Contextual Marketing Firm To Sell Straight To Publishers

This morning, contextual marketing firm ContextWeb is expected to unveil ContextAd, a real-time contextual marketing product that it will begin selling to publishers directly, rather than through distribution partners.

ContextAd instantly analyzes Web pages and then matches ads based on the content it scans in around 20 milliseconds, according to the company. And, because it does so in real-time, ContextWeb can deliver new ads as sites are updated. Other products--especially those powered by large search engines like Google's AdSense--don't have this capability.

ContextWeb's decision to move into the media business came about after the company received venture capital funding from Draper Fisher Jurvetson (DFJ) Gotham Ventures, DFJ New England, and DFJ California. In prior deals, ContextWeb licensed its contextual advertising technology to the ad networks FindWhat, ContextualNet, Fastclick, Tribal Fusion, and MaxWorldwide.

JupiterResearch Associate Analyst Nate Elliott likes the move. "In a good market," he said, "there's always more money in media than in the tech business." However, he noted that it will be tough for ContextWeb, because there are already several established media players. But in the contextual marketing space, Elliot said "advertisers aren't exactly thrilled with what's out there--there is definitely room for improvement."

ContextAd matches a Web page's content as well as keywords to place ads on the page. Janice McCallum, senior analyst for research and advisory firm Shore Communications, said the process of using both content and keywords to analyze and match ads to Web pages ensures greater matching accuracy than simply using keywords. She said advertisers get "the best of both worlds" by combining keyword and content analysis, thus improving relevance.

After ContextAd's crawler scans a page, the page is indexed by all the keywords advertisers have expressed interest in purchasing. The indexed keywords are then matched by ContextWeb's advertiser database, and the cross-section is ranked by relevance, past performance, and bid price.

The most relevant, granular, and best-performing ads receive top placement. With ContextAd, advertisers buy "buckets of keywords" that place them into a given category, for which they set their minimum and maximum bid price. These "buckets" consist of level 1 to level 3 keywords. Level 1 keywords define the category, and level 2 and 3 keywords are increasingly granular. For example, "cars" would be a level 1 keyword, while "car mechanic" would be a level 3.

Based on their category buy, ContextAd performs and optimizes their keyword buys for them. Advertisers can also manage their individual keyword buys on their own. ContextWeb CEO Anand Subramanian noted that with this format, a winning bid doesn't necessarily have the highest cost-per-click; he said that relevance and then past performance are more important.

Initially, ContextWeb will only be selling text ads, available in all IAB formats. The company plans to unveil IAB standard graphical ads in the coming months. A company spokeswoman said that ContextWeb has no publishers to announce at this time, but will do so within 90 days, along with new product upgrades.

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