Contextual advertising is one of several techniques by which a webmaster of a content-based Web site, such as a news site, can advertise online and reach a targeted audience. In this type of advertising the ads seen on a web page are dependant upon its content, and are chosen and served by an automated system instead of the usual media planning section.

The first major contextual advertising program was initiated by Google Adsense although there are other programs from Yahoo, Publisher Network, and Microsoft ad Center to name a few. Webmasters are provided with a javascript code that is inserted into the relevant web pages after which the pertinent ads from the program’s list of advertisements are exhibited.

A contextual advertisement can be either visual as in banner ads or as a text as with pay per click. As with Pay per Click, the cost of text based contextual ads is dependant upon performance.

The system initially looks for the keywords in the website’s text and the advertisements it then displays are based on this text. The ads may either appear as pop ups or be displayed as in-text ads on the page itself, usually on the right side of the page as "Sponsored Links."  They may also appear as inline contextual ads when advertisers willing to pay more per click have their ads displayed at the top of a Web page.

Inline and  in text contextual ads are usually preferred because they are not as intrusive as a popup ad can be and being user activated thus permit a user to decide  on whether he or she wishes to view it or not.

Should you decide to use contextual advertising for your site do your homework and select one with your users in mind. Then consider whether your competitor’s contextual ads will be appearing on your pages and select a program that allows you to control which ads appear on them. Be smart; make contextual advertising work for you.