Why was contextual advertising superior? The economics of behavioral targeting don't make any sense. The benefits are clear for advertisers, but not for audiences. Since behavioral targeting imposes greater costs on users (cost of privacy loss, cost of lost attention from more invasive ads) than contextual targeting does, it must offer audiences greater gains as well.

How could it do this? Well, the most straightforward way is to push ads that consumers want to see. Unfortunately, behavioral targeting can only be marginally better (if that) at this than contextual targeting can. Assuming behavioral targeting can't offer consumers gains, consumers have great incentives to disable behavioral tracking systems - and they do. What this, in turn, means, is that behavioral targeters have the incentive to hide their actions from consumers - it's a classic case of moral hazard. This is how adware/spyware emerged.

So contextual targeting has, and I think will continue to, be more efficient at advertising to consumers the stuff they're searching for.

What this means is that behavioral targeting will continue to stay locked into the (profitable) niches that it's been successful in: serving ads in places where consumers spend a lot of time (and so can be costlessly tracked). Think NYT. In other words, behavioral targeting will pick up where contextual targeting stops. You search for 'Ferrari Dino' (and see contextual ads), and then visit a car review site (and see behavioral ads). This is the thinking behind the funding of plays like Revenue Science from fairly heavy hitters.

source: http://www.bubblegeneration.com/2005/04/advertising-2.cfm

This allows profile-based targeting, which I think has the potential to be the aforementioned disruptive tech - it can be superior to both behavioral and contextual targeting on value-driving attributes, but inferior in others.

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