AOL doubles down on personalization, buying Gravity for $90 million

For nearly five years, Santa Monica, Calif.-based startup Gravity, head up by a group of former MySpace execs, has tried to nail personalized content and advertisements for the web. What started out as pulling interests from Twitter evolved into a full-blown graph to tailor the web to users. Now, a nearly year after opening up its technology to all publishers, the company will be absorbed into the AOL umbrella for a purchase price of $90 million in cash, according to Recode.

For AOL, the intentions seem pretty straightforward: apparently a longtime client of Gravity, the web company seeks to monopolize the startup’s time and technology, in exchange for keeping it going. Kara Swisher at Recode notes that in addition to the purchase price, AOL will absorb operating losses from Gravity, which total roughly $12 million.

The natural fit for Gravity’s technology, which focuses on turning up original content and so-called “sponsored stories” greenlit by companies that cater to the interests of users, is with AOL’s Huffington Post. With a firehose feed of dozens of topics, Gravity’s interest graph technology will likely see best use in tailoring the Huffington Post home page and recommendations to specific users based on their interests, paring down the bulk of uninteresting content. Gravity also powers cross-platform experiences — commonly seen on the mobile offerings with publications like TechCrunch and PandoDaily — that will likely be more visible across many AOL properties.

Before the acquisition deal, Gravity completed its Series B funding round of $10.6 million in 2012, bringing total funding for the startup to $20.6 million.

Overall it’s a win-win for both parties: Gravity gets a corporate patron to continue its work (which it will for the foreseeable future, under its own brand), and AOL has an opportunity to make some coherent sense of its publication outlets. Personalization is a tricky part of interacting online, especially when integrating factors like privacy and blinding people from certain kinds of media. But it’s clear that AOL is willing to invest in it, and make it an important part of its continually building publication strategy.