(n.) Advertising on a website that is targeted to the specific individual who is visiting the Web site. A contextual ad system scans the text of a Web site for keywords and returns ads to the Web page based on what the user is viewing, either through ads placed on the page or pop-up ads. For example, if the user is viewing a site about sports, and the site uses contextual advertising, the user might see ads for sports-related companies, such as memorabilia dealers or ticket sellers. Contextual advertising also is used by search engines to display ads on their search results pages based on what word(s) the users has searched for.
Contextual advertising has attracted some controversy through the use of techniques such as third-party hyperlinking, where a third party installs software onto a user's computer that interacts with the browser by turning keywords on a Web page into links that lead to advertisers that are not paying the Web site to advertise on its pages.
A contextual ad is the advertisement that dynamically appears on a Web site.
See "How Affiliate Marketing Works" in the "Did You Know..." section of Webopedia.
Also see Refer-It.com, a directory of referral & affiliate programs for e-commerce, featuring information on over 6,500 affiliate programs.