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collarity.jpgCollarity, a company that helps monetize websites by monitoring user activity, is raising a second funding round of up to $7.8 million, VentureBeat has learned.

We wrote about the company back in 2006, when its emphasis was on a social search tool that allows site visitors to see what other visitors are interested in.

At the time, we noted that Collarity offers a interesting tool, but we also said the company faces some stiff competition from the hordes of other engines entering the market. Collarity seems to have broadened its focus since then — it still offers social search, but it’s now part of a larger suite of features that includes suggested content, tag clouds and targeted advertising. Websites install the features to gauge users’ activity and try to translate that data into greater traffic and revenue.

Of course, it’s not like website analytics and monetization is an empty field either — last week, for example, NuConomy announced that it had raised $3 million to compile and connect data about what every user is doing on a site (our coverage) — but Collarity seems different because it’s actively engaging with users through its different features. In an interview with VCCafe, Collarity chief executive Levy Cohen outlines a few other things that set his company apart: the fact that it’s easily-installed web service and that it’s free. (Cohen also notes that initially positioning Collarity as a social search engine was a mistake.)

The Palo Alto-based company has partnered with customers including Fox Networks and the Spanish-language V-Me networks, and unveiled a web video monetization tool last month.

The round is led by Amicus Capital in San Francisco and JC6 in Israel. Collarity declined to comment on or confirm the funding.

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