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.

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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.

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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

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

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.

ZocDoc

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.

Magnify.net

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.

Find more stories about: Kickapps, Magnify.net, nextNY, NYC, Outbrain, Quick News, ZocDoc

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.

Find more stories about: b5media, blog, blogs, NYC, Outbrain, Quick News

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.

Find more stories about: nextNY, NYC, Outbrain, Quick News, widgets

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.

Check out our discussion with Outbrain from last year. Other players in the ratings space include SezWho, Disqus.

Update: Om wonders what their business model is. In my discussion with Outbrain last year, sponsored recommendations was their business revenue model at that time.

Here is an example of the widget on CN with a story from yesterday:

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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.

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Editor’s note: I was provided a 8AM Easstern embargo but other sites have already posted earlier (TechCrunch) so I will post as well.

Yesterday we wrote about Disqus launching their comments tool and today we have another, SezWho. For a demo of how SezWho works, check out my friends at ReadWriteWeb and VentureBeat – both sites have the SezWho comment tool embedded. If you check out my title, I note that SezWho might be the best of the pack of comment tools. Why? Continue reading…

SezWho builds up distributed ratings and reputation which in simple terms means that your comment here on CN can add value to your comments on RWW, etc. In speaking with SezWho CEO Jitendra Gupta he said that the idea is to "carry your reputation with you" and can help CN leverage whether you should be allowed to comment directly or require validation, etc. The team has filed several patents around their technology.

They aren’t building a destination site but rather a distributor site – meaning that they want bloggers to use the tool. They offer a free version and soon a premium version with more features and access. The team recently closed a $1 million Series A round of financing.

Here is an example from VentureBeat:

The new features they are rolling out today include:

Stats for commenters Verification system so no one can "fake" your account "Red Carpet" which shows the top rated commenters on a site A badge to show your score within the SezWho network – Jitendra suggested that site owners might use the badge to show how they work with the community

Back to why I think it’s the top of the crop. First, comments remain on your site and aren’t touched in any way. Search engine optimization remains, no issues with "what if this startup goes under" and it keeps everything nice and tidy. Also, the widget is placed on top of the comments and adds value to both the reader and the site owner. I could see a great mashup of Outbrain’s personalized ratings plus SezWho’s technology on the comment side to create a powerful force in comment ratings.

Some have asked me when or if I will install any of these tools (JS-Kit, SezWho, Outbrain, Disqus, etc.) and the answer is that I am still working on a strategy around this area. Our relationship is most important to me so whatever I add has to add value for you and has to make sense from a technology standpoint.

Find more stories about: Disqus, JS-Kit, Outbrain, Reviews, SezWho

I don’t think I have gone 24 hours in the past month without hearing something about content ratings, comment ratings, widgets for content based on ratings, comment optimization and general forum tools. We have written about Outbrain who takes ratings and personalizes content based on them, JS-Kit who takes ratings and creates widgets to help find new content on a site and today Disqus launches. Each of these services provide some functionality that is the same and each has their own spin.

I had the chance to speak with Disqus co-founder Daniel Ha. Disqus comes out of the Y Combinator startup incubator and the team is based in Silicon Valley. The team is two people including Daniel and they aren’t speaking about funding ouside of the Y Combinator investment.

Disqus’ main functionality is centered around comments and creating forum threads from those comments. Their tagline is "powering better discussion" and they are centered around the discussion not the blog itself. You can check out a working version on Fred Wilson’s blog.

Disqus is creating visibility for content outside the site itself by creating forums on their destination site that drive visitors back to the blogs that generate the content. When a user comments on a Disqus-enabled blog, that comment can be rated and those ratings drive the user’s overall score. Also, the comment feeds back to that user’s Disqus profile page which Hu calls a "microblogging page" which will house all of a user’s comments across all Disqus-enabled blogs.

One of the things I like about what they offer is the spam protection. If you switch to their comment system, they have two spam filters which protect bad comments from appearing. My concern with Disqus (as with the other systems as well) is being able to take the data with you and what it takes to re-import it back into your blog should you desire to terminate the relationship. Frankly on Drupal (which powers CN) I believe it would be a difficult task. So if you decide to move to one of these offsite comment systems, make sure you consider this piece before making your decision.

Integration is offered for WordPress, Typepad, Blogger, MoveableType and an API for any other platform. I have embedded an example below.

Find more stories about: blogs, Disqus, JS-Kit, Outbrain, Reviews

NY-based Outbrain has removed the beta tag from their service and opened it to the World. Outbrain is a service that helps you get ratings on your content. They offer 1-click plugins to TypePad, Blogger and WordPress with a Javascript option to meet all other blog platforms. The interesting part about Outbrain is that it finds people like you and shows you ratings for the group it places you in (along with the raw score). This would be great for hotel reviews as many times you have no idea who the person is who is writing the review. If you are used to Four Seasons, any Microtel will look like a dump and vice-versa.

Outbrain has relationships with several of the rss feed tools which have integrated the ratings widget directly into the rss feel tool. Outbrain CEO Yaron Galai sent over this description of the personalized ratings feature:

For each visitor, we look at their rating history, find like-minded people automatically, and adjust the rating scores based on that. In other words – you and I might be looking at the same blog post, but each one will see vastly different scores based on each one’s personal rating history. We think this far exceeds the functionality of all other rating widgets that just display the plain average because personal tastes are so important when consuming content (think about it… – if the average methodology used by the other widgets would be applied to, say, Last.FM – we would all be listening to Britney Spears and Hannah Montana all day long just because a ton of kids give it 5’s all day long……….)

We also think that this is the 1^st rating widget to give readers a real personal incentive to rate stuff (and rate it honestly), as they get long term value from the personalization. When your ratings have no effect on your future experience with the widget, there is absolutely no incentive to rate (+a nice incentive to abuse it…)

In my interview with Outbrain, one of the suggestions I gave them was to allow a site to not show how many people rated the item, just the rating itself. I still believe this is very necessary for smaller sites  because if you read every story with zero ratings (or one), it makes the site look tiny and unappealing.

Ratings and tagging are hot right now. Check out our coverage of Outbrain, JS-Kit and Jiglu, all providers who help you find more content that might appeal to you. Each attacks the ratings process a bit differently.

Find more stories about: Jiglu, JS-Kit, Outbrain, Quick News

This evening I spoke with Khris Loux, JS-Kit CEO about some updates to the JS-Kit suite that will be launching in the coming days. I must say that I enjoyed my discussion with Khris because it seems we are both analytics nuts.

Badges/Widgets

They currently offer a "top" ratings widget and will be launching a "hot" ratings widget in the coming days. The way Khris describes the difference is that once a story makes the top list, it’s hard to unseat it. But with hot, a story could be good or bad but as long as it has a number of ratings in a given time period, it will appear as hot. I think both are good complements to each other and the new hot widget can drive traffic to the stories people are discussing now.

GrabIt

The second major update is called GrabIt. GrabIt allows you to pick up a badge/widget and place it on your own blog or start page (netvibes/schmedley/etc.). If you read a blog that posts lots of content each day, it can become overwhelming. What this widget can do is cut through the clutter and show you just the posts that people think are worthy.

Comment Tool Updates

This is the area I am glad the JS-Kit team has been working on. One of my frustrations with using the comment tool on CN was around search engine optimization. For sites that have large numbers of comments, the SEO value from the comments can be immense. Khris noted that they have fixed the SEO issues and now all comments will provide optimization benefits to the site where the comments reside.

Other updates include:

• Pre/post moderation
• Visitor controls to allow site visitors to sort the comments in the way they wish (top, new, karma, etc.)
• RSS feeds

JS-Kit is an 8-person team and is located in Silicon Valley. I will be working with Khris on potential integration on CN in the coming week.

Find more stories about: JS-Kit, Outbrain, Reviews

Today I had the opportunity to speak with the Boston-based team at Snarfer. Snarfer is a RSS reader that combines the ability to read, search and manage your feeds. As opposed to Google Reader, Bloglines and the other online RSS tools, Snarfer is a downloadable-app and is about 1 mb in size. I was able to download it and have it installed in under a minute. If you use Thunderbird for email, Snarfer looks and works in a very similar manner. After installation, you can select from over 1100 pre-defined feeds in a variety of categories. There are three panes in the default setup: feed list, post list and preview pane. Snarfer claims to be the fastest RSS reader available today.  The name comes from the idea to "snarf a feed" and their mascot helps you snarf 'em up!

Here are my notes from our conversation:

• They like the desktop application because they can control the entire user experience
• Sync with Bloglines which helps get everything online into the Snarfer reader
• Very advanced persistent search – similar to google alerts – you can setup an alert and Snarfer will continuously check your feeds for the term
• Tie-in with Outbrain rating technology – this helps to learn what you like (and what others like) to recommend future posts to you
• Has a built-in IE browser which allows you to view the full post within Snarfer
• Monetization – sponsored tabs – currently they have a Pageflakes sponsored tab – so if you use Pageflakes as your start page, then Snarfer starts with that and you can basically "live" inside of Snarfer. More sponsored tabs are coming in the future. It's an interesting way to monetize a RSS reader.
• They are working on a plug-in to let you save Web pages

Here are my thoughts about where they could upgrade:

• Give me an option to download an entire feed for offline reading so I can read on a train, plane, wherever
• Let me save my feedlist online either on Snarfer.com or elsewhere so I can sync multiple pcs
• Let me make my feedlist public so others can see what I am currently subscribed to – this could be very viral for Snarfer

I guess I don't think about desktop apps much anymore when it comes to something that I think of as a Web item. But after playing with Snarfer today, I could see using it going forward. If they just would add my upgrades above, it could be a major winner.

Find more stories about: Interviews, Outbrain, rss, Snarfer

This morning I met with Yaron Galai and John LoGioco from Outbrain. Located in NYC are Yaron, CEO and John, Director of Business Development. The balance of the team is located in Israel.

The most basic description is that Outbrain is a voting widget for your blog and RSS feed. You add a simple script to your template and then Outbrain will allow readers to rate your content with a simple voting mechanism. You can see a demo below or on Yaron's blog. John described Outbrain as a company that, "makes sense of content."

There are already loads of voting widgets, so what makes Outbrain unique? The most unique feature from what I can tell is their collaborative filtering. Yaron describes it as, "People who liked this, also liked X – the outbrain API provides full support for collaborative filtering allowing you to suggest more recommended links based on the post being viewed by the user." Yaron notes that it's similar in ways to Amazon’s product ratings, or Netflix ratings or Pandora.

Other features include:

• Average score – Provide users with the average score (on a 5-star scale) for each post they’re reading. Providing this community based score can significantly help users to quickly find the most interesting stories in the RSS aggregator.
• Sort items by popularity – Currently most feed readers allow users to sort posts by date. This is comparable to sorting the search results on Google randomly rather than by relevancy. Using the outbrain API partners can provide users with a ‘sort feed by popularity’ functionality.
• Personalized scores and recommendations – For users registered with outbrain, all the scores provided back via the API can be personalized based on their rating history and the ratings of like minded users.

The other interesting part of Outbrain is that the ratings widget will also work on RSS feeds. Their first two partners are FeedBlitz (feeds to email) and Snarfer (desktop RSS app).

The company is funded which seems like overkill honestly. Yaron noted that the funding came half from the product quality and half from his prior track record. I am guessing that the funding will help them market the widget and get it on some prominent blogs.

They are looking into sponsored messaging as the revenue model. So when you see the collaborative filtering results, a sponsored link might be included. John noted that the widget is not branded because they believe that it will speak for itself.

My last suggestion to Outbrain was to look at making the number of voters optional. I explained my post, "Don't Publicize How Small You Are," and there is really no need to display how many people voted for an article.

I think the combination of voting and filtering should prove beneficial for readers and bloggers. For a blogger, they can tell which content appeals best to their readers and by making it a simple vote, many readers should participate. For Outbrain to be successful, they will need large numbers of bloggers and voters. Otherwise the system won't work as created. The other challenge will be market differentiation.

Another site in this arena is JS-Kit which received huge net buzz when they re-launched in April.

Find more stories about: Insights, Interviews, Outbrain, widgets