Gravity Inc., a Santa Monica startup that offers a content personalization service for news sites, last month was acquired by New York’s AOL Inc. for $90 million in cash.
Connecting Gravity’s technology with a massive online publisher such as AOL, which owns a large portfolio of sites including Huffington Post and TechCrunch, sheds light on how news will look in the near future.
Gravity sells a technology that recommends articles based on what it concludes would most appeal to an individual reader. It can both track a person’s browsing habits as well as parse an article’s content to build a map of overlapping interests; the combined profiles are used to create a so-called interest graph.
In effect, what Gravity creates is a version of the Internet that’s tailor-made to your tastes.
As Gravity co-founder and Chief Executive Amit Kapur explained, this acquisition was the ideal meeting of AOL’s needs with his company’s ambitions. That includes getting access to the trove of AOL’s owned sites.
“There’s a network effect that results from a broader diet of content,” Kapur said. “The quality of our interest graph improves the more websites we’re on and the bigger our network gets.”
At its core, Gravity’s technology is a digital profiler. The concept is not too different from ad tech, in which banner ads are targeted at people deemed to be the best fit.
What makes Gravity and its competitors, including New York’s Outbrain and Taboola, different than traditional ad tech is an added layer of artificial intelligence.
“Historically, targeting has put people into large buckets. A group of 1 million people are grouped into an advertisement for one car,” Kapur said. “Our audience segments are buckets of one.”
To reach that level of precision, this technology has to map out the focus of an article and then trace an outwardly spiraling web of related topics. For example, a basic reading of an article about surf spots in Hawaii would be referred to anyone who’s recently shopped for surfboards on Amazon.com. But a more complex analytical spider web would also catch people who have shown interest in waterskiing, snowboarding or even are from California.
“It’s comes down to the ability to create the same abstractions the human mind would,” Kapur said. “We’re finally at a point where we can do this kind of analysis at scale.”
Kapur, former chief operating officer at MySpace Inc., co-founded the company in 2009 along with several other former executives from the social network. It has since raised $20 million in funding in Series A and B rounds, with investments from Redpoint Ventures, August Capital and Santa Monica firm Upfront Ventures. The exit was first announced on the tech site Recode in an interview with AOL Chief Executive Tim Armstrong.
Over time, Gravity has partnered with a number of publishers including Conde Nast, Walt Disney Co. and Yahoo Inc. (Sources said that at the time of the acquisition, Gravity had also been in talks with Yahoo.)
The company makes money by interspersing sponsored content – otherwise known as native advertising – into the story recommendations. In 2013, Gravity announced it tripled revenue over the previous year, although executives would not disclose specific figures.
As part of the arrangement with AOL, Gravity will be allowed to continue its partnership with outside publishers, and Gravity’s team of about 40 employees will remain in the Santa Monica; New York; and Fort Collins, Colo., offices.
Brian Fitzgerald, the president of Culver City online publisher Evolve Media, sees the acquisition as a way for AOL to get into the personalization game without paying top dollar for Gravity’s larger competitors.
“For AOL, this was a smart, strategic acquisition,” Fitzgerald said. “They couldn’t have afforded the other guys so I think they went for the smaller guy thinking we’ll use this across our network.”
While tracking technology has always triggered privacy concerns, there are editorial worries as well. Some have complained that keeping all content targeted strictly to people’s tastes would be limiting.
Kapur conceded there is a possibility of “niching out” broad content, where an overly curated layout creates a blinkered readership. But that would be personalization done wrong.
“What we do is combination of stories they have high personal interest in and stories that are generally trending,” he said. “We attach editorial weighting and rank some things more highly than the others.”
The biggest knock against this type of Web personalization could simply be that the technology just isn’t good enough. Unlike ad networks, which can span many different sites, publishers are comparatively small. Even with the advantage ad tech has with data collection, they only occasionally hit their marks.
“I don’t think content is even going to get to that level,” Fitzgerald said.
Kapur remains more sanguine.
“There’s an explosion of content happening across the Internet and sifting through the haystack for needles is overwhelming,” he said. “Instead of you having to find the best content on a site, soon the site will search for you.”
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