Koah: $5 million to invest in conversational AI Firm Description Koah is a startup creating ad infrastructure for AI applications It wants to turn conversational interfaces into lucrative revenue engines Milestone The investment, which comprised the following investors: +Jeff Johnson /Member; JLL Technologies Investments /Lead; and Liquid 2 VC, was at Series Seed stage Start.ai/Initial VADulations AI: 3/18/2019 Articles/Links: sof.Vio1 AI < Source: ABSTRACT Author: Marcel Hinze, Business AI < Editor: Kate Bradberry, Read Length: 16.4 minutes Members on record: Jeff Johnson /Member and Investor in Koah TECHNOLOGIES BASED ON AI AND BEHAVIORAL SCIENCE AI-MARKETING INCLUDING BUSINESS INTELLIGENCE AND PRESCRIPTIVE AI.ML SOFTWARE THAT IDENTIFIES CONSUMER PERSONAS, PREDICTS BEHAVIOR AND IMPROVE CAMPAIGN PERFORMANCE.GENERIC DESCRIPTION The company has patented what they call A.ITONIO CONVERSATIONAL AD SERVICE and claims it can Interconnect people, content and brands. The round was led by Forerunner with participation from South Park Commons and AppLovin co-founder Andrew Karam, who believe Koah can make ads feel as native to the AI chats as a just-in-place banner to the mobile screen.
Why AI apps are getting ads now
Originally, consumer AI products were propped up by subscriptions, which sold to prosumers, and that worked in the early days when consumer audiences were smaller and confined to wealthier markets. But with usage quickly spreading around the world, many AI apps encounter a tougher equation: users who won’t pay a monthly fee, plus inference costs that don’t easily shrink to match. Developers require a second engine for revenue, and history suggests advertising will be the one to fill the void — just as it did in search, social and mobile.
Koah is betting that the power of conversation unlocks a new type of ad unit. Instead of grown-up placements, its pitch is for intent: capturing the moment when a user asks for help and pairing that with a specific, clearly labeled offer. The company is still not putting ads on interfaces owned by models in the foundation; it’s concentrating on a long tail of AI apps built on large models, including those that are serving users outside of the United States where converting to subscriptions is more difficult.
How Koah’s conversational ads operate
“With The Koah SDK, sponsored messages are delivered when they are contextually relevant in a chat, are labeled as ‘sponsored’ and are designed so they read more like a helpful recommendation, and less like a jarring interruption.” If a user requests a startup hiring plan, for example, the interface could display an Upwork offer to hire pre-checked freelancers. Want help with study plans and maybe next up will be a promotion for Skillshare.
The company is already live inside products like AI assistant Luzia, parenting app Heal, student research service Liner, and creative site DeepAI. Early advertiser types cover work marketplaces and educational providers and health services—areas in which conversational intent and immediate next actions are a great match.
Early data and what they indicate
Koah claims its placements are four to five times more effective than standard mobile ad units found in chat interfaces — about 7.5% of users click on ads on Koah, on average, through the company, and some partners take in up to $10,000 in their first month with the company. Perhaps most importantly, Koah says that it is seeing far less of a negative impact on session length than, say, display-style ads, and adds that in fact Koah’s aim is the opposite: make the assistant more useful in the moment when a user is looking for a solution.
In funnel terms, click-to-message or conversational ads could be thought of as a middle-of-journey tool. Just ask the Facebook chatbot operators themselves: People do not close deals inside of a chatbot; they want to research and compare, and then go off to search or a merchant site to purchase. The thing Koah needs is to provide the ability for brands to hone in on that the commercial intent accurately — through deep links, prefilled lead flows, even contextualized calls to action — without turning the exchange into a sales pitch that ruins the experience.
A monetization layer for the AI long tail
Legacy mobile ad networks have been tested in AI interfaces by numerous developers, only to encounter poor fit and low returns. Koah is selling itself as being purpose-built for conversational UX: pacing that respects how people take turns talking, natural-language creative that reflects the assistant’s tone, and controls that let publishers decide when ads are allowed to appear. For consumer in-vestors like Forerunner, whose investments have included category-defining commerce and consumer platforms, the thesis is pretty simple: Subscriptions won’t be enough to take consumer AI mainstream, and a native ad layer will be mission criti-cal.
There is real execution risk. Measure and attribution are more difficult when the recommendations occur in free-flowing conversation. Brand safety and hallucinations necessitate tight guardrails so that offers do not appear next to misleading or sensitive content. Expectations around privacy are on the rise, and any contextual targeting has to be clear and compliant. And platform dependence is an up\-coming issue: if the biggest model providers want to run their own ad networks, indies will rely on better performance and tooling to demonstrate value.
Where the new money goes
Koah wants to grow its SDKs, measurement stack, and policy controls, while growing both sides of its marketplace — more high-intent inventory amongst AI apps, and more advertisers with offers that feel like real next steps in a conversation. Global coverage is something Jumbo put a premium on, most notably in markets where paid plans tend to underperform but which AI asssistants are increasingly scaling. If Koah can sustain high relevance but low friction, it does have a business that could potentially elbow its way into common infrastructure of the AI-driven consumer apps serving up the long-tail of consumer apps that Koah can monetize.
The larger picture is an easy one: AI apps require sustainable economics. Threading ads within moments of intent — not as banners, but as timely, useful options — Koah is trying to prove that making money can buoy the user experience instead of corrode it. If the lessons stick as the network expands, ads in AI chats could go from novelty to norm.