Contextual advertising is an online marketing method that generates and displays advertisements based on the content of a web page or the keywords typed into a search engine text box. It has garnered a great deal of marketing attention lately since it is one of the most targeted forms of advertising possible. By limiting advertisements that are displayed only to those related to the web site topic or search engine query, this ensures that the advertisements that are displayed are likely to be of interest to the web surfer who is exposed to them.

Contextual advertising is a good option for both merchants and web masters. Merchants like it because they get a greater return on their marketing investment since the ad is only seen by people who are likely to be interested in their product and therefore more likely to actually make a purchase. Web masters enjoy this type of advertising because it allows them to earn income on each and every web site that they maintain. Many websites that contain contextual advertising are hobbyist web sites that were not created for commercial reasons. Hosting contextual ads allows the web master to recoup his or her expenses and perhaps even make a profit from the web site. It also allows web masters to migrate from subscription based sites to free web sites.

This type of advertising really reached the big time when internet heavyweight Google created its Google AdSense contextual marketing service. Google AdSense utilizes Google's highly advanced search engine technology to serve up advertisements that take into account not only the content of the web page but information such as the user's location. For example, a web browser from Germany might see advertisements in German touting German products, whereas an American user will see ads in English that are directed at an American public. In fact, Google's advertising program can even regionalize down to the city that the user is in. Never before has internet marketing been able to achieve this level of directness and consumer focus. It has achieved one of the erstwhile holy grails of online marketing--the ability to bring local offerings to the user and finally mesh local communities with the greater online universe.

Contextual advertising is one of the fastest growing online marketing methods. As consumers continue to do more and more of their shopping online we can expect more merchants to compete for their attention. This means that this advertising is likely to continue to gain strength as a major method of advertising. The targeted and direct nature make it a very popular choice with merchants who are looking to squeeze the most value out of their marketing dollars.