Contextual Advertising in a Galaxy Not So Far Away

Editor’s note: I wasn’t sold on this Star Wars theme at first – it was Leif’s idea –  but I must admit, we got a bit carried away once we started. 

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News of the impending death of the third-party cookie starts to make it across the digital advertising industry. Reports spread of what it might look like. Deloitte Digital says the end of the third-party cookie is particularly hard-hitting to the CPG, Retail, and Financial Services sectors, which face an approximate $300 million yearly loss each. While long-tail SME advertisers were not included in the study directly, one can only assume that the issue far exceeds the $2 billion worth of Return on Ad Spend (ROAS) mentioned in the study. In an even more staggering report by McKinsey (in partnership with the IAB), the publisher market is facing a prospective $10 billion loss of revenue with the end of the third-party cookie.

Here’s the thing: Obi-Wan might have felt a great disturbance in the force, but he only felt it after it happened. We don’t need to wait for cookies to cry out in terror as they are silenced – we know it’s coming.

Since we know it’s coming, what is a rebel publisher to do? It’ll require a mobilization effort, but there is ripe opportunity for publishers to regain some control of their destiny. Savvy and forward-thinking publishers can adopt technologies ahead of their competitors and protect those future ad dollars from vanishing… like Obi-Wan.

Publishers armed with the right tools can mitigate the impact on advertiser ROAS described in the aforementioned research reports.

The chart below, hidden away in the middle of the pack of walled gardens but available to publishers, shows the ancient magic art of contextual advertising.

Someone who has long been an ally to the publisher’s cause is OAO (www.adops.com). OAO, now in its 20th year of business, is a long-time player in the world of publisher-side advertising and revenue operations. From their core offering of high-touch, white-glove ad operations services, and solutions, they have built out additional offerings that range from traditional ad operations services to programmatic and ad product support to integration services and much more. They continue to build and partner with new and innovative technologies that align with their mission of publisher enablement. I sat down with Craig Leshen, President of OAO and lead distribution partner for Ops Mage, and Leif Kramer, OAO’s head of product and principal at Kramer Labs, developer of Ops Mage, to see what they make of this opportunity.

Darth Beeler: Contextual has been around…for like a long time. Why the resurgence in interest?

Craig Leshen: Contextual advertising is nothing new, and several solutions have been in the market over the last decade or so. However, historically, they have almost all been focused on buy-side empowerment, with integrations that only exist for programmatic advertising and as segments for purchase via bidding platforms. There are some that do allow for more publisher-friendly solutions, but even those require the publisher to use an outside AdX or other programmatic account. The data wasn’t really for the publishers to leverage at will.

Fast-forward to today, and the conditions have changed considerably. We’re seeing buyers move budgets away from audience targeting and dive into contextual, as they know that’s the direction things are moving. As media dollars flow toward contextual targeting, so too should publishers. Helping to nudge more publishers down this path, IAB Taxonomy standards allow payments to flow more easily for both direct and programmatic media buys.

DB: It’s also an interesting time to redevelop some of these concepts.

Leif Kramer:With the latest cloud technologies now available and artificial intelligence becoming so ubiquitous, today’s solutions are much more powerful, and the quality of the output is far superior to what has been possible historically. Beyond that, the technologies a publisher elects to utilize are much easier to implement than in years past.

DB: You put your energy into building Ops Mage and focus on contextual advertising.

LK: The demise of the third-party cookie, combined with a hunger for more relevance in advertising placements and the lowered barrier to entry in terms of next-generation software, really makes this a great time to get into contextual advertising. Ultimately this lowered barrier means better pricing for publishers. Taking it a step further, contextual targeting has historically only been for text articles on site. Ops Mage is now beta-testing audio track analysis (i.e., podcasts) and video to build out even greater contextual advertising opportunities. With these new abilities at our fingertips, we think it’s a really great time for publishers to get into the space.

“What may have taken an hour for a publisher to contextualize can be done in seconds with AI.”

DB: Where do droids fit into this?

LK: If by droids you mean AI, AI makes all this possible. It is a significant burden on publishers to effectively contextualize content. Imagine trying to remember every IAB classification and then being tasked with reading and re-reading an article to capture all of that information accurately, and this doesn’t even account for audio. Contextualization is a great use of AI and modern Large Language Models (LLMs) – they scale, work in parallel, and don’t get sick or ask for time off. What may have taken an hour for a publisher to contextualize can be done in seconds with AI.

DB: Are you confined by IAB Taxonomy?

LK:We support IAB 3.0 taxonomy “out of the box” and sentiment analysis (positive/negative/neutral) for content and brand name identification. In some cases we can even support custom contextual queries. So imagine a scenario where an advertiser wants to target articles about electric vehicles (IAB2-10) but wants to only focus on specific brand names or from a brand safety perspective, wants to make sure that their ads are not showing up when the article is about an EV catching on fire. We integrate directly into Google Ad Manager’s publisher-provided signals (PPS) and provide coverage across that entire taxonomy. This also makes it very easy for publishers to know what IAB data they can sell to buyers.

“This can be a short-term win on the way to a longer-term win.”

DB: How does contextual equate to publishers rebelling and ultimately controlling their own destiny? 

LK: Let’s break the opportunity down into two categories: direct and open marketplace.

For direct, contextual advertising is known to drive greater performance (i.e., better engagement, more clicks, and better brand recall). While it’s not the only game in town, it is one of the cornerstones of impactful ad experiences. Moreover, this type of targetable data demands a higher than average CPM since it is far more likely for the ad experience to perform better than a randomly served, non-endemic ad. To be sure, just look at the success of the Data Management Platform (DMP), built with the understanding that there is great value in delivering the right ad to the right user at the right time. Publishers now have the tools to offer contextual targeting as part of their media sales package, which can include direct sales channels or contextual-driven, syndicated PMP deals.

On the open marketplace, our clients have seen positive results regarding lift to attributable impressions from Ops Mage contextual data. This will increase even more as the buy side dives further into contextual advertising. Beyond that, if you’re surfacing more contextually targetable data that maps to IAB classifications, you’re exposing your inventory to even more potential media spend. This is a logical thing; pubs need to be in it to win it.

DB: Should we wait for third-party cookies to be destroyed, or is it time to act now?

LK: Building off of my previous comment, the sooner pubs expose their inventory to more potential media spend, the sooner their revenue will increase. Not every advertiser will buy contextual today…but plenty are, and we’re seeing that in real-time with our publisher clients. The publishers that take action now will have a discernible advantage over those who wait until the last minute.

DB: Craig, bring it all together… 

CL:  We’ve spent the past 20 years honing our business and expanding our offerings in furtherance of our mission to be the premier white glove ad operations services and solutions provider for digital publishers. Partnering with strategic technology companies and supporting those tech solutions on behalf of our publishers is just one example of how we add value. Ops Mage is a natural extension of this idea. It is a perfect illustration of how ad operations teams can utilize innovative technology to help publishers drive revenue across traditional ad sales and programmatic monetization channels. 

As the demise of the third-party cookie is felt across the industry, contextually targeted ads will be a low-risk, high-value tactic that publishers can employ to protect revenue and drive additional business. I mention that it’s low-risk because user privacy laws don’t necessarily apply to ads that are targeted based on page content. Ops Mage is an elegant and easy-to-deploy solution for publishers that will yield positive results immediately. 

OAO is the primary distribution partner for the Ops Mage product, which is currently available to all publishers.

To learn more about Ops Mage, contact sales@adops.com.

…and be sure to stay tuned for the next episode of OAO’s endless saga to help publishers.  May the force of Ad Ops be with you!