Why the Taboola and Outbrain Merger Didn’t Click

  • News & views

Originally posted on AW360.

By Rachel Tuffney, EVP of US Operations, Dianomi

One of the highest-profile mergers in the advertising technology and publishing business – Taboola and Outbrain – fell apart this week, nearly a year after its announcement. While it’s difficult to pinpoint any one reason as an outside observer, it’s clearly due to a perfect storm of compounding factors: market timing, new demands for brand safety as well as the world-changing under a global pandemic and waves of a social sea change.

First: timing. Outbrain and Taboola’s business models are similar and both hit by the same threats. I suspect that the “no-frills” business model for Taboola and Outbrain no longer fits into the financial plans needed to make the financing and merger work on the old agreement. Technology and society move so fast, and today, the ecosystem is placing more value on high quality, brand-safe advertising and content with no compromises.

The move towards brand safety

Brand safety has become more and more paramount over the last few years, and this was ratcheted up further by the recent Facebook boycott. Layered on top of the impact that a global pandemic has had on ad spend and overall budgets. It should come as no surprise that two native advertising goliaths that aren’t exactly synonymous with premium or quality content – despite beginning to implement brand safety measures – are swimming upstream against a very strong brand safety current.

The move towards quality and measurement

Digital advertising is only as successful as the strategy behind a campaign. Brands must consider a range of factors to ensure success at reaching targeted audiences. Right place, right time. Native advertising, a subset of digital advertising that Taboola and Outbrain have arguably dominated, is reliant on having the right content, delivered in the right environment to achieve clicks.

But as the industry shifts towards quality environments and expanded measurement tactics (moving away from measuring clicks in isolation), is it still accurate to identify Taboola and Outbrain as category leaders? Publishers are increasingly looking for incremental revenue opportunities that native can provide but balanced very much around maintaining a quality audience experience and an in-context opportunity for brands to have that “right place, right time” assurance.

The move towards publisher-driven technology 

The increased focus on publisher side technology (in terms of in-house products and preferred partner companies who co-develop products and sign up to brand and quality guidelines) – means publishers no longer have to compromise. Taboola and Outbrain may be able to promise quantity and reach but publishers will probably no longer sacrifice quality and flexibility.

The silver lining of these two brands ultimately not clicking is perhaps a greater ability for publishers to maintain a quality editorial environment, as well as a premium reader experience without restricting their monetization options at a time when they are already up against blocklists and decreased ad spend. More publishers and more brands see the possibilities of in-context native advertising, particularly if it can be executed in a premium environment.