Contextual advertising company GumGum raises $22M

Anthony Ha

GumGum is announcing that it's raised $22 million from existing investors Morgan Stanley Expansion Capital, NEA spinout NewView Capital and Upfront Ventures. CEO Phil Schraeder said he'll use the funds to pursue a more aggressive acquisition strategy.

This Series D comes nearly five years after GumGum raised a $26 million Series C. Schraeder told me the company's "core business has been profitable for years," and that GumGum now has the ability to turn profitability "on or off" depending on how quickly it wants to grow.

"We have historically not done M&A or acquisitions — those are going to be part of what we do going forward," he said. "We have built an amazing, strong, profitable balance sheet and team and presence in-market that we want to accelerate and grow."

Schraeder has been at GumGum for nearly a decade, starting out as vice president of finance before becoming COO, CFO and president. After co-founder Ophir Tanz stepped down last year to run the company's dental industry-focused spinout Pearl, Schraeder finally became CEO.

Based in Santa Monica, Calif., GumGum was founded in 2008. The team developed computer vision technology that could identify the content of an image and then place an appropriate ad alongside the picture.

This is the core business that Schraeder was referring to, which he said GumGum has used as a "foundation" to expand into new areas like sports sponsorships and in-video advertising. The in-video unit has already been tested with Sprint and other brands, with a broader launch scheduled for the second quarter of this year.

GumGum demo

The company also recently launched Verity for Publishers, which the company says uses both natural language processing and computer vision to analyze the content of a page to ensure that it's brand-safe and relevant for advertisers.

Schraeder said that even here, GumGum's foundation in image analysis remains important, because simple keyword detection won't cut it. For example, photos help Verity determine that a "shooting" story is about basketball rather than a violent tragedy. GumGum plans to launch a similar product for advertisers, called Verity for Brands, later this year.

Schraeder argued that this kind of contextual understanding of online content will become increasingly important to advertisers, particularly as cookies become less and less useful as a way to track and target consumers.

"For the industry, this is what’s going to help us — better user experiences leveraging the context on the page, integrated advertising that brings back the positive view of advertising," he said.

The company is also announcing that it has appointed Lisa Licht to its board of directors. Licht was formerly the CMO at Live Nation Entertainment and now runs a consultancy that works with AllBright, Illumination Animation, the Metrograph and Exploding Kitten.

"As I see it, this is the ideal time to get behind GumGum,” Licht said in a statement. “They have outpaced the market in terms of growth year-after-year, maintained profitability and now there’s an obvious inflection point at hand for contextual advertising in digital. That’s an area where GumGum already has a significant edge, so I’m looking forward to helping expand its lead in that area, while also contributing to success across the full breadth of GumGum’s business.”

Pearl, the healthcare spinout from LA-based AI startup, GumGum, raises $11 million