Contextual marketing is an online marketing model in which people are served with targeted advertising based on terms they search for or their recent browsing behavior. By tying the ads users see to their demonstrated interests, advertisers hope to decrease user annoyance with online marketing and, simultaneously, increase clickthrough and conversion rates. Google's AdSense program, for example, is a straightforward version of contextual marketing, in which ads are displayed based on the terms that the user searches for.
In a more sophisticated application, contextual marketing uses an approach called behavioral targeting to serve relevant advertising. Here's an example: The user searches for mid-size car reviews, reads one or two reviews and then reads an article about fuel-efficient models. Next, the user might visit a general news site and be shown ads for hybrid vehicles and biofuels.
To the user, the appearance of ads relevant to his interests -- on seemingly unrelated sites -- may seem like pure coincidence, or even synchronicity. In fact, however, each time the user performs a search, reads an article or clicks on an ad, a cookie stored on the computer tracks the activity, which is used to create a behavioral profile of the consumer for marketing purposes.
Behavioral targeting is usually conducted throughout ad networks of affiliated Web sites. TACODA, Inc., for example, is an Internet marketing company that oversees an ad network of 4,500 sites. According to the company's chairman, David Morgan, TACODA sees 80 percent of the U.S. online population 50 times a month, through sites including Cars.com, CBS Sports and the Wall Street Journal.