Yahoo gave the example of someone online shopping for boots being shown an ad for something completely unrelated because no advertisements for footwear were available in inventory.
"If you see an ad for boots, that's instantly going to pique your attention more than an ad for, say, a car battery," Yahoo! said.
"That's better for users. This is why contextual advertising is such a powerful tool."
Separately, Google on Wednesday announced Enhanced Campaigns, which will allow businesses to run a single advertisement campaign across multiple devices. Google said businesses will be able to advertise their products and services simultaneously across both mobile and desktop and target people in certain locations or at certain times of the day.
The changes to Google's search advertising network are expected to be completed by the middle of this year.