Contextual advertising is advertising that fits in its context, like an ad for cable television on a TV listings web site. An advertiser will benefit from the targeted nature of contextual advertising, while an online publishing company can benefit from showing contextual ads on web sites it operates.
This sort of advertising is not entirely something new. Marketers have long sought to target specific audiences by running ads in magazines, radio programs, and other media they were more likely to view. However, the Internet has made it possible for contextual advertising to target much smaller customer niches at a lower cost, thanks to its wide range of niche content.
With context based promotion, it is feasible for even the most specialized products and services to find interested customers, without having to pay for exposure to a general (or loosely targeted) audience. This benefit has helped such advertising to gain a prominent role in online marketing, with context based ads appearing on millions of web pages.
These promotions are most commonly in the form of links, text-based advertisements, sponsored search results, or banner ads. Promotional messages in email newsletters are also frequently context based. While they typically cost more per viewer than non-targeted advertisements do, contextual ads compensate for this by producing much better results.
Web site and blog owners who sell contextual ads (either directly or through an affiliate marketing company) also benefit more from it. They can deliver better results to advertisers and earn much more per click or impression than they would from non-targeted ads. This allows even small sites to produce worthwhile revenue.