Although AOL is doing mostly fine, the company is not really popular nowadays. However, it seems keen on making some big changes now. After selling off Winamp and Shoutcast, the company has decided to buy Gravity for $90 million in cash. The deal is expected to close sometime during the first quarter and includes $12 million in net operating losses that should result in a future cash tax benefit to AOL of around $5 million.
Gravity is an Internet personalization startup that was founded in 2009. It aims to provide its users with a more personal experience when they are browsing the internet based on a technology called “Interest graph”. The technology constantly updates its database with information relevant to what the viewers are seeing and provides suggestions and links to similar content based on those interests. According to both AOL CEO Tim Armstrong and Gravity CEO Amit Kapur, the internet needs are constantly changing. At first people were interested in “search, then social and now personal”.
Of course, AOL did not buy the company out of pure curiosity. Personalizing the internet can have huge positive effects on advertising. Instead of promoting generic advertisements and content, publishers can now cater to every individual’s needs through a huge network. As the database and the technology improves, most users should find the content to suit their needs more and more and the advertisements aimed at them will be far more likely to succeed. Since the company is taking a lot of cues from Amazon, their future should be interesting.