We’ve never met a marketer who isn’t looking to expand his or her brand’s penetration, and prospecting through programmatic provides an opportunity to find new consumers more precisely than mass broadcast channels. That sounds good, but let’s face it: prospecting is hard. There are seemingly endless targeting tactics from which a marketer can choose — from thousands of third-party audiences to algorithm-based optimization, to hyperlocal and much more. But, what if we could elect a King — a targeting tactic that relatively consistently produced strong results across advertisers? Our Programmatic Strategy & Optimization team investigated contextual targeting — buying impression opportunities based on the surrounding context of the site page — to see if this tactic could rule them all.

I have a digital subscription to the Economist. Number crunchers trying to understand why I subscribe might look at the fact that I live in New York City, am a white male, fall in X age range and have Y income to parse it out. In reality, none of these factors are causally linked to why I purchase and targeting these attributes to find more consumers like me would probably be very inefficient. Consumers buy services and products to meet specific circumstances of struggle. In my case, I got a subscription to the Economist the day after MediaMath moved to a new office. Something had changed and created a new circumstance of struggle. I went from having a short walk to work to a 30-minute subway ride. I wanted something ‘productive’ to fill the time and that didn’t require an internet connection. The Economist was my solution.

Consumer buying is driven less by characteristics of a person and more by situationally-based needs that a product or service can fulfill. Each year, Nielsen publishes its “Breakthrough Innovation Report” and has shown that the most successful new products pinpoint and solve circumstances of struggle. This extends past the product itself to how the marketing team executes in-market. TV creative that aims at attracting new consumers to a product often dramatize the circumstance of struggle prior to showing the product or service as the solution (see the Sidebar below for an example). The tactic can be incredibly effective. When consumers are watching TV, they’re most likely not experiencing the circumstance for which the product or service solves for. By incorporating the circumstance into the commercial, we expect that the advertiser is pulling the consumer into the situation and increasing the persuasiveness of the product benefits then shown.

Like with TV commercials, programmatic video advertising provides the opportunity to demonstrate the circumstance in the creative and overlaying rich targeting data can ensure the message is shown to the right consumer. However, for digital display in particular, we don’t have the benefit of using five or 10 seconds to establish a circumstance for a prospective customer. How do we do it? Programmatic allows us to reach consumers in context rather than using the creative itself to establish it. We looked at performance of contextually targeted strategies versus all other prospecting tactics across ~250 campaigns and found that, on average, the cost per acquisition of contextual strategies was ~15 percent lower. In part, this is explained by the relatively low data cost for contextual targeting versus alternatives like third-party audiences. However, response rate — the percent of time a served impression creates the desired consumer action — was meaningfully higher for contextual as well. Net, communicating in context produces greater receptiveness to an advertisement. Our hypothesis is that the consumer’s frustrations and aspirations are more top-of-mind in context and, as a result, establishes a circumstance of struggle for the display advertisement.

Contextual targeting isn’t the only tactic by which marketers can communicate in context. Many of our advertisers are starting to explore strategies like weather-based targeting and native inventory. The latter appears promising. Native-style display inventory matches the look and feel of the surrounding site page. And, when properly targeted, it can contextually match the substance of the page as well as the aesthetics. To that end, in a survey conducted by the Association of National Advertisers in 2015, 63 percent client-side marketers responded that contextual relevance of native was very important to them (in contrast to 26 percent for aesthetic relevance). The scale you can achieve on native has historically been a limiter. That said, scale has rapidly increased as consumers spend an increasing amount of time in environments that support native advertising. In fact, Business Insider forecasted that US native-style display would roughly triple in spend from 2015 to 2018.

The future of native is exciting as a form of context-based targeting, but let’s get back to our main question — is context king for prospecting? Unfortunately, it’s not a straight yes or no answer. Contextual improves performance meaningfully for the average campaign and does so at scale. However, we have found targeting tactics that can perform as well or even better. Our net takeaway is that contextual should absolutely be a part of the targeting strategy for a campaign, but we need to think about our approach holistically. No single targeting tactic will get a brand to its full interested consumer universe. Maybe contextual isn’t king, but it at least has a seat in court.