While the deal remains subject to regulatory approval, Taboola is believed to have tempted Outbrain with an offer of $250m and a 30% stake in the new firm, still called Taboola.
Both founded in 2007, the two companies operate services that plug into partner publishers to drive traffic to “relevant” content.
Taboola said that the deal will “provide enhanced advertising efficacy and reach to marketers worldwide” and help news organizations more effectively find growth in the coming years.
Adam Singolda, founder and chief executive of Taboola, said: “Over the past decade, I’ve admired Outbrain and the innovation that Yaron Galai, Ori Lahav and the rest of the Outbrain team have brought to the marketplace. By joining forces, we’ll be able to create a more robust competitor to Facebook and Google, giving advertisers a more meaningful choice.”
EMarketer research said that 70% of total US digital advertising revenue in 2019 is controlled by Google, Facebook and Amazon.
“We’re passionate about driving growth for our customers and supporting the open web, which we consider critical in a world where walled gardens are strong, and perhaps too strong," Singolda continued. "Working together, we will continue investing to better connect advertising dollars with local and national news organizations, strengthening journalism over the next decade. This is why we’re merging; this is our mission.”
Yaron Galai, co-founder and co-chief executive of Outbrain, said the firms have a “shared mission and vision of supporting quality journalism globally”.
He added: “I’m confident that together, we will be able to further our mission, which we call our Lighthouse, of bringing the best, most trustworthy content discovery capabilities to users around the world.”
Singolda will remain chief executive of the combined company, although the branding may be refreshed to indicate the new offering.
Nick Welch, vice president of business development, ADmantX, said: "This merger has been speculated in the industry for some time and sees the two largest ‘content recommendation’ engines come together to present the new Taboola with a huge opportunity to create a scaled first-party data business on behalf of its publishers to take on Facebook and Google, if it can figure out how to comply with the increasing and shifting sands of regulation...
"However, neither Taboola nor Outbrain are particularly known for their premium or ‘quality’ headlines and in an era where brand safety, fake news and hate speech are becoming pressing concerns for brands and publishers alike, Taboola will need to adapt to these increasing sensitivities."
The board of directors will consist of current Taboola and Outbrain management and board members. Galai will “actively assist with the transition for the 12 months following the closing”.