Taboola and Outbrain Said to be Talking About a Merger

You may not know their names, but chances are you’ve seen their work, down at the bottom of an article, on any one of a thousand online news sites. You might even have clicked on one or two of their suggested links, although you probably wouldn’t want to admit it.

Their names are Taboola and Outbrain, and their business is selling the recommended links that show up on websites run by hundreds of different publishers, both large and small (including Time Inc., which owns Fortune magazine).

The two companies, both of which got their start in Israel but are now based in New York, have been competitors for years, but now there are reports that they may be considering a merger.

A report of the talks first appeared on Thursday on a site called Calcalist, a business news publisher based in Israel. According to the article, Taboola and Outbrain are in “the advanced stages” of a merger proposal, having determined who will get what share of the equity.

The idea of a merger between the two companies is not a new one. As Calcalist explains, they have held similar talks twice before, with the last negotiations occuring in 2015. But the two sides could not agree on how the assets would be split.

The two companies are like mirror images of each other. Both were founded by Israeli entrepreneurs — in Outbrain’s case, it was Yaron Galai, who started the company in 2006, and in the case of Taboola (which got its name from the Latin term for a blank slate, “tabula rasa”) it was entrepreneur Adam Singolda, who founded the company in 2007.

Both rose to prominence by helping publishers of all kinds generate more traffic for their web pages. In some cases, media companies pay to have their stories included in the recommended link widgets both companies operate, while others are paid for the traffic they generate. Some do both.

The result can be lucrative for publishers that are struggling to make ends meet with digital advertising, and watching their print revenues decline precipitously. According to published reports, Time Inc. signed a deal with Taboola in 204 that was worth $100 million over three years.

As Facebook and Google have taken a larger share of the digital-advertising pie, however (recent estimates are that they accounted for almost all of the growth in 2016), pressure on Taboola and Outbrain has intensified, which may explain the revived merger discussions.

Concerns about the rise of “fake news” and clickbait have also caused a number of publishers to stop using the recommended link widgets produced by both companies.

According to Calcalist, the combined value of the two companies is estimated to be $1 billion, and that figure also says something about the changing market for their services. In 2015, Taboola raised funding that valued it at $1 billion, while Outbrain was also said to be valued at a similar amount when it was considering an IPO in 2013.

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