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Unlocking the Power of Contextual Targeting in Connected TV

Published: Jul. 07, 2023

With the decline of third-party cookies and advancements in AI and machine learning, contextual advertising is enjoying a resurgence among advertisers and audiences alike. Studies show an estimated 79% of consumers are more comfortable with contextual ads than behavioral ads.

But while contextual targeting has been well-established in online advertising, emerging channels like Connected TV (CTV) are still navigating the implementation of contextual solutions and discovering the best approaches to make it work effectively.

How will contextual advertising fare in the future? Will contextual data play a bigger role in CTV’s future? We’ll dig into the benefits, roadblocks, and nuances of contextual targeting to help you better understand what makes this targeting strategy so popular.

Want to learn more about CTV targeting? Check out our guide.

What is contextual targeting in CTV?

To understand how contextual targeting works in connected TV, let’s first break down how this strategy works in the display world.

In display advertising, contextual targeting works by crawling web pages and analyzing their text, including factors such as the text, keywords, images, and overall theme. Demand-side platforms then pass the web page through a semantic engine to categorize the page into specific topics, as well as make sure the page doesn’t contain words that could be deemed inappropriate.

CTV advertisers share the same goal as their display counterparts when contextually targeting users: Connect with their target audience in the midst of content that is highly relevant and likely to resonate with the message. The actual process, though, looks a lot different. Publishers are often tasked with categorizing shows into genres, where they decide on whether the contextual information will be available on the bid request. When buyers evaluate the bid request, they can glean if the proper contextual information is available to contextually target users.

Otherwise, publishers can establish genre-specific private marketplaces with select buyers and demand-side platforms. Within these marketplaces, buyers will only receive contextually relevant bid requests.

What are the benefits of using contextual targeting in CTV?

Contextual targeting has taken a backseat to first-party audience targeting. According to eMarketer, advertisers believe advertiser first-party data activation holds the greatest promise, while contextual advertising trails far behind.

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Advertisers have been eager to granularly target users using the massive amount of data available on connected TV — from device IDs to household IP addresses and more. First-party audience targeting, though, requires an enormous amount of site traffic. Unless you’re a large-scale enterprise, your brand is limited to the audiences that visit your site. In other words, first-party data doesn’t scale well for everyone. To make matters worse, third-party cookies are seemingly on their way out.

Because of these factors, connected TV advertisers are reconsidering contextual targeting. Why?

  • By utilizing contextual data, advertisers can still target relevant audiences without relying on individual user information. Some industries already have a head start — finance, healthcare, and other verticals with sensitive information often leverage contextual ads to avoid violating policies.
  • Contextual targeting can be more accurate than household IP addresses. For instance, contextually targeting a show popular with adult women means you’re more likely to reach the wife or mother within the household. On the other hand, if you blindly target the household IP address, you won’t know who in the household you’re reaching.
  • Finally, contextual targeting helps address brand safety concerns. By excluding ads based on the content context, advertisers can have more control over where their ads are displayed, reducing the risk of associating their brand with undesirable content.

What are the challenges of using contextual targeting in CTV?

One major shortcoming of CTV is the need for more transparency. Apps and publishers store video content on their content management systems, sometimes behind closed platforms — making it harder for data providers to analyze videos and determine their context.

To make matters worse, publishers have yet to agree upon a singular content taxonomy. Because there is no way to crawl video content, publishers categorize content themselves — and inevitably create their own taxonomy. For instance, while one publisher may classify their live sports event as “sports,” another may note it as “football” — and another may refer to it as the “NFL.”

While the road ahead is anything but straightforward, advertisers are hopeful the industry will improve over time. “By the end of the year, I don’t think scale will be a problem anymore. You’ve got to walk first, before you can run. And we’ve just getting to walking now,” said Lynn Chealander, director of product management at Xandr to Digiday.

Unleash the Power of Targeting on Connected TV

As the popularity of CTV continues to rise, embracing its targeting capabilities, like contextual targeting, will be essential for advertisers aiming to stay ahead of the curve.

Now that you know how to target viewers on CTV contextually, you can start to put your knowledge to work. Leverage all connected TV has to offer, from advanced targeting to precise measurement and more, using Simulmedia’s TV+ platform. From retargeting to building custom lookalike audiences and beyond, TV+ helps advertisers get in front of their ideal audiences to maximize reach and drive conversions.

We’d love to show you how it works. Schedule a demo to speak to one of our experts today.