Yahoo is deepening its commitment to digital advertising, even as its competitors warn that the market is faltering.
The internet pioneer, which was delisted last year in a $5 billion deal, is taking a roughly 25 percent stake in Taboola, the company known for providing high-profile links on websites, the companies’ CEOs said in a statement. an interview. The deal is part of a 30-year exclusive advertising partnership that will allow Yahoo to use Taboola’s technology to manage its extensive native advertising business – ads that have the characteristics of traditional news and entertainment content.
Shares of Taboola are down nearly 80 percent over the past year amid broader slumps in the public and advertising markets, giving it a market cap of $455 million. Last January, when Taboola struck a deal to merge with a special acquisition company, or SPAC, it was valued at $2.6 billion.
Executives at companies like Meta and TikTok have warned that advertisers skittish about the economy have cut their spending. But Jim Lanzone, Yahoo’s CEO, said in an interview that the deal with Taboola puts both companies in a good position for when the advertising market picks up again.
“I think, you know, five, ten, thirty years,” Mr. Lanzone said. “Digital advertising has a huge tailwind in the long run.” He added that while the company will continue to try to raise money in other ways, such as expanding its subscription business or investing in e-commerce, “there are hundreds of millions of people consuming news and sports and finance on leading properties. making a lot of money through advertising – and will continue to do so.”
A giant of the early Internet, Yahoo has been eclipsed over the years by tech rivals like Alphabet’s Google and Meta’s Facebook. The company endured a messy power struggle and shaky 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 a break from the public markets would give it a chance to grow. Yahoo says it has about 900 million monthly users of its properties, including AOL, TechCrunch and Yahoo Sports, making it one of the largest destinations on the web.
Founded in 2007, Taboola specializes in native advertising and operates an extensive advertising network through thousands of well-known websites, including CNBC, NBC News and Insider.
The deal with Yahoo gives Taboola the exclusive license to sell native ads on Yahoo’s sites, and the companies will share the revenue from those ad sales. The companies have not disclosed the terms of the revenue split.
Yahoo and Taboola estimate that the deal will generate at least $1 billion in revenue annually. Yahoo, which will become Taboola’s largest shareholder, will also have a seat on the company’s board of directors. And Yahoo advertisers will have the option to sell their ads on sites in Taboola’s network.
“Everywhere I look at Yahoo, I see missile ships,” said Adam Singolda, CEO of Taboola.
Taboola and its rival, Outbrain, are engaged in a multi-year battle to sign exclusive advertising deals with publishers. They once made a deal to merge, but they called it off in 2020 and each went public a year later.
Taboola this month reported about $332 million in third-quarter revenue, down about 2 percent from the prior year, a decline that was partially attributed to weakness in the digital advertising market.
Yahoo, for its part, is trying to build every product within its mini-media empire and take advantage of its audience. Mr. Lanzone has also said that Yahoo is open to converting some of its popular websites into standalone public companies.
But it’s also possible that Yahoo will remain intact as a holding company for its websites, he said, and that the holding company will be supported by additional deals. The company said in September it had acquired The Factual, a company that uses algorithms to evaluate the trustworthiness of news websites.
“We’ve definitely been very aggressive in looking at areas where we could innovate, where we could collaborate or acquire,” said Mr. Lanzone.
