Taboola has had a busy month. Three weeks after the company went public on the Nasdaq, it acquired the ad technology company Connexity for $800 million on Friday.
Connexity is a logical and attractive acquisition target.
Taboola places a recommendation box on the publisher’s website to connect visitors with advertisers and other publishers. Connectivity is also rooted in the seller. It connects visitors to publishers’ websites with merchants and retailers through affiliate links (Connexity acquired affiliate marketing company Skimlinks last year) and compares prices with other shopping sites, such as PriceGrabber.com, at through their own prices and from Shopzilla.com. . There is some overlap between the 6,000 publisher clients of
Connexity and the 9,000 publishers of Taboola. But Connexity’s list of retail partners, including Macy’s, eBay and Wal-Mart, as well as stable small businesses, are new members of Taboola, said CEO Adam Singorda.
When Taboola completes the acquisition and integrates the back-end between the two companies, the product SKUs (“stock-keeping units”, retail terms for individual products) of Connexity’s retail customers can be directed to the referral links of Taboola. Think about it: a single product ad in the Taboola recommendation box. Singolda said that increased demand will increase the income of Taboola publishers.
It is important that this ad revenue belongs to business revenue, not ad revenue, because it is based on transactions rather than pay-per-click. Increasing business-based revenue is a long-term priority for many online publishers, so adding these links will promote business growth.
Additionally, the two companies are able to cross-sell and up-sell each other, Singolda said.
Taboola plans to allow publishers to adopt Connexity, stating that they will work together on commercial content strategies and revenue diversification plans.
“I think all digital publishers will have a commercial part of the website,” Singolda said. Adding Connexity will allow Taboola to enter the publisher’s emerging business sector, incorporating its technology as if Taboola had been integrated into web content pages.
Taboola and Connexity need to be integrated as well, because the walled garden increasingly controls the monetization of the network, and third-party tech companies outside the walled garden have less and less data available.
Last year, Connexity closed Hitwise, its network analytics business, because it could no longer obtain cross-site tracking data. Also last year, Amazon removed third-party affiliate vendors from its commission plan, so the Skimlinks affiliate network acquired by Connexity no longer receives traffic sent to Amazon (that is, it no longer sends traffic to Amazon).
“Amazon has millions of merchants, but the merchants are primarily Amazon,” Singolda said.
If fenced gardens are building bridges, it depends on ad technology and independent e-commerce companies operating on open networks to build a more robust and integrated network of users, publishers and merchants to compete.
“Almost all brands will continue to store windows on Amazon,” he said. “We need to bring these e-commerce functions to the open web.”