Taboola steps up in video, buys ConvertMedia for shy of $100M

Taboola, the startup behind the publishing widget that recommends more content at the end of articles online, has made an acquisition to expand its horizons beyond the written word: it has bought ConvertMedia, a recommendation engine designed specifically to sniff out and recommend online videos at scale.

Terms of the deal are not being disclosed but we understand from sources that it is in the very high double-digit millions, just under $100 million.

ConvertMedia, which is based out of Israel, had raised an undisclosed amount of funding from investors that included Spark Capital and Pitango (the latter also being an investor in Taboola). ConvertMedia was generating around $50 million in annualised revenue prior to the deal.

(For some context, Taboola itself has raised around $160 million, says it has touched hardly any of that because it’s currently profitable, and is valued at around $1 billion.)

Taboola’s CEO Adam Singolda tells me that today Taboola serves 360 billion content recommendations daily to around 1 billion unique users (double the number it covered in February 2015), with publishers that use its widgets including heavily trafficked sites from AOL (which owns TechCrunch), Conde Nast, and the Daily Mail Group, among many others.

The hope is that adding in ConvertMedia will help Taboola reach 1 billion video views per day to put it into closer competition with the biggest players in video today, and set it further apart from the likes of more direct competitors like Outbrain.

“If Taboola streams more than 1 billion videos daily, then Taboola becomes a significant source of video supply, which today is mostly Facebook, Snapchat and YouTube,” he said. 

Singolda once told me a while ago that Taboola was first conceived as a video recommendation service when it was founded back in 2007. Today, however, the majority of the content that it accompanies — and that it subsequently recommends today — consists of articles and other works of writing.

But the tide has been rapidly shifting in the publishing world. Spurred in part by the rapid growth of video services on sites like Facebook and YouTube, publishers have been looking for ways to keep users on their own sites for longer, and to subsequently cash in on more lucrative, premium advertising formats beyond the legacy display market. And that has led them into developing a lot more video content.

Taboola is hoping that ConvertMedia’s existing footprint and technology — which is getting integrated into its wider platform — will mean that publishers will use its widget alongside videos as they already do with articles.

“We could send you to a YouTube video already but not directly out of our feed,” Singolda said. “Now we have access to buyers and marketers who want to syndicate videos on to other publishers’ sites. We have the ability to optimise and recommend those,” similar to what they do already with written content by circulating around traffic by way of its widgets. ConvertMedia also brings to Taboola a lot of relationships, he said, “eight years of business partnerships with TV buyers for syndication,” he said. “We used to syndicate and send people away, but and now we can also bring people in.”

The videos will come into Taboola in small doses, at least at first. Singolda says that initially, those who come across Taboola widgets on pages will likely only see “zero to one” video in the Taboola carousel. He says that the company is also still experimenting with how videos will appear in the carousel. One option is that they may autoplay “following Facebook’s lead on autoplay”; another may be a little symbol to indicate you’re seeing a video.

Just as publishers are looking to video as a way of keeping users better engaged on their sites, as well as the premium ad dollars coming in, they are also hoping that video content will help them keep a strong channel of social traffic coming into their sites, as posts with video on Facebook generally perform very well.

This highlights a different challenge for the publishing world: the role of how sites like Facebook and Google (or Twitter or Snapchat or any other social or interactive discovery site) could ultimately end up eating publishers’ lunch by becoming the primary platforms for consuming their content.

For Taboola itself, that is also where the startup ultimately hopes it can have an impact: as a lever for publishers to offer discovery and recommendation on their own sites. That also makes Taboola the startup an interesting company.

Verizon-owned AOL yesterday made the bold step of acquiring Yahoo for $4.83 billion, also in part to scale up and position itself as a viable third option beyond Google and social for monetizing content. Coincidentally, it was reported earlier this year that Taboola gave an equity stake to AOL as part of a strategic deal, although from what we understand AOL is not actually an investor as a result of that.

Considering that Google and Facebook are also eyeing up better ways of working with publishers, it leaves the door wide open for recommendations of what Taboola may do next.