AOL gets personal with $90M Gravity acquisition

In an effort to get up close and personal with consumers and advertisers alike, AOL has ponied up $90 million in cash to acquire Gravity, a content-personalization startup that creates interest graphs based on users' preferences, interests and habits.

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AOL gave its publishers and advertisers a shiny new toy on Thursday when it announced it would acquire Gravity, a Santa Monica, Calif.-based content optimization and personalization startup.

To close the deal, AOL will shell out $83 million in cash upfront and an additional $7.7 million that will be deferred over the next two years.

Company officials said Gravity's technology – described as interest graphs that are based on users' interests, preferences and habits – will be deployed on content websites like the Huffington Post and TechCrunch to offer what it calls a "more tailored and relevant selection of editorial and advertising content" to readers.

"The web is moving to the era of personal, and a personal web filter will reshape how consumers get information and services," AOL CEO Tim Armstrong said in a statement announcing the deal. "Gravity is joining AOL to lead the personalization transformation of AOL's brands and platform partners."

The acquisition gives AOL some extra horsepower in the race among among social networking sites and online content publishers to turn an ocean of user data and habits into a targeted stream of revenue-generating advertising opportunities .

AOL officials said Gravity's technology will be immediately put to use in "all areas" of AOL's strategy to create more engaging experiences for its consumers, advertisers and publishing partners.

Founded in 2009 by Amit Kapur, Jim Benedetto and Steve Pearman – formerly top executives at MySpace – Gravity has about 40 employees and had raised $20.6 million in funding to date.

The Gravity product and team will report to Luke Beatty, AOL's brand group head of product.

"It's time to move beyond searching for the best content to having the best content search for you," Kapur said in a statement. "We believe that by combining AOL's vast brand, publisher and advertiser network with Gravity's interest graph technology, we can do just that."

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