Holla at yo Context, What?

While advertising practices have changed in drastic ways in our modern history, no other market has experienced such rapid saturation and exposure than that of internet advertising. Since this “internet” thing became a big deal, the shear number of users world wide has had advertisers foaming at the mouth as they realized that low cost advertising was possible(as opposed to higher cost methods like newspaper ads, billboards or mailing solicitation) and that segmenting consumers into specific groups would be much easier to accomplish. While most traditional advertising is targeted at the general population, which is not desirable for advertisers, the ability to separate consumers into different preference groups allows for much more effective advertising. Take Nike shoes for example. While in the prehistoric days of the internet, an advertiser might put up a billboard in the side of road with the newest Nike basketball shoe. While some potential consumers may be affected by this ad, it is unlikely that my 90-year-old grandma will want to go buy the new kicks. Warping forward to the days of the internet, Nike could pay to have an ad of their new shoe appear whenever someone searched basketball equipment, sporting news or shoes on a search engine. It’s ah nice.

With internet advertising gaining momentum, one must look at the difference in advertising strategies. Pop-up ads serve as the scum of the industry as almost all users try to avoid them. Contextual advertising, however, serves as an efficient way to match consumers with producers based on the consumers’ interests. This strategy is currently being used by many internet companies as advertisements are selected and served by automated systems (i.e. within google or yahoo) based on the content displayed by the internet user. The future of internet advertising is unclear, but for now, contextual advertising seems to be a great fit for consumers and producers. I’m no economist, but I would have to say that this advertising increases social welfare as producers can be more appropriately matched with consumers, giving way to higher utility and less wasteful advertising. Thumbs up to you contextual advertising.