Goldman Sachs’s $75m vote of confidence in GumGum’s contextual ad analysis product – a product that’s been baking since 2008 – suggests the market believes context may once again be king. The Drum catches up with the adtech company’s EMEA managing director, Peter Wallace, to find out how recent rumbles around privacy, identity and third-party cookies have uplifted the firm, while also inspiring pretenders to the throne.
On Tuesday, April 13, GumGum announced a $75m investment from finance giant Goldman Sachs, bringing its overall raised funds to $122m. The Santa Monica adtech company works with 100 brands and 1,200 publishers around the world, but will use the capital for international expansion and to acquire like-minded businesses with something to offer, likely in huge-growth spaces such as OTT and CTV.
The Wall Street Journal believes the company has tripled in value to $700m since 2019, as marketers get to grips with the notion that advertising targeted at the individual is threatened by the rising tides of privacy regulation and consumer awareness.
So, what does GumGum do?
Over the years, GumGum has spun out numerous business threads, including one that analyzes teeth and another that identifies and values branded impressions in sports across social and beyond. With the sharp focus that comes with capitol investment, GumGum is streamlining to concentrate on reading and understanding – and sometimes serving – an ad on a page by analyzing it on a domain, URL and content level. As an extra flex, it says it can do audio, images and videos.
“Using a combination of image recognition, sentiment analysis and natural language processing to do contextual analysis gives us a human-level understanding what’s on the page,“ says Wallace. “We then typically deliver custom-built brand creative or video that’s contextually relevant to the page. It doesn’t use any personal identifiable information, it isn’t unnerving to the user and doesn’t tread any fine lines from a compliance perspective.”
GumGum says it participates in more than 100bn ad auctions and contextualizes some 50m pages and videos a day. It wants to do more.
Without third-party user data, which has been described as the oxygen of the web, marketers must know what’s on a page and infer who’ll read it. It could be as simple as identifying that people who read tips for raising a family in a well-respected publication might want to buy a family-suitable vehicle (which is what GumGum has done with Mini).
The same technology is also used to ensure brand safety and suitability on partners’ media buys across the web. This application dominates contextual advertising discussion as the blame for demonetizing huge swathes of media shifts from accusations of dumb tools to lazy implementation. Contextual tools will grow with renewed interest and investment.
Wallace believes that contextual advertising has “sprung up” as a solution to the demise of the third-party cookie. It’s compliant, accurate and can deliver at scale. But there’s a problem. “Every single adtech vendor and every single media solution says they can do it. It’s really annoying. We’ve been here doing this for 12 years.”
There’s no third-party body verifying claims about contextual solutions, like the IAB in the wider adtech space. “Somebody can pop up tomorrow and say they’re targeting based on whatever – it’s smoke and mirror sales.”
Instead, what’s often on offer is basic keyword analysis, which has its flaws – such as football reports that include the word ‘shoot’ being denied ads because advertisers don’t want to appear next to stories about gun crime, for example.
“As an industry, we need to get to grips with what people are actually providing. What’s actually under the hood?”
Wallace is calling for validation of claims, keen for a chance to demonstrate that his tech is superior to many crowding the space.
So will GumGum’s approach stick? It recently published a study with Dentsu Aegis Network claiming that ’contextual targeting is more cost-efficient than behaviorally targeted campaigns’. It also claimed that its solution, Verity, placed ads in relevant contexts with nearly twice the accuracy of the other leading contextual intelligence solutions tested.
For many marketers, contextual buying will require a new way of thinking.
“Our SSP sits on top of our tech stack and delivers a PMP that has data overlaid on top of it, pre-agreed with the client. There are maybe three contextual solutions that sit natively within DSPs as either a contract or pre bid contextual solution or a brand safety solution – there’s been pretty much no new integrations of contextual solutions into DSPs for years.”
If the rush is real, that’ll change. “If this is going to be the targeting methodology that drives the industry, platforms need to start opening themselves up to new technology.”
But what do the publishers get for affording access to their audiences through Verity? Wallace says the leading solutions will have to offer them the ability to contextualize their own pages and help add value. The more that join, the bigger audiences and more environments it can offer.
The solutions are eyeing up over-the-top (OTT) and connected TV (CTV) spend. “How are you going to do that without any sort of form of image and audio-based analysis?” he asks. “They’ll need this tech.”
Acquisitions are ahead for GumGum. OTT and CTV pique its interest. In-game advertising is another possible application down the line. International expansion is also on the horizon.
“We’re looking for businesses that complement what we’re doing from a product standpoint and that give us entry into areas we don’t have exposure to at the moment.”
Wallace, urged to make some final predictions about the adtech space, says he has his “fingers crossed” that the UK’s competition and markets authority has a “massive crackdown” on the walled gardens – which, he says, are engineering the shift from the third-party cookie “in a way that’s hugely profitable for their own individual businesses and screwing over the small guys“.
Standard ad formats such as the mid-page unit (MPU) have had their day, he says – “no one looks at them” and there will be an “explosion” of contextual-based businesses before a consolidation. We may hear about GumGum chewing up some of these new entrants in the near future...