Outbrain bought the content recommendation system Surphace from AOL for an undisclosed sum. Surphace is a reincarnation of Sphere, a startup founded by Martin Remy and Steve Nieker in 2006 as a related content plugin and was later acquired by AOL in April 2008 for a rumored sum of $25 million. In October 2009, AOL re-branded the service to Surphace and launched a self served solution for related content called S4. Since launch, the self served solution has attracted over 3,000 publishers and around 1 million page views a day.
Outbrain, one of my favorite related content widgets (as you can see in action on VC Cafe), is a related content plugin as well. About a year ago, Outbrain launched Outloud , a paid re-circulation service that enables publishers to attract viewers from the Outbrain network of publishers, for a flat fee. Outbrain has raised approximately $17 million in VC money, from Gemini, Greylock and private investors.
More details on the acquisition as posted by Peter Kafka on All Things D:
Tim Armstrong has disposed of another asset that AOL bought before he showed up: The company has sold Surphace, its content recommendation engine, to Outbrain, which does the same thing.
I don’t have the deal terms, but my hunch is that no cash is involved, and that AOL’s compensation could come in the form of equity in privately held Outbrain, or a tax benefit, or both.
“In keeping with the AOL strategy, any place where we are not a leader in the category or profitable, we are going to look at partnerships or other alternatives. This is one of those businesses. We are pleased we found a great home for the Surphace technology and its employees,” AOL venture and local head Jon Brod said in a statement.
Outbrain CEO Yaron Galai declined to comment.
AOL acquired Surphace for something north of $25 million in 2008, when it was called Sphere, and Armstrong was still running ad sales at Google. Co-founder Tony Conrad left AOL in 2009, but has since come back as part of the About.me acquisition late last year.
Both Surphace and Outbrain do roughly the same thing: They allow publishers to automatically present related pieces of content to Web surfers, based on the very straightforward theory that a visitor interested in a certain kind of story would stick around if offered similar stuff. (AllThingsD is a Surphace customer, so you can see it in action at the bottom of this post).
AOL reports earnings early tomorrow morning.
Disclosure: I used to work for AOL as principal product manager of Search in Europe.
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