Ever get the feeling there is nothing worth watching on television, despite there being 100+ channels? That same paradox is even more significant on the web, given the enormous and ever-increasing amount of Internet content.

Taboola attempts to create a solution in the online content marketplace. Taboola's tagline, “content you may like,” conveys a lot about its business philosophy. Recommending and connecting people to sites that may resonate with them is the core of Taboola’s business. The service appeals to audiences who don’t know what they are looking for (and the majority of habitual internet users, including educated ones, frequently fall in this category). The founder of Taboola, Adam Singolda, in an interview with Forbes, explained it this way: “I realized that there are three ways people got to consume content: (1) Search: if they knew what they were looking for and could type it (2) Social: if a friend of theirs shared it (3) Opportunistic: they just happened to be on a page, or they happened to open their TV– what’s next? I was very passionate about solving (3), and connecting people around the world with content they may like."

In essence, Taboola claims to be the reverse of search engine results. While search engines provide precisely what the user is searching for, Taboola recommends content proactively based on user’s preferences, which are, in turn, based on Taboola's sophisticated algorithms

Business Model

Founded in Israel, the firm is currently headquartered in New York and has offices in Bangkok, London, Pasadena, and Tel-Aviv.

Taboola offers a content marketing service that connects content creators with content publishers. Available tools and technology includes web-based widgets titled "Content You May Like," “You May Also Like,” "Recommended for You," or similar. These widgets carry pictures and links to related content (video, image-based slideshows, or articles) and are placed by content publishers on their sites. The linked content can be internal (from the publisher's website or network), as well as external (leading to other sites), for which the publishers get paid a share of advertising revenue. Current publishers include sites like The Huffington Post, Time, USA Today, The Weather Channel and Investopedia, among many others. 

On the other side are the content creators: customers who use Taboola to drive traffic to their sites and act as advertisers who pay for this incoming traffic. These are the sites for which links can be seen in the web widgets put up on the publisher’s website.

Advertisers may also be publishers (and vice versa), depending on their specific website business model.

How Content Marketing Business Works

The players in content marketing marketplace:

  • The content contributors (advertisers) who wish to drive traffic to their sites and are willing to pay for it in the role of advertisers.
  • The publishers (bloggers/site owners) who put a Taboola widget on their site and get paid for displaying the links.
  • The interface (Taboola) which connects the contributors and publishers and facilitates the functioning of the marketplace.

According to Taboola's site, it has 150 billion monthly recommendations, 400 million unique visitors, and more than one million content pieces. And according to ComScore, Taboola reaches more desktop users in the US than Facebook, Inc. (FB).

How Taboola Makes Money

In the content marketing business, the intermediary, like Taboola, is the controlling authority that:

  • Engages clients (content creators advertisers) who are willing to pay for getting traffic to their sites,
  • Connects publishers who can display links/widgets on their sites for advertisers’ page promotion, and
  • Offers technology that enables seamless integration of a marketplace where hundreds of sites are hosting widgets/links/ads, while others are getting the desired traffic with all activity in terms of clicks, payouts, quality of content, user engagement, and similar analysis being tracked in real-time through complex algorithms designed to increase customer engagement.

For providing this marketplace, Taboola collects a promotion fee from content creators/advertisers and shares some of its percentage with publishers. It is not known what percentage is paid to publishers and speculative estimates vary, but considering the high penetration on popular portals, it is assumed to be attractive enough to keep such publishers engaged. Taboola's earnings are also unknown. However, Taboola and similar companies are considered a threat to traditional context-based offerings such as Google's AdSense.

The Challenges of Content Marketing Business:

Not all bodes well for this advertising revenue generation business. Of concern are the following:

  • Content marketing may be against the wishes of the end-user and be perceived as spam.
  • Convincing publisher sites that moving visitors to other websites is not an easy task. Taboola has been successful so far with some big publishers signing up and by relating content links to publishers' networks. 
  • Related content links often lead to spamming targets and malicious sites, which has been a common complaint.
  • Methods, images, and language used by marketers are often perceived as misleading spam, promoting low-quality distasteful content, including sellable items that aren’t relevant or practical.

To circumvent these problems and allegations, Taboola has engaged in technical improvements through its algorithms and including a mandatory disclosure that is promptly displayed. It also defends content based on the user’s choices.

Another challenge is that people’s behavior differs on the Internet and real life, with many who might not pursue such topics offline keen to click on links to “Reduce Weight Quickly” or “Get Rich Quick” guide.

Development Phases 

(figures and timelines, courtesy of CrunchBase)

  • Founded in early 2007, Taboola focused on Video2Video (V2V) recommendations, as it was comparatively challenging to recommend videos due to the relatively complex content type (compared to text). V2V recommendations appear after a viewer is done watching their chosen video.
  • The company secured funding of $1.5 million from Evergreen Venture Partners in the same year of launch, followed by another $4.5 million the next year.
  • Taboola expanded beyond pure V2V to add Text2Video (T2V) and saw tremendous growth in 2010. It signed on big-ticket clients like Bloomberg, The Huffington Post, and The New York Times.
  • More investments by multiple investors followed from 2011 to 2013.
  • Taboola started article recommendations (moving from video to text and slideshow content) in 2013, and it introduced mobile apps in late 2013.

Future Business Potential for Taboola

Technical advances will need to continue to be integrated and enhanced for the company to remain in business and win the trust of end-users and publishers. A few of key features include:

  • Offering a unified dashboard for targeted audiences for the content they wish
  • Relevant, spam-free content on the content creators’ side
  • Better publisher payout than competitors

Having penetrated the larger publisher networks, Taboola's new opportunities may lie in the small, niche publishers, which offer limited traffic but may have a large enough segment to complement other clients.

Competitors of Taboola 

  • Outbrain – Started as a text-based contextual offering, Outbrain is now very much in Taboola's territory of text, image, and video. These close competitors have a similar operating model – recommending relevant content to people through widgets on publisher sites. And both Outbrain and Taboola are the talk of the town as the alternatives du jour to Google AdSense, Facebook, and similar other contextual advertising services.
  • Google AdSense – Pure contextual ad, AdSense has been the delight of both advertisers and publishers, owing to its tight control, relevant contextual ads, and optimum payouts. How Taboola plans to take on AdSense will be an interesting development to observe. 
  • Facebook ads – These ads have been around for some time, but they are limited to the Facebook network and other partner sites only.
  • Others like BlogadsYahoo advertising, and Komli remain focused on niche areas, regional focus, or are limited in their exposure.

The Bottom Line

While the online advertisement space remains dominated by Google AdSense, Taboola offers a unique variation, generating business from recommendation-based proactive advertising. Any online business runs the risk of quick customer loss and of going from boom to bust, as a result of an inability to deal with recurring or new issues (such as spam control) or of developments in competition, such as the entry of new, innovative players offering better solutions. How Taboola and its competitors innovate will shape the online advertising arena.