There are many ways to reach people through online advertising, and the two most common (and popular!) are behavioral targeting and contextual targeting.
But with recent regulatory changes like GDPR and even more recently iOS 14.5’s privacy changes, the pendulum is swinging more towards contextual targeting and away from behavioral.
But what are behavioral and contextual targeting? What’s the difference? Is one more effective than the other?
Let’s have a look.
Quick Links
- What is behavioral targeting?
- So why doesn’t everyone use behavioral targeting?
- What is contextual targeting?
- What is the difference between behavioral and contextual targeting?
What is behavioral targeting?
Behavioral targeting is the most prominent method of targeting users with your ads.
With behavioral targeting, you are using a user’s historic website and browsing data (what websites they’ve been on and what content they’ve looked at) to inform your advertising.
You’re essentially collecting data on a user, and then using this data to create a more personalised advertising experience than would be possible without it.
Behavioral targeting is highly effective…
Because you are only showing ads to a user you know has been browsing or looking at certain topics in the past, you can be confident in knowing whether or not they’re going to be interested in what you are advertising.
This, in turn, means less wasted ad spend trying to advertise to user’s who are not interested in what you’re promoting, and a higher ROI (return on investment) from your advertising efforts as a result.
And this really shows.
Data from McKinsey shows that organisations that use behavioral insights from their customers to inform their strategy outperform peers by 85% in sales growth and more than 25% in gross margin.
Grenis Media takes it a step further by saying:
“To get the desired ROI, it’s imperative for users to include behavioral data usage in their marketing campaigns”
So why doesn’t everyone use behavioral targeting?
You might be asking yourself ‘if behavioral targeting is so great, why isn’t everyone using it?’.
It’s a good question, and the answer can pretty much be summed up by one word:
Privacy.
Privacy is a big concern
Because behavioral targeting relies so heavily on collecting a user’s data, there has become a louder and louder voice behind people not wanting to share their data.
And there’s a number of reasons why.
Some people simply are not okay with companies knowing every website they go on and what they are reading.
Others think it’s unfair that companies are collecting their data for free and then profiting off of it, with none of that profit coming back to the user whose data was used in the first place.
And some people just want the option of keeping their data private.
Whatever the reason, regulation has stepped up to fill the gap.
With GDPR in Europe coming into full force back in 2018, it’s clear that when the concern becomes large enough, governments will step in and enforce regulation to address that concern.
What does this mean?
In practice, this means that companies must obtain user consent before collecting and storing their data, as opposed to the ‘wild west’ before regulation like GDPR, where there were no limits on how much data companies could collect on users.
It also means that behavioral targeting is much less effective, because not everyone is opting-in to allow cookies to track their behaviour to feed back to the companies wanting to use this data for targeting purposes.
This brings us on to contextual targeting…
What is contextual targeting?
We have a whole article about contextual targeting here, but in short, contextual targeting is the idea that you can target a user even when you can’t identify their past behaviors and interests, and it’s done by looking at the context in which they are looking at a webpage.
In a sense, where behavioral targeting focuses on targeting the user, contextual targeting instead focuses on targeting the webpage, through which you can have a reasonably good idea of the type of user.
There are two main components of contextual targeting: contextual category targeting and contextual keyword targeting.
Contextual category targeting
Contextual category targeting is when you use the category of the page to determine whether an ad should be served.
The content of the webpage is analysed, and the information collected is used to determine which category the website belongs to.
This could be something as broad as Automotive ([IAB2] on the IAB categories list), or as niche as Vintage Cars or Certified Pre-Owned Cars ([IAB2-22] and [IAB2-5] respectively.
Contextual keyword targeting
The idea behind contextual keyword targeting is that you are targeting sites based on the keywords appearing on individual webpages and websites.
So rather than the whole webpage or website being categorized and then you target the category, instead you’re targeting the specific keywords appearing on a webpage.
This makes it a lot more granular and focused than contextual category targeting, but this downside of this is that it can be harder (and more expensive) to reach the users you are after.
What is the difference between behavioral and contextual targeting?
As mentioned in the previous section, the main difference between behavioral targeting and contextual targeting is that whereas behavioral targeting focuses on targeting the user, contextual targeting focuses on targeting the webpage, through which advertisers have a pretty good idea on the type of user they’re reaching.
Some other differences include:
Reliancy on third-party data
Behavioural targeting is reliant on third-party data, as you’re having to use a user’s historic data to inform your targeting (NOTE: once third-party cookies are completely discontinued, behavioral targeting will instead have to shift to first-party data).
Contextual targeting however has no reliance on any historic data – it instead uses the real-time context of the webpage/website to inform targeting decisions.
Question that informs advertising
With contextual targeting, the question you’re asking is “where is the ad going to go?”, which you’re answering by evaluating the webpage the user is currently on.
With behavioral targeting, you’re instead asking “what has the user already looked at?”, which you answer by looking at their historic data to determine their interests.