The marriage between Taboola and Outbrain is over before it started.
You'll never guess why.
The clickbait wedding of the year, between Taboola and Outbrain, has been called off. After a year of planning, including getting permission by the Department of Justice, the combined company which would have, on paper, approached Facebook and Google-like numbers in terms of reach (claiming the partnership would get content in front of 2 billion people) is now just another casualty of 2020.
(Image via Spongebob Squarepants)
Adexchanger offers this rationale:
First, Taboola changed its commitment to publishers in June. It stopped offering publisher guarantees and switched to a revenue share model. This caused Taboola to breach several publisher agreements, according to the source, and led the company to lose high-profile customers, including Fox News and News Corp in the UK.
The fallout contributed to Taboola’s inability to line up new financing, which had been promised as part of the original merger agreement.
Here’s how the WSJ framed it:
Under the deal agreement, which was struck last October, Outbrain shareholders were to receive $250 million in cash and 30% of the combined company. A person familiar with the matter said Taboola sought to renegotiate the deal as the coronavirus pandemic affected the business of each company, but the two sides couldn’t come to a new agreement.
The combined company would have been valued at $2 billion, but this was not, in fact, a love connection.
Indeed, according to multiple reports, they started to fight once the money got tight, as advertisers reined in ad budgets due to the coronavirus. Additionally, as the new company would be called Taboola, there was always some tension between the execs.
According to Techcrunch:
“No one gets divorced because they’re happy,” another source close to the deal said about the feeling of resignation over the development.
And while the merger got the green light from United States regulators, the new company was still being looked at from the UK and Israeli governments.
Taboola and Outbrain present perhaps the most interesting litmus test in media. On the one hand, journalists particularly and readers generally dismiss the content recommendation boxes as providing no value to visitors, at best; at worst, showing readers some pretty unappealing content, which then gets them mad for visiting the site.
On the other hand, these recommendation companies provide publishers with not insignificant revenue, with some news companies generating millions from them. It’s hard to turn down money. Especially in this economy.
It’s really become a Fasutian bargain, where publishers choose between taking money from content recommendation services and pissing off readers. And it’s been a conversation for almost a decade.
But for many editors — especially those who don’t interact much with the business side of the house — the feeling is that the revenue generated by the Taboolas and Outbrains of the world is not worth the sacrifice of editorial dignity.
In an email to Digiday, Ben Williams, New York Magazine editorial director, wrote simply, “The revenue doesn’t justify the downsides (aesthetics, sending readers elsewhere) for us.”
Here’s a tool that shows you all 56,099 sites that use Taboola.
So what does this mean moving forward? Click here to find out!
Thank you for allowing me in your inbox, today and every day. If you have tips or thoughts on the newsletter, drop me a line. Or you can follow me on Twitter. If you enjoyed this edition, please consider sharing it across your social platforms or getting your colleagues to sign up. Thank you!!
Billy Joel, “Scenes From an Italian Restaurant”
Some interesting links:
For publishers and ad-tech execs:
IAB’s CEO steps down; David Cohen assumes role (Ad Age)
For publishers:
The Athletic hits 1 million subscribers after enduring sports shutdown (CNBC)
Facebook says ‘technical issue’ caused its ads to appear on publisher websites without their permission (Digiday)
For billionaires:
Bezos, antitrust, and the power of media patronage (Fast Company)
For brands:
How Patagonia is learning to become an anti-racist company (Patagonia)
For platforms:
Another Facebook worker quits in disgust, saying the company ‘is on the wrong side of history’ (WaPo)
Facing Trump Ban, China’s TikTok Embeds Itself Into U.S. Culture (Bloomberg)
For journalists:
A robot wrote this entire article. Are you scared yet, human? (The Guardian)
For media criticism:
Why That Atlantic Article Won’t Bite Trump (Politico)