The Future of Video Advertising Is Contextual and Automatic

By Hersh Patel

2021 saw a surge in interest in contextual advertising as brands and publishers scrambled to determine how they will target and measure audiences after the imminent death of the third-party cookie on Chrome.

With granular information about individual audience members' interests and behaviors disappearing, advertisers are looking to context as a way to serve audiences relevant messaging.

2022, therefore, will see the shift toward contextual ads dovetail with another long-standing advertising trend: the shift from text-based messages to video. New technologies and data processing capabilities will allow brands to automatically create video ads and place them against relevant real estate, maximizing potential engagement.

Here's what needs to happen for contextual and automatic videos to become commonplace, why advertisers are likely to embrace the ad format, and how brands can capitalize on this next generation of ad tech.

How video will become contextual and automatic

The same forces that allowed for the emergence of highly contextual, real-time display advertising are driving contextual video ads: Advertisers have access to more data against which to place advertisements and more powerful automation technology to design creative fast and at scale.

This is why programmatic, contextual display ads are already commonplace, whereas video ads rising to the same standard are not yet widespread. In display, advertisers have a massive number of existing impressions and an immense amount of content around which to target campaigns. It is challenging for video ad companies to obtain the same amount of scale because there is simply less existing video content on the web.

But the gap between display and video ads will not last forever. On the contrary, video inventory will grow enough in the next one to three years to power sophisticated contextual video advertising campaigns at scale.

Why advertisers will embrace automatic, contextual videos

To understand video ads' shift to contextual, it is helpful to think about advances in TV, not just digital video. TV was historically a spray-and-pray medium. Advertisers sacrificed the benefits of narrow targeting for those of broad reach and emotional power linked to the nature of the medium.

But those dynamics are no longer true of TV. Addressable TV, the process of using audience data from multiple sources such as the census and browsing to create more targeted advertising campaigns, has allowed TV advertisers to not only reach broad audiences but also target individuals and measure campaign success on a granular level. The same shift is now happening in digital video.

Consider the case of a beer brand hoping to drive sales with video ads. The brand does not need to spend an outsize portion of its budget on costly football game ads. Rather, the beer manufacturer can automatically create videos that are likely to reach its audiences in times and places where they are most likely to convert.

For example, the beer brand might partner with bars selling its products to run ads on their TVs or serve ads online to consumers reading about beer itself or related terms such as "barbecue."

In any of the above cases, the power of contextual video is similar to the value proposition of contextual for display: reaching not only consumers who have shown an interest in the product but also, and more importantly, those in the midst of experiences — out at a bar or browsing for beer and related products online — where they are most likely to respond positively to beer marketing.

Contextual advertising is not necessarily an entirely new way to conduct marketing. Rather, context enriches existing approaches by ensuring that the people who see messages are primed to respond to them at the moment of engagement.

What the shift to contextual video means for brands

Advertisers hoping to maximize the effectiveness of their ad spend should begin shifting budget from traditional display to video now. Even if contextual, programmatic video is not yet commonplace, advertisers can get comfortable designing creative for the medium — no small task — and take advantage of its high engagement rates relative to text.

Within a few years, brands can anticipate much of their ad spend going to video and a great deal of video advertising becoming both automatic and contextual.

This does not mean that contextual ads will replace behavioral ones. Rather, context will become another data-driven proponent of advertising, helping brands reach consumers with messages they actually want to see — at the precise moments they're most likely to want to see them.

The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.

Hersh Patel cofounded Hindsight in 2017 to help publications figure out how to effectively place ads as cookie-tracking is phased out by the major internet browsers. Its software is used by sites like FOCO and FanDuel to place ads based on the content of the article, rather than the reader's data history. With Patel as CEO, Hindsight has raised $1.3 million.