- Taboola said this week it would repay $16 million it withheld from publisher clients amid the coronavirus earlier this year, according to a person with direct knowledge of the matter.
- The company's move to renege on these revenue guarantee deals contributed to the breakdown of its proposed $2 billion merger with rival content recommendation firm Outbrain.
- Taboola CEO Adam Singolda said advertiser revenue rebounded in the second half of the year and that the company is returning the amount publishers would have received had their guarantee deals not been put on ice.
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Content-recommendation company Taboola has told employees it planned to repay publishers $16 million in revenue guarantees that it pulled earlier this year, according to a person with direct knowledge of the matter.
Taboola is best known for placing the "content you may like" widgets at the bottom of news articles and home pages. Its clients include NBC, Bloomberg, CBS News, and Business Insider.
The company often won contracts with big publishers by offering them a guaranteed amount of revenue each month but which often came at a loss to Taboola. Other clients get a share of the revenue generated when their readers clicked on an ad in the widget.
Along with many other ad-dependent companies, Taboola's business took a hit during the early part of the coronaivrus crisis. It switched publishers from guarantees to 100% revenue share deals. Taboola said in a June blogpost that these measures, which some publishers agreed to, were temporary. Some publishers, including Fox News, left Taboola for competitors during the pandemic.
Now Taboola is restoring the money publishers would have earned during the time the guarantees were postponed.
"Publishers were there for us when we called them and they agreed to move their guarantees to the end of [their agreements]," Taboola CEO Adam Singolda told Business Insider. "As we finish the year and as advertisers rebounded [spending] in the second half, we want to give back the full amount. They were there for us and we are going to be there for them now and forever."
Singolda declined to comment on the total amount Taboola is returning to publishers.
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Taboola's move to renege on its guarantees was one of the sticking points in the breakdown of its merger with fellow content recommendation company Outbrain, which was called off in September. Outbrain hadn't mirrored the move with its existing guarantee deals, according to a person familiar with the company.
The two companies planned to combine and create a $2 billion content recommendation giant in October 2019. Under the initial plan, Taboola said it would acquire Outbrain for $250 million in cash and stock totaling 30% of the combined company. Singolda would lead the company's 2,000 employees.
But the deal dragged slowly through the global regulatory process with competition authorities in Israel and in the U.K. Then the coronavirus crisis hampered their businesses, and Taboola sought to renegotiate the terms of the acquisition, dramatically reducing the cash element. Outbrain turned it down.
Outbrain co-CEO told Digiday in September that his company terminated the deal because Taboola tried to change the initial agreement "similarly to how they changed agreements for publishers earlier this year."
Around the same time, Taboola's Singolda told staff in a memo, "While we continue to grow and do better than ever since the merger announcement, Outbrain's business continues to stagnate and in fact trend downward." Taboola instead would focus on its path to an IPO, the memo continued.
Outbrain's Galai told Digiday in September the company was profitable and hitting its key growth metrics.
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