Are contextual advertisements effective?

The internet environment has changed the format of internet advertising. One emerging form of online marketing communication is 'contextual advertising', in which marketers strive to develop customised images or texts more relevant to customers based on the content of web pages. This study investigates the effectiveness of internet contextual ads. In particular, we examine the effect of internet contextual ads on brand memory (i.e. recall and recognition) and attitudes towards the advertisement and/or brand using the theory of priming effect. We find that the complexity of banner ads moderates the relationship between a contextual advertisement and its effectiveness, and generates two distinct priming effects (i.e. assimilation and contrast effects). The results demonstrate that the internet contextual advertisement enhances brand recognition and induces favourable attitudes towards the ad. In addition, consumers have higher recall rates and attitudes towards the brand when they are exposed to a less complex contextual advertisement or when they are exposed to a complex, non-contextual advertisement.