Yahoo takes a minority stake in advertising network Taboola

Yahoo takes a minority stake in advertising network Taboola

Yahoo is deepening its push into digital advertising, even as rivals warn the market is teetering.

The internet pioneer, which was taken private in a $5 billion deal last year, is taking a roughly 25% stake in Taboola, the company known for offering eye-catching links on websites Web, the companies’ chief executives said in an interview. The agreement is part of an exclusive 30-year advertising partnership that allows Yahoo to use Taboola’s technology to manage its significant business in native advertising – advertisements that feature the characteristics of traditional news and entertainment content.

Taboola’s shares have fallen nearly 80% in the past year amid a broader slump in public and advertising markets, giving it a market capitalization of $455 million. In January last year, when Taboola struck a merger deal with a special purpose acquisition company, or SPAC, it was valued at $2.6 billion.

Executives from companies like Meta and TikTok have warned that advertisers nervous about the economy have cut spending. But Jim Lanzone, Yahoo’s chief executive, said in an interview that the Taboola deal puts the two companies in a good position for the recovery of the advertising market.

“I think, you know, five, 10, 30 years,” Mr Lanzone said. “Digital advertising has a huge long-term tailwind.”

He added that while the company would continue to try to make money in other ways, such as expanding its subscription business or investing in e-commerce, “we have hundreds of millions of people consuming news, sports and finance on market-leading properties that are heavily monetized by advertising – and will continue to be.

Yahoo, an early internet giant, has been overshadowed over the years by tech rivals like Alphabet’s Google and Meta’s Facebook. The company endured a messy power struggle and unstable leadership as it matured, leading to layoffs and shifts in strategy.

The company was taken private by investment firm Apollo Global Management in hopes that new leadership and respite from the public markets would give it a chance to grow. Yahoo says it has around 900 million monthly users of its properties, which include AOL, TechCrunch and Yahoo Sports, making it one of the biggest destinations on the web.

Taboola, founded in 2007, specializes in native advertising, operating an advertising network on thousands of well-known websites, including CNBC, NBC News and Insider.

The agreement with Yahoo gives Taboola the exclusive license to sell native ads on Yahoo sites, and the companies will share the revenue from those ad sales. The companies did not disclose the terms of the revenue split.

Yahoo and Taboola estimate the deal will generate at least $1 billion in revenue per year. Yahoo, which will become Taboola’s largest shareholder, will also get a seat on the company’s board. And Yahoo’s advertisers will have the ability to sell their ads on sites in the Taboola network.

“Everywhere I look at Yahoo, I see rockets,” said Adam Singolda, chief executive of Taboola.

Taboola and its rival, Outbrain, have been engaged in a years-long battle to sign exclusive advertising deals with publishers. They once made a deal to merge, but called it off in 2020, and each went public a year later.

Taboola reported about $332 million in third-quarter revenue this month, down about 2% from a year earlier, a drop it attributes in part to the weak advertising market. digital.

Yahoo, for its part, seeks to grow every product within its mini media empire and capitalize on its audience. Lanzone also said Yahoo was ready to turn some of its popular websites into standalone public companies.

But it’s also possible that Yahoo will remain intact as the holding company for its websites, he said, and that the holding company will be bolstered by additional deals. The company said in September that it had acquired The Factual, a company that uses algorithms to rate the trustworthiness of news websites.

“We’ve certainly been very aggressive in looking for areas where we could innovate where we could partner or acquire,” Lanzone said.

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