If you’re reading this, you’ve probably heard the news; Taboola and Outbrain have agreed in principle to join forces in an acquisition that will alter the course of the content recommendation space in a drastic way. For better or for worse? Well, that remains to be seen.
I want to start by congratulating Adam, Yaron, David, Eldad and their collective teams on getting to this point. We’ve all heard the rumors of this type of partnership for years, and it seemed like it wasn’t a matter of if, but when, a deal of some sort would finally happen. I can’t imagine it was easy for anyone, but here we are.
Joining forces to create a scaled platform to compete with the tech triopoly is no modest mission, and I think we can all agree that as things stand right now, the whole of Taboola+Outbrain is greater than the combined sum of its parts to take on the giants in Silicon Valley.
Okay, now that the formalities are out of the way, let’s talk about the brass tacks – what does this mean for publishers?
This is a hairy question to unravel. We’re less than 12 hours removed from the announcement and my DMs are chock full of clients, friends and colleagues articulating concerns of price degradation as a product of the acquisition.
If M&A history for deals of this size are any indicator, these concerns certainly hold water.
In reading some of the press regarding this acquisition, I’ve seen quotes stating that the combined entity will “double and triple” revenue for publishers.
It’s an interesting train of thought given the sheer amount of page real estate content recommendation widgets have gobbled up over the last year or so.
Hey, if adding infinite-scroll adfeeds to post article page real estate didn’t accomplish a 2x – 3x revenue lift for publishers, maybe a merger will?
I don’t buy it.
Consolidation in a fiercely competitive market does not logically lead to better pricing. That is especially true in the technology sector, where the quality and scalability of software and product are the ultimate drivers of price and performance.
At a basic level, there are two realistic ways for publishers to sustainably increase revenue:
- Increase traffic (planting more orange trees)
- Increase yield (squeezing more juice out of the oranges in the pantry)
BUCKLE UP FOR THE SALES PITCH….
Higher Quality = Higher ECPMS = Higher Revenue
At RevContent, we’re confronted with this challenge on a daily basis and last year, we brought on a new CTO, who immediately tasked our developer team with solving the problem of getting more juice from our oranges.
After talking to some of the largest news and media companies on the web, we realized we needed to take a sober look at the RevContent platform and do better.
We put ourselves in our publishers’ shoes and started to explore how to do more (higher ECPMs, higher revenue, higher user engagement, more ad quality controls, etc.) with less (fewer widgets on the page, fewer ads in the widgets, fewer contract contingencies, etc.)
Long story short, we spent the last 18 months in the lab focusing on a product that checks the necessary boxes to be more than viable for our best partners.
Leveraging a new machine learned quality scoring algorithm, RevContent rewards the highest quality publisher traffic with the highest yields and revenue.
In order to put ourselves in a position where we could service our highest quality publishers with better performance, we made the decision to aggressively terminate our lowest quality publishers. We started this process in Q4 2018.
We’re now well into this process, and the results speak for themselves.
By aggressively taking a quality first approach on the supply and demand sides of the business, RevContent’s tier 1 publishers have seen a 117% increase (and still growing) in ECPM since Q1 2018.
The numbers in the graph below are taken from a data set of over 288 billion impressions.This is real, sustainable, performance data and I think it tells a story that matters now more than ever.
You’re likely going to hear things are “business as usual” from your account managers at your current content recommendation provider. Remember that you do have options and a “double and triple” revenue increase is available right now.
My DMs are open. Email richard@revcontent.com and let’s chat.
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