of iDeutsch and directDeutsh, sees contextual advertising as the "next-best" option to search. "What we've been trying to do for a hundred years is put our ads in front of the right people. Search has proven to be the most efficient way to generate leads, but there's an inventory issue," Rubin said.

Rubin points out that all advertising follows the time-honored direct mail model: "Sell as much as you can, as cheaply as you can, and when you exhaust that channel, you move to the next."

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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