Yahoo is deepening its push into digital advertising, even as its competitors warn that the market is faltering.
The internet pioneer, which was taken private in a $5 billion deal last year, is taking a roughly 25 percent stake in Taboola, the company known for serving up attention-grabbing links on websites, the CEOs of the companies said in an interview. The deal is part of a 30-year exclusive advertising partnership that allows Yahoo to use Taboola’s technology to manage its sizable business in native advertising — ads that have the characteristics of traditional news and entertainment content.
Shares of Taboola have fallen nearly 80 percent over the past year, amid broader doldrums in the public and advertising markets, giving it a market capitalization of $455 million. In January 2021, when Taboola struck a deal to merge with a special purpose acquisition company, or SPAC, it was valued at $2.6 billion.
Executives at companies such as Meta and TikTok have warned that advertisers skittish about the economy have pulled back on their spending. But Jim Lanzone, CEO of Yahoo, said in an interview that the deal with Taboola puts both companies in a good position for when the ad market revives.
“I’m thinking, you know, five, 10, 30 years,” Lanzone said. “Digital advertising has huge wind at its back over the long term.” He added that while the company will continue to try to bring in money in other ways, such as expanding its subscription business or investing in e-commerce, “we have hundreds of millions of people consuming news and sports and finance on market-leading properties that are heavily monetized through advertising — and will continue to be.”
Yahoo, a giant of the early internet, was 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 the investment firm Apollo Global Management in the hopes that new leadership and a respite from the public markets would give it a chance to grow. Yahoo says it has about 900 million monthly users of its properties, which include AOL, TechCrunch, and Yahoo Sports, making it one of the largest destinations on the web.
Taboola, founded in 2007, specializes in native advertising, operating a sprawling advertising network over thousands of well-known websites, including CNBC, NBC News, and Insider.
The deal with Yahoo gives Taboola the exclusive license to sell native ads across Yahoo’s sites, and the companies will share revenue from those ad sales. The companies did not disclose 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 get a seat on the company’s board. And Yahoo advertisers will have the ability to sell their ads on sites across Taboola’s network.
“Everywhere I look at Yahoo, I see rocket ships,” said Adam Singolda, Taboola’s CEO.
Taboola and its rival, Outbrain, have been locked in a multiyear battle to sign exclusive advertising agreements with publishers. They once struck a deal to merge, but they called it off in 2020 and each went public a year later.
Taboola this month reported roughly $332 million in revenues for the third quarter, down about 2 percent from the year before, a decline it attributed partly to weakness in the digital advertising market.
Yahoo, for its part, is looking to build up each product within its mini media empire and capitalize on its audience. Lanzone has also said Yahoo is open to spinning off some of its popular websites into stand-alone public companies.
But it’s also possible that Yahoo will stay intact as a holding company for its websites, he said, and that the holding company will be bolstered by additional deals. The company in September said it 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 of where we might innovate where we might partner or acquire,” Lanzone said.