Baynote caught my eye at the Web2.0 conference in San Francisco a couple of weeks ago. They weren’t in a typical exhibit booth with screaming graphics and clever tchotchkies. They were at a small stand-up table in a mosh-pit of other companies doing speed pitches to the constant stream of attendees walking through. But they stood out because they do something different and highly compelling. They continuously analyze traffic patterns on a Web site’s pages in order to dynamically optimize search engine results, navigation and content. In essence, they leverage the actual behavior of the crowd to dynamically shape what gets served up to subsequent visitors, rather than relying on the experts or editors to manually determine content. They’ve been proving their value on sites ranging from Interwoven’s enterprise knowledge base to Intuit’s mission critical TurboTax web application.

Today Baynote is announcing a new addition to their product line, a solution they’re calling Community-Guided eCommerce, which leverages their analytics-to-optimization capabilities to serve up product and content recommendations. Like their other hosted solutions, the new application works behind the scenes to analyze about 20 heuristics that provide a clear picture of user behavior and decision-making–not only what links buyers click on, but more hidden behaviors like where the mouse tracks on a page. The stream of analytics among hundreds or thousands of users allows Baynote to determine, for example,

• what keywords a user entered to find a particular product
• what competing products they considered before deciding on a purchase
• what attributes or options they considered
• what accessories or add-ons they considered 

Baynote’s Community-Guided eCommerce then uses this data to dynamically generate landing pages that leverage proven search engine keywords, and to provide product recommendations and affinity product links to new users coming into the site. If you’re shopping, for example, for a camera, you might be served up a page that shows that among 2500 people who shopped for the same camera, these were the competing cameras considered, this is the camera most purchased, and these are the accessories most considered or purchased along with their camera. And again, it’s all happening dynamically.

I spoke with Jack Jia, founder and CEO of Baynote, for an hour last week about Baynote’s technology and market outlook. His vision is to change the way content is served up on the Web to more effectively guide users to content they want. User-generated recommendations, popularized by sites like Amazon, represented a great step forward, but they’ve also revealed a lot of challenges. When recommendations are offered voluntarily by users, you don’t really know the motivations behind a recommendation, much less if the recommendation is representative of most users. In most cases, only 1% of a site’s users post any content, and what drives them to post may range from true enthusiasm to a vested but concealed interest in the reviewed product. Jia is more interested in what he calls “the wisdom of the silent majority”–insights gained from what users actions rather than their words.

Baynote’s new Community-Guided eCommerce solution leverages this wisdom of the silent majority to offer a number of useful features and insights to eCommerce sites, which Jia says has increased revenue on customer sites up to 20%. Those features include:

• Peer-driven Recommendations, which automatically detect shopper segments and serve up product recommendations based on peer group purchasing behavior
• Seasonality and Fad Detection, which shows shifts in consumer interest and automatically adjusts product recommendations,
• Product Gap Detection, which identifies products that shoppers are looking for but are not currently offered, 
• Dynamic Landing Page Optimization, which displays visitor-specific product recommendations based on incoming search-engine traffic
• Implicit Folksonomy, which utilizes searching, browsing, and purchase behavior to automatically tag all products on the site to increase traffic
• Built-in A/B Measurement,  which automatically performs visitor split testing 

As a hosted application, Community-Guided eCommerce can be added to any eCommerce site, and it’s being priced on both a subscription and gain-sharing model. Baynote just received nearly $11M in Series B funding from Disney this month, and they’re lining up Class A customers like Motorola, Intuit and Fannie Mae. Based on their technology, vision, backing, and the impact of their products on revenue, I’d expect them to be a worthwhile investment and not a flash in the pan. I do think they may need to come up with a snappier name for the product, though. Community-Guided eCommerce is descriptive, but doesn’t exactly roll off the keyboard.