Taboola has splashed tens of millions of dollars on a video ad tech company to take on YouTube, Facebook, and Snapchat
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.
"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.
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.