Quigo announced yesterday it closed a $5 million round of venture funding as the New York search startup prepares to take on Google in the contextual advertising market.
Highland Capital Partners led the funding, Quigo’s first infusion of institutional capital. Lycos founder Bob Davis, now a partner at Highland Capital, will join Quigo’s board of directors.
Quigo said it would use the funding to further develop its two search products: FeedPoint, an automated system that analyzes Web pages and suggests keywords, titles and descriptions for use in search marketing; and AdSonar, a contextual advertising system for displaying paid listings on Web pages.
Michael Yavonditte, Quigo’s chief executive, said he expects to officially release AdSonar in April. It will compete for publishers and advertisers with Google’s AdSense, Kanoodle’s Context Target and Overture’s Content Match.
“We’ve had thousands of inquiries,” he said.
Google mostly dominates the nascent contextual listings market, which displays paid listings related to a Web page’s content. Investment bank U.S. Bancorp Piper Jaffray estimates contextual advertising will generate $100 million this year, growing to $1.4 billion by 2008.
Thanks to its head start in the market, Google listings are on thousands of Web sites, from prominent ones like NYTimes.com to Web logs.
Kanoodle launched a competitive offering in December after hiring executives from Sprinks, which Google bought and shut down last fall, and securing more than $10 million in venture backing. Context Target listings are displayed on CBS MarketWatch. Overture displays its Content Match listings on parent company Yahoo’s network and parts of MSN.
Yavonditte said he is undaunted by the competition’s products. “We do think, on a generic level, the relevancy that we see out in the marketplace can be a lot better,” he said.