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Last week NY-based recommendations service Outbrain raised $12 million with a total of $18 million in total venture capital funding. Today Outbrain is announcing the launch of their revenue model which they are calling, "Sponsored But Good".
Here’s the idea – by now you’ve probably seen the Outbrain ratings and recommendations widget on sites across the Web. Going forward if the publisher enters into the program, whenever possible, a maximum of one of the recommendations will be a sponsored recommendation. Outbrain assures me that the sponsored recommendation will be closely related to the content being discussed in the blog post. The interesting thing about this program is that the links will never point to a product page; instead they will point to another blog post discussing the topic. So Apple might buy the iPhone topic and point the traffic to a blog post about the iPhone, etc.
Here’s an example of what the recommendations box will look like:
The content site and Outbrain will share in the generated revenue from the click. Outbrain says that if you decide not to signup for their program, any monies earned through your blog will be stored in an account and donated to charity at the end of the year. This is the first time I’ve seen any advertising company do this.
I like the concept of the Sponsored But Good program but after buying millions of dollars in media year-over-year, here are my concerns with the program:
- Enough supply – are there enough blogs in their network and enough blogs that will activate the feature to give Outbrain enough inventory to sell?
- Deep sales force? Since this concept is new, it will take a lot of convincing to get brand marketers to sign off on the ad dollars. They will need to overcome the objection of "why should I spend money to push traffic to another blog post and not my brand site?" Also, they will need to sell enough ads to have at least a decent fill rate initially
- How many clicks will it take for a blog (even a massive one) to make enough money to make the program attractive?
If Outbrain is able to convince brands to try out this new model, they could do very well with the program. It will just take a lot of sales and convincing to get the buy-in for this new online advertising form.
Note – Outbrain asked me for my feedback on their model a couple of times over the past few months. I was never paid – just reviewed what they had and provided my feedback. Most of what I told them are the same things I wrote above.
Last year NY-based Outbrain raised a $5 million Series A round of funding. Today the company is announcing a new Series B round of funding to the tune of $12 million. Including a $1 million angel funding, this brings the total funding for Outbrain to $18 million dollars. Previous investors Gemini Israel Funds, Lightspeed Venture Partners and GlenRock Israel all returned for the round and the round included new investors Zohar Gilon and Rhodium.
Outbrain provides a rating and recommendation widget that can be embedded into a blog or Web site. Outbrain has also partnered with several RSS readers to incorporate ratings directly into the reader. The recommendations can be set to only the current site or can be open to a network of sites. We’ve been using the widget for about a year now and have provided feedback to the Outbrain team on ways to improve the service. In December Outbrain launched the link zapper which allows their partner sites to remove a recommendation when it doesn’t fit the article content.
The Outbrain service is available as a widget for most blogging and CMS platforms. There’s also an API for developers to leverage.
I can only guess that this type of warchest is to hunker down to be able to have funding to last through the current economic environment. To be completely honest, the first time I read their release I thought they raised $1.2 not $12 million dollars. In my conversations with the Outbrain team, it’s easy to tell that they are very well educated about the Web and are passionate about content discovery. It will be interesting to see where the monies are allocated going forward.
Update: Yaron Samid of TechAviv has some thoughts on why Outbrain got so much cash.
Update 2: Yovav "Jay" Meydad of Snap found out about the funding earlier but held back in posting. Very well done – he made sure that Outbrain got as much buzz as they could from the story. I do this as well and I wish more blogs/news outlets would as well.
Here’s the latest news from a variety of NY-based startups. If you are a NY-based startup and have news about your company, send it in.
KickApps announced today that they have hired David Lapter as Chief Financial Officer and Tom Gaffney to head up the company’s expanding Customer Success division. Apparently the Customer Success division works on strategy and creative services.I’ve never heard of a Customer Success division but I like the idea! Check out all of our KickApps coverage.
Outbrain launched an update to their widget this week called the "Link Zapper". We run the Outbrain recommendations widget on CN (you can see it at the end of this post). The widget recommends other posts both from CN and from our whitelist of partner sites. The Link Zapper allows us to easily remove a link that might not be a good fit for the source story. It’s a very manual process and while I am hoping for some automated tools in the future, it’s a good start. Check out all of our Outbrain coverage.
We’ve covered ZocDoc extensively on CN and I believe it could be the breakout star of 2009. ZocDoc provides online management for doctor, dentist and other healthcare practitioners. Forbes magazine named ZocDoc the winner of their small business contest. The announcement came this week and ZocDoc won $100,000 to further develop and expand their service.
Earlier this week Magnify.net announced the launch of Thwoop.com, an online community for featured entertainment content and user-contributed videos. The concept for Thwoop.com came from children’s toy e-tailer Brand Performance and the site will be powered by Magnify.net. Check out all of our Magnify.net coverage.
NY-based content ratings and recommendations provider Outbrain has announced a new distribution partnership with blog network b5media this morning. Under the terms of the partnership, b5media will install the ratings and recommendations widget on all 300+ blogs in the b5media network. Financial terms of the partnership were not disclosed.
The Outbrain widget allows blog readers to rate the quality of the content and receive recommendations for other content based on their ratings. Recommendations can come from the individual site or a whitelist can be setup where sites can partner together and recommendations are shared across the listed network.
The more sites that Outbrain can partner with, the stronger their recommendations network becomes. From my perspective that’s where the Outbrain value lies. The raw ratings are not worth a lot to me as I am never sure what it is that the person is ranking. It could be spelling, grammar, quality of the content, subject matter, etc.
Outbrain has announced that the discovery portion of their ratings widget is now public and available for any blog to use. We have been running their widget on CN for about 60 days. So far, 429 clicks through the recommendations option, of which 295 were from inside CN where people were clicking on "same site" recommendations and 134 were outside referrals from people clicking on CN posts that were displayed as recommended reading on other blogs outside CN. When you install the widget, you can select to only show related stories from your blog, from blogs you select or from any blog running the widget as well.
I’ve said all along that ratings alone really aren’t that meaningful. Especially without information about the rating party. But the idea of tying ratings and content discovery together makes the Outbrain widget much more useful. The ability for a user to view two stories (or more) versus only one can mean profitability for a blog.
Outbrain can also populate a most popular widget based on the ratings and they provide an analysis report based on your user ratings and recommendations.
Here is an example of what the discovery widget looks like on CN:
The only thing I’ve noticed is that sometimes the suggested stories don’t seem to match up with the original story. In this case, the original story was about Twitter but somehow the system felt like a Google Calendar story was related. I am guessing the system gets smarter over time.
What would really kick ass is to get this discovery bit into the rss feed. My guess is that their business model will be to drop in sponsored related links over time. Check out my chat with Outbrain executives from last year. Adam at Mashable has some additional thoughts on the recommendations.
With its technology team in Israel, NY-based Outbrain has raised $5 million in Series A funding. The VC firms participating in the round are: Gemini Israel Funds and Lightspeed Venture Partners. GlenRock Israel, which backed Outbrain since its inception, also participated in the round. The company raised $1 million in seed funding last year.
Outbrain provides a rating and recommendation widget that can be embedded into a blog or Web site. Outbrain has also partnered with several RSS readers to incorporate ratings directly into the reader. The recommendations can be set to only the current site or can be open to a network of sites. We’ve been testing the Outbrain functionality on CN over the past 10 days and will have some insights and a review after our test concludes later today.
Outbrain notes that following the investment, Daniel Cohen from Gemini, Yoni Cheifetz from Lightspeed and Ziv Kop from GlenRock, will be joining Outbrain’s board of directors.
Here is an example of the widget on CN with a story from yesterday:
Outbrain has developed a free Rating and Content Recommendation widget for bloggers, content publishers, rss readers and other content aggregators. Readers can rate posts/articles on a 5 star scale and then receive recommendations to other content they might like. It’s like what Amazon and Netflix do with book and movie recommendations where if you like “x” you may also like “y.” Through collaborative filtering, our system identifies groups of like-minded raters to make personalized suggestions to other content. There is no need for readers to register or login to rate and receive targeted recommendations.
Bloggers can get their free rating widget here at www.outbrain.com/get/j and for select partners we have a REST API. In addition to the rating and recommendation widget bloggers also receive a free rating analytics report that displays how each post was rated and a Most Popular badge that displays a river of the blog’s top rated posts.
We are funded, have a proven track record and are based in New York with R&D located in Israel.