May. 14, 2009
MEREDITH PRICE LEVITT , THE JERUSALEM POST
It may not actually smell bad or attract rats, but the Internet has recently been compared by more than one technology expert to an enormous garbage dump. The late computer pioneer Joseph Weizenbaum even likened it to the trash heaps outside of Mumbai where people must literally crawl through the refuse to find something useful among all the junk. If you’ve seen Slumdog Millionaire or ever had the pleasure of landing in Mumbai, this simile conjures an even more vivid mental image.
But the point that Weizenbaum and others have made is a good one. With so much irrelevant information growing larger by the second, the challenge to find what you’re looking for on-line is mounting.
This “information overflow” problem has prompted many technology companies to provide solutions geared toward personalization using both recommendations and targeting. For many years, Amazon and Netflix have been recommending books and movies to users. With the dawn of the semantic web, in which computers are able to go beyond merely finding key words to actually understanding and analyzing text, new recommendation services are focusing on adding context to this personalization.
Outbrain, an Israeli start-up, is one of the major companies in this playing field. Its free widget allows users to rate blog postings and content articles on-line with a simple system of little yellow stars. Once users rate an article or post, they can be redirected to other articles that Outbrain thinks may be of interest to them. Depending upon the option the publisher chooses, users can be redirected in three ways: (1) within the source to articles on the same Web site; (2) to articles from around the entire Web with the highest ratings, and (3) within a large network to other articles that are all owned by the same publisher (such as The Jerusalem Post, which sends users to other articles within its network).
According to Ori Lahav, the co-founder and CTO of Outbrain, the goal is twofold. On one hand, the ratings and recommendations help users bump into good content they might not otherwise find. On the other, it helps Web sites and publishers keep people on their site for longer by circulating the traffic.
“Loyalty is weak on the Internet,” says Lahav, which is one of the reasons why publishers like Outbrain. It helps them increase the number of page views they get from users and draw a wider audience.
How do the ratings work? Although tight-lipped about how the technology behind the five-star rating system, Lahav explains that Outbrain uses various sets of recommendation algorithms. These are based on behavioral patterns (ratings and page views) as well as content. In addition, efforts are constantly made to improve the algorithms based on trial and error. “From our research of the domain we are acting in, there is no single formula for creating a good recommendation,” he says. “Every case has its own winning formula.”
ALTHOUGH THIS type of service is well known on sites like Digg, Delicious and Last.fm, few competitors deal solely with news. Spotback allows users to rate everything but is less focused than Outbrain.
It comes as no surprise that co-founders Yaron Galai and Lahav chose the publishing industry for their first start-up. Previously, Galai was a co-founder of Quigo (a company that placed ads beside relevant content). Acquired by AOL for a reported $350 million, Quigo primarily served large publishers and Galai worked with companies like Fox, ABC, ESPN, NBC and Time Warner as well as about 250 newspapers. Lahav previously led the development team at shopping.com, which was acquired by eBay in 2005 for more than $600m.
The two dynamic founders have been friends since they met during their army service, where they both served as officers in the navy before moving on to careers in hi-tech.
In the summer of 2006, they launched Outbrain. “The basic premise was to bring the best and most interesting articles to the reader wherever he or she reads content,” says Lahav. The rating widget was offered to blogs in the fall of 2007. “It went very well and spread nicely. The bloggers were in favor.”
The Outbrain widget’s popularity is based on several things. First, it’s easy to set up and implementation can be done in literally one or two clicks. Second, it’s what Lahav refers to as a “polite widget”; in other words, it does not put Outbrain branding on the page or leave visible footprints. Third and perhaps most important of all, the Outbrain widget provides a high standard of support even though it’s a free service. And this goes beyond just lip service. I noticed at least three different blogs with comments from Lahav – either about how to solve a problem, answering a question or just thanking the bloggers for using Outbrain.
It can be installed on most leading blog platforms, including TypePad, WordPress.org, FeedFlare, Moveable Type and Blogger.com. Aside from thousands of bloggers, publishers using the Outbrain system include the Discovery Channel, the Chicago Tribune, Sport’s Illustrated Golf.com and The Jerusalem Post.
“The word of mouth has been very positive,” says Lahav.
FAR BEYOND being popular in the blogosphere and with large publishing companies, Outbrain has also enjoyed tremendous success with venture capitalists. In February, it raised an impressive $12m. in a second round of funding led by Carmel Ventures. The total capital now stands at $17m. (previous backers include well-respected venture capital firms such as Gemini Israel Funds, Lightspeed, Venture Partners and GlenRock Israel).
As many suspected, Outbrain revealed a new revenue plan soon after announcing the success of its second round of funding. It calls it “sponsored but good.” The new system displays sponsored related links attached to blog posts from its network of users. This sponsored link does not lead to a paid-for blog article. Rather, it is an organic article that sheds positive light on a product that has been pre-selected by the advertiser. It is also marked so that readers can identify it as a sponsored link.
According to Lahav, the new business model is one of the things that makes Outbrain so innovative. Finding a solution that benefits readers, publishers and advertisers without compromising the quality of content they provide was challenging.
“We are basically going to promote good content about a product or service by finding the right places and people to show it to,” he explains. “This will give the product better exposure and it allows us to take advantage of a niche in the advertising market.”
The example he gives is a review of a Nokia product by Joel Spolsky. “This is a great, honest review written by a credible blogger that Nokia may want to take advantage of. We can help it do that by spreading that content to the relevant people.”
Although this revenue model provides a win-win situation, there are still a few glitches to overcome. For now, Outbrain is manually choosing and controlling what content to promote for sponsored content to maintain the reliability but Lahav hopes to find good solutions to deal with larger demands in the future.
As far as the rating system goes, the recommendations that Outbrain provides are not always relevant based on what you may be looking for and people can actually vote more than once if they use a different browser or clear their cookies. According to Lahav, there is an anti-spam mechanism for ratings in place but, and here I quote, “I’ll tell The Jerusalem Post how that works only after Ahmadinejad will reveal his anti-air attack and nuclear secrets.”
The bottom line is monetizing discovery on-line without upsetting people. If Outbrain can meet its goals to make readers, publishers and advertisers happy simultaneously, it will be well on its way to balancing stability, size and success. If you’re reading this on-line, feel free to vote!
Catalonia-Israel Commerce Chamber 