Some consolidation is afoot in the world of advertising. Taboola and Outbrain, rivals that both operate advertising-based content recommendation engines for publishers — which typically appear in the form of boxes at the bottom of articles online that feature a mix of stories from the publications themselves, plus ads and sponsored content from other sites — are forming a single company.
The aim: to bulk up to a customer list that will now number 20,000 online properties and an audience of 2.6 billion to compete better against the likes of Facebook and Google, online advertising giants that present the biggest competitive threat to both adtech startups and the publishers who are Taboola and Outbrain’s customers.
The two companies, both founded out of Israel but headquartered in New York, describe the deal as a merger, but the combined entity will be called Taboola, with Taboola’s founder Adam Singolda securing the CEO slot. Further, Taboola is paying Outbrain investors $250 million in cash plus a 30% share of the combined companies. The merger is creating a company that will be valued at $2 billion, making the transaction value of this deal $850 million.
Singolda said in an interview that each of them is already profitable and each was already clearing $1 billion in revenues annually. Taboola had individually passed a $1 billion valuation years ago. (Taboola had raised $160 million from investors that include Comcast, Fidelity, and Pitango; Outbrain had raised $194 million with investors including Index, HarbourVest and Lightspeed.)
The deal is literally years in the making. Reports of talks between the two go back as far as 2015, but Singolda said they have actually been talking for the better part of a decade. (Outbrain was founded in 2006, Taboola was founded in 2007.)
The reason it’s taken so long was down to ironing out the details and getting longtime rivals to trust each other.