Contextual Advertising, Part 1 of 2

We’re an easily annoyed bunch, we human beings. Live or die, the Do-Not-Call-Registry should be viewed as the tipping point for the end of interruption marketing. Consumers do not wish to be bothered. We cannot be prodded, pushed or cajoled into buying decisions anymore. We’ll make our own decisions, on our own time, thank you very much. This ethos and the empowered consumer are exactly why inquiry marketing is so effective. Any contextual advertising discussion must take into account how we arrived at this point.

Tyranny of choice is a key inquiry marketing driver. We’ve seen the emergence of fierce and sudden competition in every product category, plus hundreds of cable channels, satellite TV and radio programming, ad saturation and poorly differentiated products in many categories. All this and more overwhelm our senses every day. The cumulative impact has taken its toll on consumers. We’re weary of the many choices. We’re suspicious of the claims, ticked off at the telemarketers, and we always open the mail over the wastebasket.

Along came the Internet. Search engines made self-service product research possible. Two elements: overwhelming choice and the arrival of the Internet and search engines, produced a profound and fundamental shift in the search behavior. Inquiry behavior.

Exhibit A: Four hundred million user-initiated Internet searches each day — 400 million questions, curiosities, investigations.

The consumer is in control. Accept it.

Your customers already do. They’re forming opinions, even personalizing product specifications online. They use search engines, search and research. They read and learn without your help. The best you can hope for in this new environment is to be visible and available while they self-educate.

Inquiry marketing addresses the new marketing reality. It’s what Sergio Zyman, Coca-Cola’s former CMO, calls “consumer democracy.” It’s the rise of choice, and the decline of mass marketing.

Contexually Speaking, What Is a Contextual Ad?

A contextual ad is the same ad Google or Overture displays at the top of search results. It’s labeled “sponsored result” or “sponsored link.” But this ad is instead displayed on a content page that contains relevant material. The ad serving is automated, based on algorithmic relevancy consideration.

Contextual advertising is a relatively new online advertising channel. It’s available through Google, Overture and Sprinks. I’m fascinated by these ads because I believe they’re a fundamental component of the inquiry marketing mix, although they’re slightly removed from the behavior of search.

Why are contextual ads important? Not all Internet sessions begin at a search engine. Not every searcher clicks on any one search result. Some people begin their online journey on a news site, sports site, or e-commerce site. While there, they may choose to view content relevant to your category or brand. They’ll educate themselves about a topic while you have an opportunity to be in front of them.

Often, relevant pages from participating content sites achieve high search engine rankings on your targeted keywords. That means contextual ads can capture searchers who don’t click your link in their list of search results. Even when visitors don’t arrive from a search engine, if the content’s relevant to your brand or your category, they may well be qualified prospective customers.

In inquiry marketing, the marketers’ job is to ensure their brand is in the seeker’s path, be it a search engine or an article on a niche topic. When an ad is in context and highly relevant both to the subject matter and your brand, it’s part of the inquiry process.

You may be wondering if banner ads are an inquiry marketing component. Sure, but only when they’re fine-tuned to a particular page’s content, and only when they’re an integral part of the conversation on that page. Some banner ads meet that requirement. But customizing banner creative on an ongoing basis for hundreds of pages of ever-changing Web content is unrealistic. That’s part of the reason banner ads perform poorly.

Contextual advertising’s killer app is the remarkable inventory both Google and Overture possess. I’m not talking about advertising real estate, but “advertiser inventory.” They have the ability to bring 150,000 paying advertisers to content sites. This creates a new marketplace. It makes it possible for a single media buy to be distributed across hundreds (or thousands) of pages, with each ad relevant to the content on that page. Banners can’t do that. At least, they can’t inexpensively, in real time, or automatically.

Contextual ads speak to customers as they research or read about topics that interest them. Consider a prospective customer visiting their favorite news site. They spot an article about TiVo taking over the world. They read an analyst’s prediction that in 14 weeks, every home in America will have at least two. They may have been interested in TiVo already, but weren’t in a buying mode at that time. At the end of the article, four contextual ads are displayed, each linking to information about buying a TiVo.

Will that individual purchase at that moment? Maybe, maybe not. But recognize she’s in “inquiry mode,” educating herself on a topic of interest to her. Note that she read all the way to the bottom of the page. Reading on a screen is pain, and love. It matters. If you’re weren’t particularly interested in the topic or not in inquiry mode for a purchase, you probably won’t click on an ad. If there isn’t a click, the advertiser pays nothing, even if the consumer noted their brand for later.

I spoke with Susan Wojcicki, director of product management at Google, who oversees Google’s contextual advertising product (incidentally, Google employee number 18!). Susan taught me an import distinction. I’d believed contextual ads were text banners, analogous to classified ads in a newspaper. Susan pointed out an important difference: classified ads are grouped together and in the back of the newspaper, never near relevant content. She believes there’s no offline equivalent.

“There doesn’t exist that much [true] contextual advertising in the offline world,” she said. “In the past, if you read a magazine about tennis, you’d surely see tennis advertisers. Advertisers have always been attracted to publications where they know [their ad] will convert, so you do see contextual advertising at the publication level. But these same publications won’t commit to what story your ad will run next to. That’s very different [from online contextual ads].”

Next week, Susan will discuss the size of the contextual market; conversion rates of contextual advertising inventory; how publishers benefit, opting-in and -out of contextual ads on a site-by-site basis; and potential enhancements to the program. Fascinating stuff for the inquiry marketing faithful.

Related reading

Brand Top Level Domains