A hierarchical category system for organizing and displaying electronic advertisements is disclosed. Each electronic advertisement is assigned one or more categories from a hierarchical categorization system. Similarly, each available advertisement placement location is also provided with a category from the hierarchical categorization, system. Then, when displaying advertisements, the system attempts to locate advertisements that have matching categorizations. When no matching advertisement with an exact matching categorization can be found, the system will attempt to locate an advertisement from a more specific (child) category that is a sub category of the current category. However, the advertisement from the more specific (child) category must specify the broader category within its own allowable fall-back path.