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Taboola buys Outbrain as digital ad networks consolidate

Taboola buys Outbrain as digital ad networks consolidate


If you’ve been on the internet in the last 10 years, you couldn’t have missed them: Rows of small, box-shaped ads at the bottom of articles, promising to take you to more articles — or to find an amazing credit card, or a too-good-be-true solution for belly fat, or to see what really happened to that teen TV star from a long time ago.

You may complain about them, and some publishers have stopped running them. But there are very good odds you’re going to see them all day, every day — like at the bottom of this very article.

Now the two companies that dominate that corner of the ad business are getting together. Taboola and Outbrain, two New York City-based companies run by Israeli CEOs, are combining. It’s a move their employees, investors, and everyone else in the digital ad business have been predicting for years.

The two companies are calling this a merger, but it certainly looks as if Taboola is buying Outbrain: The combined company will be called Taboola, and current Taboola CEO Adam Singolda will stay CEO; his longtime Outbrain counterpart Yaron Galai will leave. Outbrain shareholders will get 30 percent of the combined companies, plus a $250 million cash payout.

The two companies had collectively raised more than $300 million over more than a decade, and they say that has allowed them to build big businesses: Both Taboola and Outbrain say they are profitable, and that the combined company will do $2 billion in gross revenue next year.

If you read articles on the internet, nothing is going to change for you: The Outbrain/Taboola ad boxes exist because publishers need additional ad revenue as they fight an increasingly tough battle against Facebook and Google for marketers’ dollars. (Vox Media, which publishes this site, works with Outbrain, which serves up the ads you’re seeing at the bottom of this page).

Publishers, though, may worry that their leverage will decrease and their terms will get worse as the two competing ad networks combine. That combination could also be an issue for regulators, who in recent months have been increasingly scrutinizing companies like Amazon, Google, and Facebook over antitrust concerns.

Singolda and Galai insist that won’t be a problem for their merger. They argue that they are still small potatoes compared to Facebook and Google, so regulators won’t have any reason to stop the deal. And they say publishers should be happy to have a stronger competitor to those internet giants, which can attract more advertisers, so publishers will get more money.

“We intend to grow what they make a lot,” Singolda told Recode.

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