The Web, Now Just for You

New online tools offer personalized recommendations to help users find what they like—and help advertisers target their audience

by Catherine Holahan

Kevin Rose likes to talk about his taste for oolong tea. But lately the founder of Digg, a popular bookmarking site that enables users to submit links to Web pages and articles they find noteworthy, has been more vocal about strangers' appetites for, well, everything. Rose has been paying particular attention to which Web sites, stories, and links are gobbled up by the 900,000 registered users who visit Digg—and which ones are cast aside. He plans to use what Digg knows of its members' tastes to help them find more media fare they might want to consume.

Later this year, Digg will launch a recommendation tool able to expose members to fellow Diggers who appear to have similar interests, says Rose. "Digg will be smart enough to know what interests you," says Rose. The site will identify those with like interests in part by the previous stories they have dug and "buried"—the site's term for voting down a story. "Theoretically, over time, you provide useful information," says Digg Chief Executive Jay Adelson. "It makes a personal version of Digg more possible."

Ad-Delivery System

Digg is not alone in working to leverage what it knows about users' tastes to suggest more relevant content. Internet giants Yahoo! (YHOO) and Time Warner's (TWX) AOL, as well as a host of startups, are testing or developing tools to do the same. Earlier this February, Yahoo quietly launched a recommendation feature for its bookmark tool that suggests content related to that previously bookmarked. Similarly, AOL began testing a tool in November that suggests news articles to individual My AOL customers based on what they have read before and what those with seemingly similar interests have selected.

Of course, tools that personalize the Web are not new. For years, people have been able to customize their home pages on sites such as Google.com (GOOG) and Yahoo.com. Similarly, e-commerce sites such as Amazon.com (AMZN) have long relied on recommendation tools to fuel additional sales.

So what's new? Previously, Web sites added automated recommendation tools to their e-commerce offerings to get you to spend more money. Now, it's about getting you to spend more time. The goal of the new generation of recommendation tools is to encourage visitors to stay as long as possible on particular sites and, in the process, deliver as many ads as possible to users—without alienating them.

The "Engagement" Quotient

In the world of marketing, the length of time spent on a site is called "engagement," and it's a key consideration when advertisers determine where to spend their ad dollars. Sites that have high user engagement can gain longer exposure time for ads, making it more likely that a user will click on an ad or absorb a branding message. Sites that offer higher engagement often charge higher rates to show the ads or collect more revenue from click-through advertising.

When sites know enough about visitors to suggest content, the additional ad-targeting capability they can provide is very appealing to advertisers. Theoretically, that knowledge can be used to suggest items users may want to purchase, making advertising more likely to translate into sales.

VideoEgg, a two-year-old company that provides video tools for sites such as social network Bebo, has developed a new version of its media player that recommends videos related to the one the user is watching. The new player, which is set to launch sometime in the third quarter, shows ads related to the video playing. For example, a music video could display an interactive ad at its base selling ringtones by the same artist. The hope, says CEO and co-founder Matt Sanchez, is that the recommendations keep the user engaged with the player, and potentially the advertising, longer. "We want to entertain users as long as they want to be entertained," he says.