Kontera, an Israel-based startup (officially headquartered in San Francisco), is raising $10.3 Million second round from Sequoia and other investors. It seems that the ad networksР’В online are very hot these past months after the major acquisitions done by Google, Microsoft, AOL and others.

A year ago they raised $7 million from Sequoia Capital and Lehman Brothers. Tomorrow they’ll announce a second round of financing - $10.3 million more from Carmel Ventures, an Israeli venture firm. Sequoia and Lehman are also reported as participants . Kontera’s main product is in-text advertising. They’ll take popular keywords within the text of an article and put double lines below them to signify it’s an advertisement. Clicking on it generates cash for the publisher. A demo of the product is here. In the press release a customer claims to be seeing 10% click through rates from the ads.

The same product is also in full exploitation by Vibrant MediaР’В since many years. Vibrant Media, in many aspects, appears bigger player than Kontera. Another serious player on the contextual arena is LinkedWords.com, a contextual platform, where the focus is on in-text contextual linksР’В (linked words) that meaningfully connect one content area to another on very relevant way helping that way the small to mid level web sites drive targeted traffic to each other. Since it is free the chances of success behind LinkedWords.com’s concept seem higher to us. Once they reach the critical mass of contextually linked words around web nothing stops them to start serving contextual ads on these words totally avoiding the annoying JavaScript based mouse over pop-up messages that both Kontera and Vibrant Media employ and rely on.