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While these days everyone is obsessed with online video and video monetization, text remains the most common form of content on the web and still represents the largest advertising opportunity.

When it comes to monetization of text, we have experienced a slow evolution: at first there were banners – Yahoo was king. Then, Google introduced sponsored listings and “adorned’ every corner of the web. Today, In-text or in-content advertising is the new frontier. Rather than taking real estate from the page with massive graphics or piles of ads, this new model of advertising leverages the existing content on the site by embedding ads in words, in the form of “non-obtrusive and informational” links, mostly recognized by a double underline.

Amongst the contenders for the crown of in-text advertising is Israel’s Kontera. Michael Eisenberg of Benchmark Israel had listed Kontera as one of the top 10 most valuable internet startup, so my curiosity was sparked when the company contacted me (through their diligent PR agency) and asked me to take a closer look at the Kontera’s technology.

Kontera’s Background

yoav shahamKontera was founded by CEO Yoav Shaham in 2003. The company raised about $17 million in two rounds in the past couple of years. Main backers are Sequoia, Carmel and Lehman Brothers.

Kontera’s  patent- pending contextual analysis technology offers web site owners a JavaScript tag to include in the code of their pages, allowing it to analyze content in real time and pick out links judged to be the most appropriate keywords for advertising.

What’s the latest with Kontera?

A short research reveals that Kontera has been focused hard on distribution:We covered Kontera’s recent partnership with LinkedIn a few months ago.  In May the company released a controversial WordPress plugin, followed by a one-click Blogger plugin in June.

Most recently,  Kontera launched Hybrid, a customizable, In-Text media layer that enables publishers to place links to related content next to an ad within one In-Text unit.

You can see sample integrations of Kontera Hybrid here:

http://www.motorauthority.com/cars/audi/audi-modular-design-to-spawn-next-gen-vw-phaeton-bentley-continental-gt-and-arnage

Or here: http://www.mensfitness.com/fitness/136

The company reports that so far, while typical online ads are generating click-through rates between

0.05 -0.5%, Kontera is seeing the following results for Hybrid:

a. 20 – 30% user engagement rate – more than 1 in 5 users who mouse over a highlighted link for Kontera‘s new Hybrid unit are clicking on one of the links

b. 3.5 – 5%  CTR (click through rate). So basically, an average of 4% of users who get to a page with the Hybrid unit click on one of the links

c. 2.5 – 4% increase in page views for publishers running Kontera‘s new Hybrid unit, which translates into an incremental increase in ad revenue

While I don’t fully understand where the increased page views are coming from, these numbers are pretty good, compared to a Google Adsense integration. When was the last time that you have clicked on a Google ad and bough something?

UPDATE: I got a clarification from Kontera on the increased page views:

The increase in page views comes from the fact that users who click on links to related content from the same publisher in the Hybrid unit. For example, with the Hybrid units on Men’s Fitness, the links to related content are links to other articles deemed contextually relevant according to Kontera’s textual analysis technology from Men’s Fitness.com. It is these clicks which generate the increase in page views.

In Text Advertising – Competition

This is one of the main challenges for Kontera, but the market is big enough to share and still be profitable. Below the players in the in-line advertising field:

Vibrant Media – the largest provider of in content ads, directly competes with Kontera with Vibrant Resource, a mouse-over window that contains search, related info, company information, maps, video, images and articles. The company is currently shifting its focus mainly to video.

Triggit -  this new and promising San Francisco based startup requires no code embedding whatsoever. Instead, site owners can easily call a dhtml toolbar to easily mark words in the post and assign ads to them. Click trhough rate must be high too, because the ads are not differentiated from the regular links.

Chitika | Linx – Still in beta, the company behind ‘mini malls’ is tapping their large existing user base to grow market share by matching products to the text mentioned in the body of a post.

Doclix - Another Israeli startup founded by Oded Itzhak, one of Quigo’s co-founders. Doclix provides in text advertisements with related content, tag clouds, etc. I couldn’t get it to work with Firefox 3.

SnapShots Engage - Snap was first introduced as a ‘binoculars’ tool, but is quickly moving into the advertising space by surfacing bubbles of related content and tag clouds. I’ve tried SnapShots on VC Cafe until recently and saw disappointing results – increased load time for pages and lack of any sort of reporting made me turn the service off. That said, the team was helpful in setting things up and there are many options for customization.

AdBrite Inline Ads – In comparison to other solutions, AdBrite’s Inline Ads provide less control for the user. 8 words are selected automatically (probably according to CPM).

Adbrite inline

PredictAd – Not exactly an In-text advertiser, but this Israeli third-party autocomplete service helps monetize search suggestions, by matching products to a user’s query while typing. I encourage you to try the their Demo.

In summary

Kontera is well funded and positioned to lead the in-text advertising play but the open questions will remain competition and most importantly: user adoption, currently an uphill battle for these companies in general.

As stated by the web usability guru Jacob Nielsen:

One of misery design’s most insidious recent examples is the idea of embedding links to advertising on the actual words of an article using a service like IntelliTxt. By sullying the very concept of navigation, such ads not only damage the user experience on the host site, they poison the well for all websites. Such links make users even less likely to navigate sites, and more likely to turn to trusted search engines to guide them to the next page.

If we omitted anyone from the list, please add the missing companies to the comments.

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Eze Vidra

Head of Google for Entrepreneurs Europe and Campus London at Google
Eze is the Head of Google for Entrepreneurs Europe and Campus London. In 2005, he started VC Cafe to shine a spotlight on startups and Venture Capital in Israel, and in 2012, Eze founded Techbikers, a non-for-profit that supports education through cycling challenges for techies.
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