Study of Effects of Contextual Targeting on News

Bias towards contextual targeting

Since pressure for enforcement of privacy regulations in the adtech industry heated up mid 2019, contextual targeting has been repeatedly discussed as an alternative to behavioral targeting. It seems clear that this discussions is influenced by the historical bias towards contextual targeting as something of the past, something dated and not as efficient as behavioral targeting.

Given the industry’s overwhelming focus on behavioral targeting the last eight years, this bias can come as no surprise. Not only are the players in the contextual space few, but the development of contextual targeting has not been a priority for the industry as a whole – ranging from the advertisers and their agencies, all the way through the tech suppliers to the publishers.

Fully transparent contextual targeting

Kobler has developed a special purpose buy side platform to enable what we call fully transparent contextual targeting. Transparency is a prerequisit for contextual advertising to evolve to the next level, as Kobler sees it. Contextual targeting, as opposed to behavioral targeting, is all about where the ad is shown – it is this surrounding context that should give the ad the halo effect. Without full transparency on every ad impression, there is no way to know which type of content actually achieves this goal or not, and optimization will have to be done in the dark.

In order to shed some light on the discussion of contextual targeting as a viable alternative to behavioral targeting, Kobler would like to share some insights on our experience with contextual targeting this year.

Contextual targeting makes publishers more money

A recurring discussion this year has been how much behavioral targeting based on third-party data actually benefits the publishers. Several studies have been published, claiming a lift in prices for publishers ranging from 4 % to 60 %.

For Kobler it is clear that contextual targeting is more aligned with publishers’ core business model than behavioral targeting, given the fact that content is their unique asset. No other place than through the publisher’s inventory can these readers’ expressed interest be targeted in real-time.

Campaigns run on Kobler’s platform participate in real-time auctions competing with all types of targeting. Kobler is therefore in a unique position to isolate the effect that fully transparent contextual targeting has on advertisers’ willingness to pay for these ad impressions.

In the six months period from mid March to mid September, Kobler analysed the bidding and winning patterns across campaigns from 130 Norwegian advertisers running on the Kobler platform. Due to our close relationship with publishers, Kobler were able to compare our findings to the average price (CPM) publishers have on all programmatic sales, including both private marketplaces and open RTB.

Bid and win pattern on the Kobler contextual advertising platform for 2019

The p95 distribution of bid prices (purple line) placed by the Kobler contextual platform and corresponding clearing prices (blue line) during a six months period in 2019. In addition trend lines for both graphs.

Our analysis revealed that during this six months period in 2019:

  • advertisers bid on average 3,4x the average CPM that Norwegian publishers have from programmatic sales, with a clearing price of 2,3x this average CPM
  • the average bid went up 25 % while the ad spend going through the platform quadruplicated