Dive Brief:

• GumGum, the contextual advertising intelligence firm, secured a $75 million round of funding from Goldman Sachs, according to an announcement. The ad-tech company has raised $122 million in total and is now valued at nearly $700 million, roughly three times what it was worth just two years ago, sources told The Wall Street Journal.
• The fresh investment — GumGum's largest to date — will be used to pursue an "aggressive" mergers and acquisitions strategy, a spokesperson said, while expanding reach in international markets. Founded in 2008, GumGum develops solutions using natural language processing and computer vision that help marketers place ads on display, native and digital video channels, including over-the-top (OTT) TV.
• Interest in contextual targeting continues to climb as marketers scramble to find a replacement for the third-party cookie, a bedrock of online ad-targeting that will be largely deprecated before the year's end due to policy changes enacted by Google.

Dive Insight:

GumGum receiving a fresh round of funding from Goldman Sachs speaks to how investments in the ad-tech category, particularly areas like contextual targeting, are heating up ahead of the death of third-party cookies. Changes to mainstay ad-targeting tools, combined with the broader shift of media dollars toward digital channels like OTT and connected TV due to the pandemic, are leading more marketers to adopt solutions like what GumGum has to offer. The firm currently works with over 100 major brand clients and 1,200 publishers at the global level.

"Cookies are being phased out and consumer privacy regulations are becoming more stringent," Allison Berardo, vice president of Goldman Sachs Growth, said in a press statement. "We believe GumGum is well positioned to benefit from this market dynamic as its contextual technology offers an alternative for brands to deliver relevant and targeted advertising."

At the same time, the pandemic has created a bigger appetite for M&A as businesses fortified by the health crisis look to shore up their strengths, including by snapping up smaller rivals. GumGum clearly sees an opportunity to grow more acquisitive in the months ahead. As part of the funding round, Holger Staude, managing director of Goldman Sachs Growth, will join GumGum's board of directors.

GumGum has gone through some adjustments to weather the COVID-19 crisis. Last April, it laid off 25% of employees in its sports and advertising divisions most heavily impacted by the pandemic, per Business Insider. Just two months prior, it had secured $22 million in Series D funding.

While GumGum appears to be among the pandemic's ad-tech winners one year later, contextual targeting is an increasingly crowded field, as the tactic is viewed as one of the more viable cookie alternatives. However, it's a sector experiencing its own growing pains and one that is not as standardized as the cookie. A report in Digiday this week revealed some publishers are feeling overwhelmed by the influx in pitches they receive from vendors about contextual targeting solutions.