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GumGum's Ophir Tanz Spins Gold from Ads on Images Online

This story appears in the September 2011 issue of Entrepreneur. Subscribe »

When he was 13, Ophir Tanz decided he'd never be able to work for anyone else. By 15, he had started his first company, an interactive branding agency called Fluidesign, which he sold before heading off to college. After graduating from in 2004 with both bachelor's and master's degrees, a brief 10-month stint at the Bridgewater Associates hedge fund confirmed what he had long known: "It was a great salary, I learned a lot, but I just couldn't help myself," he says of his entrepreneurial leanings.

Now 29, Tanz runs , Calif.-based GumGum, a digital network that places targeted advertisements over pictures online. "Basically, we pioneered a way for publishers to make money through ads on images," he says.

GumGum claims to reach 110 million unique visitors per month and says its smoothly integrated, in-image ads are clicked on as much as 20 times more than traditional online spots. This has enticed premium publishers like Gannett, Time Warner, TMZ and Hearst to sign on with the network, which hosts big-name advertisers such as Sony, Jack in the Box and Curves.

Tanz came up with the idea in 2007, after realizing that photographs were the only juicy piece of web page real estate that hadn't been monetized. He spent the next year studying how images are displayed and figuring out how to reliably place ads on top of them.

In addition to employing image recognition and clustering techniques, GumGum's proprietary technology assigns contextual keywords to images by scanning the text on a page and analyzing incoming search traffic and metadata. The results allow advertisers to target keywords that will match their messages to the right audiences.

For example, American Apparel might target a youthful, hipster-leaning demographic with keywords such as "jeans" or "Zooey Deschanel." GumGum then places the fashion retailer's ads on related images across the sites of its publisher clients. The system is user-friendly: Much like , publishers embed a code that causes ads on the GumGum network to automatically appear on their web pages. (The publishers keep 60 percent of ad revenues.) On the other end, advertisers buy access to GumGum's network and target the most relevant images.

"In the beginning we had to knock down people's doors," Tanz says. Now, things are different. GumGum has raised $4 million in venture funding and attracted tech veterans like David Sacks (PayPal and Yammer), Michael Jones (Myspace) and Vince Thompson (AOL and Facebook) as advisors and board members. Tanz projects GumGum's 2011 annual run rate at, conservatively, $10 million. Later this year, GumGum will leap forward with an expansion effort and introduce a self-service platform, inspired by , which will allow businesses of any size to buy space across the network.

GumGum has never sought the media spotlight, but the company is on a hiring spree of late that includes a CFO and communications strategist. And Tanz is far more confident about drawing attention to his efforts.

"The communications piece hasn't always been important to us because we were bottom-line-focused and resource-strapped," he says, "and the story is always sort of shaky at the beginning."

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