What is Contextual Commerce and Why Does It Matter for CPG Brands?

As the backbone of behavioral advertising shifts with the tightening of data privacy laws and emerging retail media networks build walled gardens around valuable purchase data, CPG brands are navigating a complex digital landscape. Marketers are left questioning where advertising dollars should be strategically allocated and where their high-intent shoppers can be found online. With retail ecommerce sales projected to reach $5.4 billion this year, how can CPG brands cut through the noise?

Contextual commerce offers a solution. The concept of contextual commerce is simple: By positioning commerce-enabled media within the right context, i.e. where shoppers are already browsing online, brands can create a seamless path to purchase — but what does this really look like?

A New Context for CPG Brands

For the grocery industry, the most contextual — i.e. highly relevant — environment was historically brick-and-mortar stores, as end-cap displays mere feet from the checkout line were the epitome of a low-funnel tactic. But why is contextual commerce reaching peak potential now? 

With the rise of digital and the endurance of a global pandemic, consumers have adopted omnichannel shopping behaviors that have dramatically shifted the digital path to purchase. With increased trust and habitual usage of food blogs and large online publishers for meal inspiration, CPG brands have a new opportunity to leverage contextual advertising beyond the store for the first time.

Used by 9 out of 10 consumers, digital recipes offer the perfect context to drive online grocery purchase decisions outside of the retail environment. Consumers use recipes to meal plan, build shopping lists, discover new products and more. Brands that advertise within digital recipes, therefore, reach high-intent, head-of-household shoppers planning their weekly grocery trips. Brands can take these contextual media solutions a step further by enabling shoppability, turning a shopper’s ‘aha’ moment into a brand's add-to-cart opportunity.

From Behavioral to Contextual Advertising

Brands that develop a contextual commerce strategy will discover how contextual targeting can complement their omnichannel marketing efforts. For CPG marketers, contextual commerce is the layer between highly targeted, on-platform retail media and broad programmatic advertising. 

Unlike traditional behavioral tactics, which rely on buying specific audiences and demographics that are dependent on third-party cookies, contextual advertising is built on buying keywords and placing ad units within or alongside relevant content. In short, it’s the difference between a poultry brand targeting a 40-year-old man who once purchased chicken while he’s reading the news and reaching him at the moment he is browsing for easy weeknight dinners.

“Contextual targeting is the ideal opportunity to influence what and where consumers purchase when they’re in the purchase moment, and enables shopper marketers to reach the consumer pre-retailer with priority messaging when they’re still in product discovery mode.” - Joey Petracca, COO and Co-Founder of Chicory (Retail Touchpoints)

This contextual layer is vital. According to Epsilon, 88% of shoppers were only reachable off-site because those people simply didn’t visit the retailer’s site.

Chicory investigated further in a recent survey and discovered that, of shoppers who had not visited the retailer’s website or app in the last 60 days, 57% did their meal planning online, but not on the retailer’s platforms. Contextual targeting enables CPG brands to reach that 57% and to extend their reach beyond the boundaries of the retailer.com, unlocking the untapped layer where consumers are primed for considering future grocery purchases. 

Let Commerce Commence

Transforming this moment of consideration into an opportunity to be added to cart is the beauty of contextual commerce. By layering shoppable technology that’s directly integrated with retailers onto contextual media, brands can secure a spot in the digital cart with just one click. 

This type of highly relevant shoppable advertising is an exciting development for our industry, as grocery items, particularly fresh products, are a less natural add to digital carts than, say, a sweater. Contextual commerce makes this strategy actionable for marketers by allowing them to contextualize those items for a shopper. For example, including ground beef within a shoppable ad unit that also includes hamburger buns, ketchup and American cheese during the summer months. 

When CPG brands activate in the right context, they are able to reach and delight consumers — instead of cluttering their browsers with irrelevant ads — to make a big impact. The numbers don’t lie: in-recipe ad units experience engagement rates 200%+ higher than standard display units. From that moment on, CPG sales and customer lifetime value only grow by leveraging the power of contextual commerce.

If you’re ready to future-proof your brand’s marketing plan, give us a shout. Chicory’s contextual commerce approach combines contextual advertising with shoppable tech— driving sales for the world’s leading CPG brands and retailers.