Yahoo this morning announced it has purchased a roughly 25 percent stake in content recommendation and native ad business Taboola, showing its continued faith in ad revenues as the core of its business model.
The share purchase comes as part of a wider 30 year deal which the two companies estimate will generate $1 billion in annual revenues. Taboola says the two hope to develop a “leading native advertising offering for advertisers, publishers, and merchants on the open web”.
Under the terms of the deal, Taboola will run native advertising capabilities across Yahoo’s digital media properties. This portfolio includes Yahoo-branded publications like Yahoo News and Yahoo Sports, as well as Yahoo Mail, TechCrunch, and Engadget. These ads will be sold via Yahoo’s own demand-side platform. Revenues from these ads will be split between the two companies – the exact split hasn’t been disclosed.
“Partnering with Taboola enables Yahoo to further enhance the contextual and native offerings within our unified advertising stack,” said Jim Lanzone, CEO of Yahoo. “The partnership also allows Yahoo and Taboola to continue to differentiate in market, improving user, advertiser and publisher experiences across properties, while benefiting from the long-term tailwinds in digital native advertising. Together with Taboola, we will maximize reach and campaign performance for advertisers, enhance monetisation opportunities for publishers, and drive improved, privacy-forward experiences for users.”
Meanwhile Adam Singolda, founder and CEO of Taboola, said that Yahoo’s growth areas of video, native, and ecommerce aligned with his own company’s priorities. “This partnership is a big step toward achieving our goal of generating $1 billion in ex-TAC by 2025,” he said.
A tale of two turnarounds?
The deal brings together two businesses which have struggled in different ways over the past few years, with both hoping that their combined offering will win bigger chunks of ad budgets, even at a time when ad budgets are under increased scrutiny.
Yahoo’s difficulties, in its various incarnations as Oath, Verizon Media, and now back in its original Yahoo brand, have been well documented. While its various web properties continue to draw massive audiences across the globe and its owned and operated ad tech remains popular, it’s often struggled to get the most out of its holdings. The $3 million sale of Tumblr, which it originally bought for over $1 billion, and the $4.6 billion write-down on the company while it was still owned by Verizon are the most obvious examples.
Now however, having been sold by Verizon to asset management firm Apollo in September last year, Yahoo is hoping to fare better as a standalone company.
Taboola meanwhile has had a difficult time on the stock market since going public via a merger with a special purpose acquisition company (SPAC), in June last year. While many tech companies have seen their share prices drop over the past year, Taboola’s fall, down by over 80 percent from its IPO price, has been particularly harsh. In its most recent quarterly earnings report, the company reported a 1.9 percent year-on-year fall in revenues, feeling the effects of a tighter ad market.
But this thirty year deal clearly isn’t just aimed at driving growth in current macroeconomic conditions. Yahoo’s Lanzone says he feels there’s plenty more mileage in digital advertising, and that his company is well placed to capitalise on that growth.