The Advertising Identity Crisis: Contextual Advertising as the Privacy-First Solution

The advertising world has long been obsessed with identity — who the customer is, what they’ve done, and how they can be targeted based on their behavior. But this fixation on the “who” has led us down a path of diminishing returns, rising costs, and growing consumer distrust. Contextual advertising, powered by advances in AI and technology, offers a new way forward. It’s not just about matching ads to the content users are consuming; it’s about aligning brand goals, creative assets, and contextual environments to deliver outcomes that feel relevant, timely, and privacy-safe.

This shift isn’t just a tactical pivot — it’s a fundamental rethinking of how advertising can grow brands and shift perceptions. As discussed in “The Instability of Cookies and the Rise of Privacy Walls”, the old ways of identity-based targeting are becoming less effective as privacy regulations and walled gardens limit access to user data. The time for a new approach is now.

The current approach is absurd

Today, audiences and creative decisions are often governed by demographics and behaviors. For example, a car advertiser looking to target outdoor enthusiasts will create a segment like “outdoor enthusiast auto intenders.” The advertiser then delivers a “personalized” creative asset showing the car in a camping or hiking setting.

At first glance, this approach seems logical. But think about what it really means. Instead of building creative that adapts to where and how it will be seen, brands are reverse-engineering entire campaigns based on assumptions about a person’s identity. The result is an expensive and convoluted process that produces assets that at best feel disconnected or redundant and at worst are insulting to the viewer. Do we not think that consumers could imagine driving their SUV to a campign trip. Would this ad immediate make the consumer have a light bulb moment of “Wow, I had not idea that an SUV with extra storage could hold camping equipment. I thought it was only for groceries. Now I will totally buy that SUV.”

As we explored in “First-Party Data’s False Promise to Advertisers”, this identity-first mindset also drives up costs — requiring expensive infrastructure to store and activate data — without necessarily improving outcomes. Most consumers don’t care that a car ad was “personalized” just for them. What they care about is relevance — and relevance doesn’t come from knowing who they are; it comes from understanding the moment they’re in.

The Power of Context: “You Are the Company You Keep”

Contextual advertising offers a simpler, more effective way to drive relevance. Instead of building campaigns around identity, it starts with the environment where the ad will appear. The message and creative asset are then tailored to align with the content and setting, creating a natural, intuitive connection for the viewer.

To illustrate this, let’s imagine an out-of-home (OOH) advertising for a high-end luxury vehicle:

• Appropriate Context: A billboard positioned in an affluent urban area or near a premium shopping district. The ad, featuring the sleek car against a backdrop of city lights, speaks to the aspirations of the passerby.
• Inappropriate Context: The same ad placed near a discount outlet mall or in a rural setting surrounded by tractor billboards. The message clashes with the environment, diminishing the car’s premium appeal.

This “you are the company you keep” principle applies just as strongly in digital advertising. A luxury home décor brand, for instance, will achieve far better outcomes placing ads on high-end design blogs or architectural magazines than by targeting users with identity-based retargeting ads on random sites.

Creative Built for Context

One of the most exciting aspects of this shift is how it redefines the role of creative in advertising. In the current model, creative is built for audiences — personalized assets meant to speak to different demographic or behavioral segments. But contextual advertising flips this script.

By focusing on the context in which the ad will appear, creative can be tailored to align with the brand’s communication goals and the environment. A creative asset for a fitness brand in a health-focused article might highlight performance benefits, while the same brand in an entertainment article might emphasize fun and community.

This approach doesn’t just improve relevance; it drives demand for better, more thoughtful creativity. As explored in “The Role of Cookies and IDs”, much of the early promise of digital advertising was tied to optimizing creative for performance. Contextual advertising reinvigorates this promise in a way that’s more sustainable and impactful.

But what about personalization at scale ?!?!

Unlike professional marketers, real consumers don’t care how an ad got there or if it came from the “personalization” budget. They cannot tell the difference between a personalized ad and a relevant ad. Connecting relevant creative to relevant context IS personalization at scale. Every time I see the citation that “When it comes to personalized ads, studies have found that almost 90% of consumers prefer them and 87% are more likely to click on ads for products they’re interested in or shopping for” I want to puke. Marketers love to cite this research. But dig a little deeper, and you’ll find a surprising truth: what consumers actually want is relevance.

A sneaker ad in a fitness blog feels relevant, regardless of whether it was served based on tracking cookies or contextual alignment. Conversely, a “personalized” ad in the wrong environment — like a luxury watch ad in a bargain-hunting forum — feels intrusive and out of place and devalues the brand.

Contextual advertising bypasses this confusion. By focusing on relevance rather than identity, it creates moments that feel natural and unobtrusive. It’s advertising that works with the consumer’s experience, not against it.

Why Contextual Advertising Is the Future

Contextual advertising isn’t just a solution to rising privacy concerns — it’s a smarter, more efficient way to advertise. Here’s why it’s the future:

1. Privacy-Safe: It respects consumer boundaries by eliminating the need for invasive tracking or personal data.
2. Cost-Effective: By reducing reliance on expensive identity-based infrastructure, it lowers CPMs and non-working media fees.
3. Creativity-Driven: It challenges brands to invest in better, more versatile creative that resonates across contexts.
4. Outcome-Focused: It aligns with the communication goals of the brand, delivering relevance without sacrificing brand integrity.

Most importantly, contextual advertising delivers what consumers truly want: ads that are timely, meaningful, and seamlessly integrated into their lives.

What’s Next

The current approach to advertising — obsessed with identity and personalization — has run its course. Contextual advertising represents a new way forward, one that’s simpler, more ethical, and more effective. It’s a strategy that allows brands to achieve better outcomes while respecting consumer privacy and driving demand for thoughtful creativity.

This isn’t just an incremental improvement; it’s a fundamental shift in how we think about advertising. By focusing on context rather than identity, we can deliver relevance in the moment, build trust with consumers, and grow brands in a way that’s sustainable for the long term.

In the next article, we’ll explore what this means for the future of adtech and which platforms are best positioned to lead the charge. Stay tuned for “The Identity Crisis: Adtech Winners in the Next Five Years.”