How Contextual Advertising Works

Contextual advertising is targeted to the specific individual visiting a website (or page within a website). A contextual advertising system scans the text of a website for keywords and returns advertisements to the webpage based on what the user is viewing.[1] The advertisements may be displayed on the webpage or as pop-up ads. For example, if the user is viewing a website pertaining to sports and that website uses contextual advertising, the user may see advertisements for sports-related companies, such as memorabilia dealers or ticket sellers. Contextual advertising is also used by search engines to display advertisements on their search results pages based on the keywords in the user's query.

Impact

Contextual advertising has made a major impact on earnings of many websites. Because the advertisements are more targeted, they are more likely to be clicked, thus generating revenue for the owner of the website (and the server of the advertisement). A large part of Google's earnings is from its share of the contextual advertisements served on the millions of webpages running the AdSense program.

Contextual advertising has attracted some controversy through the use of techniques such as third-party hyperlinking, where a third-party installs software onto a user's computer that interacts with the Web browser] Keywords on a webpage are displayed keywords as hyperlinks that lead to advertisers.

Agency Roles

There are several advertising agencies that help brands understand how contextual advertising options affect their advertising plans. There are three main components to online advertising; namely

1. •creation – what the advertisement looks like; 
2. •media planning – where the advertisements are to be run; and 
3. media buying – how the advertisements are paid for. 

Contextual advertising replaces the media planning component. Instead of humans choosing placement options, that function is replaced with computers facilitating the placement across thousands of websites.

Social Media Optimization

Social media optimization (SMO) is a set of methods for generating publicity through social media, online communities and community websites. Methods of SMO include adding RSS feeds, adding a "Digg This" button, blogging and incorporating third party community functionalities like Flickr photo slides and galleries or YouTube videos. Social media optimization is related to search engine marketing, but differs in several ways, primarily the focus on driving traffic from sources other than search engines, though improved search ranking is also a benefit of successful SMO.

Social media optimization is in many ways connected as a technique to viral marketing where word of mouth is created not through friends or family but through the use of networking in social bookmarking, video and photo sharing websites. In a similar way the engagement with blogs achieves the same by sharing content through the use of RSS in the blogsphere and special blog search engines such as Technorati.

Origins

Rohit Bhargava was credited with inventing the term SMO. His original five rules for conducting Social Media Optimization are:

1. Increase your linkability 
2. Make tagging and bookmarking easy 
3. Reward inbound links 
4. Help your content travel 
5. Encourage the mashup