Gravity Gets a $10.6M Vote of Confidence in its Web Personalization Technology

By Michael Carney , written on October 2, 2012

From The News Desk

Interest graph company Gravity is old by Los Angeles startup standards, having raised an eight figure financing round in 2009 at a time when purse strings were pulled especially tight. The company’s founders Amit Kapur, Jim Benedetto, and Steve Pearman left MySpace at its peak and set out on their admittedly ambitious mission to personalize the Web.

Today, the company is announcing a measure of validation for the patient and sometimes arduous climb to its current position atop the personalization space in the form of $10.6 million Series B financing led by GRP Partners, with participation from existing investors Redpoint Ventures and August Capital.

“We raised a large round when there were no deals getting done, but we had a long term vision about how the Internet would evolve from social to personal,” says CEO Amit Kapur. “We’re just now getting to the point when that vision is becoming a reality.”

Gravity has grown tremendously in the six months since launching publicly in March of this year, with the company currently delivering more than 25 million personalized content recommendations per day to more than 200 million users. The startup is working with more than a dozen large publisher clients, including The Wall Street Journal, TIME, CNN Money, BUZZMEDIA, and TechCrunch, with others to be revealed soon.

The company helps each of these publishers tune their homepage and mobile apps to the individual user and deliver personalized content based on their unique interests. The underlying technology combines knowledge about a user’s browsing activity within Gravity’s network of partner sites, with that user’s social graph, including comments, Likes, shares, Tweets, and recommendations by friends. Natural language processing and machine learning algorithms then filter the resulting signals to assign meaning and significance to this information.

Early stats revealed in March indicated that partner sites saw a 40 percent increase in pageviews when personalized content was served, while click through rates grew more than two times, and site loyalty, as measured by monthly return rate, was up 300 percent. To the extent that this is sustainable, all signs suggest that the company is delivering significant value to both publishers and Web users.

Gravity’s technology is largely complete. The challenge now is about rolling it out to as many corners of the Web as possible. The company has spent the last few months rounding out the documentation around its API and is preparing to open the floodgates on a self-serve model.

The next step in Gravity's evolution is to launch its own version of an ad exchange, which Kapur describes as a content marketing platform. The platform, which is already live behind the scenes as part of a small trial, will eventually allow publishers to deploy contextually targeted promoted content across their sites.

“A lot of media and content companies are looking for smarter ways to monetize their audience in more authentic and effective ways, which means moving beyond banners,” says Kapur. “Even most contextually targeted ads today are out of line with the core experience that users are on the site for in the first place. Any ad unit is about driving traffic away from the site, but the goal is to do it in a congruent way that optimizes the user experience and still generates the maximum revenue possible.”

Large and sustainable companies don’t get built overnight, the CEO tells me in response to rumors of impatience among employees and early investors. The growth in user adoption and positive feedback, combined with the fact that the latest financing closed earlier this summer but is just now being announced, suggest that he’s telling the truth when he says morale among the team of 25 is high.

The new capital will be used to expand the company’s operations in New York and San Francisco, as well as in its home market of Los Angeles, with the big push for the engineering-heavy company being about driving publisher and advertiser partnerships.

Kapur and co. were deliberate in adding a Souther California VC to their team and ecstatic to have it be what the CEO described as “the top tier VC in the area.” GRP funded Overture way back when, and should be able to add significant value in the creation of a contextually targeted network.

We are still in the early stages of the personalization race. Publishers are still discovering the benefits interest graphs can offer and how to best implement them across their properties. Consumers, for their part, are just getting comfortable with the notion amid wider concerns about online privacy. The company is conscious about the concerns of both camps, emphasizing similar diets of transparency, security, and education for each.

The goal is that Gravity will eventually be seen as Internet plumbing, becoming a fundamental part of the experience of any website or content app. “We see this as a utility that has a ton of value to everyone, but we’ve always believed that digital experiences shouldn’t be one-size-fits-all,” the company’s CEO says.