Recommendations engine DirectedEdge opens up to developers

Product-recommendation startup DirectedEdge is launching a free API for its recommendations platform so that developers can create new applications for it. Offered as a web service, the platform plugs into your website, collects data and then delivers real-time recommendations, based either on what similar users have done, or on a user’s own past behavior.

The company, based in Berlin, Germany, is quite young — it’s platform just came out of beta testing a few months ago — but it says it already has a number of large customers.

Unlike search engines, which help you find something specific, product recommendations are about helping you discover (and sometimes buy) things you didn’t even know you wanted. Amazon, the pioneer of automatic recommendations, is making 20-30% of its annual sales from suggesting products to users, based on their preferences.

The DirectedEdge platform consists of four different products that developers will now be able to expand upon:

- A recommendation engine for online stores that shows what other customers have bought/viewed and which delivers personalized recommendations (“We think you’d like…”)

- A plug in for social applications, which shows you people you might know, pages your friends like or ads clicked by similar users. Out of the 40 million recommendations delivered through the company’s API so far, there is an even mix between social applications and e-commerce, which shows that social sites have a real interest in increasing user engagement rather than just bringing in new members.

- An application for news sites, which delivers related articles and personalized recommendations.

- An application for job sites, which displays similar candidates/jobs and recommended candidates/jobs.

Helping users find relevant information and helping site owners make more money as a result isn’t a brand-new idea. One company to beat DirectedEdge to the punch is ChoiceStream, a company delivering personalized recommendations since 2001. ChoiceStream’s solutions focus on e-commerce (product recommendations), advertising (personalized ads) and email marketing (personalized transaction emails and marketing campaigns).

Another competitor is RichRelevance, founded by none other than David Selinger, former head of Amazon’s Personalization R&D team. RichRelevance offers products for the same three areas, ecommerce, advertising and email marketing, although it takes the online shopping experience a step further, providing an online webcam social shopping tool.

Using a different approach to delivering recommendations is competitor Baynote, a company focusing on real time community preferences rather than on past user behavior.

But according to DirectedEdge co-founder Scott Wheeler, the company has a leg up on the competition: Its products address the long tail rather than enterprise customers, with monthly plans ranging from $9 – $499. “We wanted to have a free developer account to encourage people to do mashups with our API and test out skunkworks integrations”, says Wheeler, keen on keeping the hacker community close. But that’s not all: as the company is trying to make its product easy to use, it has just launched an integrated solution with a major e-commerce platform vendor, Shopify, which will make its recommendations engine a 2-minute install for shops.

All these features certainly made an impression on Y Combinator‘s Paul Graham, since DirectedEdge managed to raise $15,000 in seed funding from Y Combinator and is now heading for a second round of angel capital.

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