Outbrain restructuring, denies activity decline

What is behind the restructuring of Israeli content sharing company Outbrain's senior management? It was reported this week that Eytan Galai, who up until now has managed all of the company's business activity outside the US, has now been appointed chief revenue officer (CRO), and that he will also be responsible for US business. This makes him number three on the company ladder after joint CEOs Yaron Galai, his brother, and David Kostman. The company also announced that Matt Crenshaw, who managed Outbrain's US business, had asked to leave his position in the company in order to join his family in Atlanta.

The new appointment comes exactly one year after the previous structural change in the company's management, when Kostman, previously a director in Outbrain, was appointed joint CEO. It was explained at the time that each CEO would concentrate on his area of expertise: Yaron Galai on innovation and marketing development and Kostman on business management.

Outbrain says that the change is aimed at improving the company's business performance, but denies that it is going through a bad period. "On the contrary," Eitan Galai told "Globes," "the profit indicators this year are not bad at all. In a company of hundreds of millions, every percentage point is a lot of money. We grew very nicely this year, and growth is just accelerating." At the same time, Galai does not disclose exact financial data, merely saying that profit margins in Israel are among the highest of all the countries in which Outbrain operates. He adds that the company's workforce grew 30% to over 700 this year.

According to Eytan Galai, what lies behind the organizational change is consolidation of the two entities that operated side by side Outbrain: one in the US and one in the rest of the world. "We'll now operate as a single global enterprise, not several enterprises operating in parallel," he says. He explains that the new way of working is more suitable to business with international content groups operating in more than one country.

Coping with Taboola

Galai made his remarks amidst ongoing intense competition between Outbrain and Taboola. The two Israeli content recommendations companies have locked horns in both the Israeli market and worldwide. While Taboola under founder and CEO Adam Singolda has the reputation of an innovative, daring, and media-wise company, Outbrain is having trouble forging a similar image; even worse, it has had to deny allegations of a decline in its business.

One of the persistent claims is that in the past two years, Outbrain has lost agreements with most of the major websites. The most prominent example is ynet.co.il, which switched to Taboola. Outbrain says that deals are going in both directions. Another assertion is that Outbrain pays commissions to media firms and companies, while Taboola does not. Outbrain says that it does nothing of the kind.

It should be noted in this context that the Israeli market is a tiny drop in the ocean of the global content recommendations market. The real battle is in the global market, where both of the Israeli companies are up against Google and Facebook, which most advertisers clearly prefer.

Outbrain is now launching two new products, SmartFeed and Focus, designed to protect surfers' engagement to the content sites of publishers, which are Outbrain's customers. SmartFeed is aimed at meeting the challenge posed by Facebook through a substitute feed, which offers various types of content designed to be relevant to surfers. Like Outbrain's ordinary recommendations, some of this content will come from the website itself and other websites, and some will be financed. Focus offers financed video relevant to surfers without taking them out of the content website.

According to Galai, the new tools are showing good initial results according to a range of measures: increased revenue for the content websites, connecting surfers to the website, and the proportion of those watching a video to the end. "We used to offer four recommendations at the bottom of a story. Today, we offer a feed with a more Facebook-like experience to which the audience is more accustomed and continues surfing from within the website. It can be a substitute for a content search on Facebook, which has taken advantage of publishers somewhat in the past year. Here there are fewer cats and more serious things," he says.

"Globes": What will the company's growth engines be in the coming year?

Eytan Galai: "I can't reveal everything, but starting this year we have entered new markets in Asia and Europe and will push it a lot further, because it's very important for us as a global company. The new products have enormous potential, and we'll introduce more products later. The whole idea of a global enterprise instead of enterprises working in parallel will give us a very big lever."

Revenue tripled in three years

Outbrain was founded in 2006 by Yaron Galai and CTO Ori Lahav. It currently displays over 275 billion personalized recommendations, including articles, posts, video clips, apps, and products for surfers on content websites such as CNN, Sky, The Guardian, Fox News, etc. The company says that it reaches 1.2 billion surfers a month. Outbrain has raised $150 million to date.

Following Outbrain's recent measures, Kostman said, "We're in a period of strong growth in sales and profit. Connecting global business management will enable us to effectively leverage our presence in the various markets and reach the targets we set for ourselves. Eytan (Galai) led the development of international markets with great success. Sales almost tripled to hundreds of millions of dollars in the past three years. I'm confident that in his new position, he will continue developing our global activity."

Published by Globes, Israel business news - en.globes.co.il - on October 24, 2018