This post is written more from the perspective of web users and advertisers, rather than publishers. I do run contextual ads on a few sites, but that doesn’t stop me from thinking they suck.

Everyone knows that contextual ads are an easy way to monetize a website. But if you step back for a second and look at the big picture, you may realize why the whole concept sucks. Here are my 2 main reasons:

1. The whole premise of contextual advertising is based on mistakes. I’d say 90% of all publishers are using the content networks to advertise by mistake. Either it was clicked by default when they set up their campaign, or they just don’t know what it means, either way most people are clueless that they are using it. Those who have actually tested running ads on content networks usually find the results to be terrible and switch it off immediately.

From the users end perspective, most of the time they are clicking on ads by mistake. These hapless web surfers click on well “blended” ads, totally unaware what they are doing. This leads to wasted clicks and bad ROI for the advertiser. It’s pretty obvious that someone actively searching for your keywords on a search network is going to yield a better return for advertisers than someone accidentally clicking on your ads in content.

Are there exceptions to all this? Of course. Some advertisers do OK on the content networks, and some users purposely click ads. But for the most part, I’d say these figures are pretty close.

2. By my estimates 90% of all the websites that contain contextual ads exists only because of the contextual ads. They serve no purpose in life other than enticing unsuspecting users into clicking on crappy ads. There was a time when people actually created sites with content or at least to promote a real business, but those are far outnumbered today by pointless junk sites. Overall contextual advertising has been led to a huge decrease in quality of the internet overall.

Is contextual advertising going anywhere? It’s hard to say. MSN is still going full speed ahead with their network. Google and Yahoo make huge profits off theirs. But with all the fraud running rampant and advertisers bailing out like rats from a sinking ship something is bound to happen. I foresee a big class action lawsuit shaking up the industry one of these days. Stay tuned.