Kontext Secures $10M to Power Real-Time AI Chatbot Ads
Kontext, a startup specializing in real-time advertising within artificial intelligence interfaces, has successfully secured $10 million in seed funding. This capital injection is earmarked to scale its contextual ad platform, expand its engineering team, and venture into image-based advertising, according to founder Andrej Kiska.
Founded in 2023 and currently operating with a 13-person team, Kontext enables brands such as Amazon, Uber, and Canva to integrate ads directly into AI chatbots like Media Search, DeepAI, Pixel Chat, and Spicy Chat. Unlike static banner ads, Kontext’s advertisements appear as branded links situated just below chatbot responses. A distinctive feature is that each ad is dynamically generated in real time by the same large language model (LLM) that powers the ongoing conversation.
Kiska emphasizes that these ads are crafted to feel like natural extensions of the dialogue, leveraging the user’s specific query to create personalized ad copy on the fly. “Advertising is moving to a place where you are not going to have large marketing agencies building creatives, getting them approved, and showing the same ads for a million users,” Kiska stated. "It’s going to be the inverse of that where every ad is created for every user in that particular user session, tailored to be highly contextual and relevant without requiring any approvals.”
The $10 million funding round was led by M13, with significant participation from Torch Capital and Parable VC.
Kontext’s approach demonstrates tangible results, as detailed in a pitch deck shared with Adweek. One major generative AI application reportedly saw its average revenue per user (ARPU) increase from $0.24 to $0.40—a 66% uplift—after implementing Kontext’s ad-supported monetization. Furthermore, a pilot campaign with casual game developer Nimblebit for its mobile game Tiny Tower, utilizing text-only ads, achieved a 1.58% click-through rate (CTR) and a cost-per-install (CPI) under $2. This performance notably surpassed a concurrent Meta campaign by 24%, with Kontext reporting a $2.50 CPM (cost per mille) compared to Meta’s $7.35. The specific placement of these ads was not disclosed in the deck.
As AI chatbots and search engines increasingly become primary interfaces for information retrieval, Kiska contends that traditional ad formats are ill-suited. He argues, “Nobody wants to see an ugly, irrelevant banner stuck in the middle of a chat.” This perspective underscores Kontext’s core proposition: that ads can help offset the considerable inference costs associated with running sophisticated AI chatbots, particularly for the vast majority of users who access these services for free.
Kontext provides publishers with a monetization layer, retaining a 30% share of the ad revenue generated. The company structures its deals based on various performance models, including CPM, CPC (cost per click), or ROAS (return on ad spend). Kontext is not alone in this emerging market, facing competition from companies like ProRata and Perplexity, which are also developing ad products for AI search interfaces.