Red Herring, Tomio Geron, August 13, 2007

Startup Kontera, a provider of "in-text" advertsing, has closed a $10.3 million second round of financing from Carmel Ventures, Sequoia Capital, and Lehman Brothers.

Originally from Israel, San Francisco-based Kontera puts double-underlines under words that the company matches to contextually relevant ads. When a user scrolls over a highlighted word of phrase, a small AJAX window pops up with an ad inside. A user can then either click the ad to go to the advertiser´s web site or close the window.

Kontera says that the ads have higher click-through rates than standard banner or text ads . In July 2006, the company raised $7 million from Sequoia and Lehman.
The company targets web-based forums, user-generated content, blogs and user reviews. In April Kontera announced a deal with video search engine Pixsy to add images and videos to Kontera´s pop up ads.

While the Kontera technology may bring to mind the dreaded pop-up ad of years past, its technology is designed to be non-intrusive because the underlined links are easily recognizable as ads.

There is more acceptance now of Javascript-based AJAX technology that brings up small windows on pages than there was a few years ago, a company spokesman said. Other companies that use such technology range from Snap, a startup that pops up a preview window of a web site to which a link connects, to larger companies like Netflix—which use the technology to simply pop up information on movies.

Kontera’s technology processes text on the fly and determines which words on a page are “keywords.” It then matches the words with particular ads based on rankings and clickthrough rates. The “quality”-based rating system is something that Google has popularized.

Publishers who use Kontera include Britannica, Answerbag, AskTheBuilder, Hollywood Rag, Golf Links, and several Jupiter Media sites. Advertisers include Sun, Microsoft, Ask.com, Monster.com, and TechSmith. The company also has access to thousands of advertisers through a partnership with Yahoo.

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