Taboola to challenge Outbrain's Israel dominance

Adam Singolda and Yaron Galai

Taboola is re-entering Israel's content recommendation market, worth an estimated NIS 30-40 million annually.

Roy Goldenberg Outbrain and Taboola, the world's two leading content recommendation companies, are used to competing against each other in North America, Europe and the rest of the world. The Israeli market, where both companies were founded and first developed, was not considered until a few weeks ago, a serious arena of contest. Outbrain has dominated the Israeli market, where until recently Taboola never really made any major effort.

Taboola operated here some years ago. Its website then offered only video recommendations, before developing the text recommendations that appear beneath articles and recommend additional content that may interest readers. Taboola subsequently abandoned the local market, leaving the field clear for Outbrain. The only footprint Taboola had left behind were the video recommendations on the "Calcalist" financial news website and article recommendations on "Globes" English site.

But now Taboola, which last week announced it had closed a financing round of $117 million, has decided to target the Israeli market as part of its global expansion into more languages. Sources inform "Globes" that over the past few weeks, Taboola representatives have met with staff at Israel's leading websites in an attempt to persuade them to leave Outbrain and work with Taboola's recommendations system.

Taboola's re-entry into the Israeli market will be backed up by a sales team. Outbrain is on alert in Israel and is showing signs of pressure. Senior executives at several Israeli websites have told "Globes" that Outbrain is aware of Taboola's renewed attempts to focus on Israel and is trying to equal its terms and offer attractive proposals to keep its major customers.

Taboola is expected to show recommendations on Israeli sites in the coming weeks and it seems it is hoping to catch a big fish on the web, to show how a major Israeli site integrates its systems, so as to attract other sites. A source in the industry told "Globes." "Two companies in Israel competing for the market can only be a good thing. Sites will earn more money from this rivalry." The same source estimates that the Israeli market generates NIS 30-40 million annual revenue from advertising content with Outbrain's systems.

The business model of both companies is based on the simple principle of payment per click, which is embedded in the recommendation system. Content is recommended beneath articles some internal and at least one external. The external recommendation can be for another content site or an article about a brand or advertiser. The recommended company pays for the traffic and payment is divided between the content recommendation company and the site that directed the user to the external site.

The money is ultimately the major factor dictating whether a site will choose Outbrain or Taboola. One source said that ultimately both companies work using a very similar engine, technology and algorithms.

Taboola said, "We are very excited about entering the Israeli market and want to be here for the long term. We are talking about multi-year deals and plan to continue to invest here."

Published by Globes [online], Israel business news - www.globes-online.com - on February 9, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Adam Singolda and Yaron Galai
Adam Singolda and Yaron Galai
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