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Taboola Founder and CEO
Adam Singolda.
Taboola

Taboola, the digital content recommendation company, has acquired
New York City-based video ad tech firm ConvertMedia as it looks
to take on the likes of YouTube, Facebook, and Snapchat in the
video advertising space.

ConvertMedia specializes in what are known as “outstream” video
advertising formats, which tend to appear within the content of
an article and only play when the viewer is actually looking at
the ad unit.

Both publishers and ad buyers like outstream video ads
because they offer more highly-prized video inventory (as they
can appear anywhere on a site, not just within a piece of
video content) that can be bought programmatically (using
automated platforms rather than having to buy direct from sales
teams), and they tend to be less annoying for the user
than pre-roll or mid-roll video ad formats that require them
to watch an ad before they can get to the actual video they want
to watch — with outstream, you can simply scroll away.

For Taboola — which you may recognize as being one of the
companies that serves you up sponsored “content you may like” at
the bottom of articles — outstream video technology means it can
get its ads much higher up the page, where they are more
likely to be seen. Taboola did offer video ads before, but the
user had to click away from the site they were on in order to
view them, whereas outstream keeps the user on the same page,
which is likely to drive higher ad rates.

Speaking to Business Insider, Taboola CEO Adam Singolda explained
his company has the vision of becoming one of the largest video
streaming platforms on the open web.

Taboola/comScore

Currently, Taboola content reaches 1 billion users a month,

according to comScore, and Singolda hopes that now it can
convert that reach into at least 1 billion video streams.

“Snapchat, Facebook, and YouTube are the only three companies out
there I know that are doing that,” Singolda said.

Snapchat said in April its users watch 10 billion videos a
day. In November, Facebook said it had reached 8 billion
daily video views. YouTube prefers to talk about viewing hours:
It says
on its website that “every day, people watch hundreds of
millions of hours of YouTube videos and generate billions of
views.” The majority of those views are driven by users
rather than ads, unlike with Taboola, where publishers and
advertisers will pay for a mixture of branded content and
pureplay ads.

Singolda wouldn’t comment on the price of the transaction, which
was a cash and stock deal. The press release announcing the
acquisition says ConvertMedia has a current annual
run rate of $50 million, which would suggest the value was in the
tens of millions of dollars.

Yoav Naveh, ConvertMedia
CEO.
Twitter

Like Taboola, ConvertMedia is also a New York City/Israel-based
company with an Israeli founder. Singolda and ConvertMedia CEO
Yoav Naveh had known each other for a few years ahead of the deal
and the companies share an investor in Pitango Venture Capital.

Taboola had been shopping around for a technology company
with native video expertise and had been struck by
ConvertMedia’s “fast growth” from single digit millions of
dollars in 2014 to tens of millions of dollars today.

Singolda said he’s also excited about the relationships
ConvertMedia has with TV ad buyers —  something Taboola
didn’t have ahead of this acquisition. TV ad budgets tend to
be far higher than those set aside for digital media and video is
seen as the simplest way to help convert some of that spend
because TV and video ads broadly follow the same kind of creative
format.

ConvertMedia’s most direct competitor is France-based video ad
tech outfit Teads, which is said to
have invented the outstream video advertising unit. Its
other competitors include companies with video SSPs (supply-side
platforms) such as AppNexus, Altitude Digital, Tremor Video,
and SpotX. ConvertMedia raised an undisclosed Series A round
in 2010 but has never disclosed the amount. It has around 60
employees.

Taboola has more than 400 employees and has raised $160 million
in funding to date.
Business Insider estimates Taboola generated $500 million in
gross revenue in 2015.

Disclosure: Business Insider is a Taboola customer.

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