Contextual Advertising is a program in which advertisers’ paid listing appears on web sites containing content relevant to the listings. It’s another method of distributing paid listings by search engines as opposed to the traditional means of inserting them into search results. In traditional search, advertisers choose relevant keywords and then bid on them.
Searchers enter queries, and if the advertiser has chosen that keyword, then the ad is shown. This creates a one to one matching which is straightforward to monitor and optimize. This process is different for the contextual advertising. Here, the engine analyzes advertiser’s entire keyword list and ad text in an ad group, assigns a theme to that ad group and then matches this theme to sites in its network.