On the one-year anniversary of the $100 million acquisition by Taboola, the content discovery engine, of the video startup ConvertMedia, Yoav Naveh, co-founder of ConvertMedia and Taboola VP of Video, talked to Adotas about the winding road that got them there.
Churchill said history is written by the victors, so I guess I could claim that when Gil Shiff and I started ConvertMedia back in 2008 we always planned to be a video publisher solution. However, what really happened is much different. Start-ups don’t always move in straight lines. Ours certainly didn’t.
We actually started ConvertMedia as a pricing engine. As a machine learning engineer (myself) and a data scientist (Gil), we wanted to use data to understand how different business models can all compete in one auction – providing a way to compare CPC, CPA, CPM campaigns all in one place.
Selling this type of technology in the early days of RTB proved challenging, with many DSPs and SSPs claiming their algorithms to be their competitive edge. We had one huge client, but after they were bought by Google (and we weren’t…), we wandered in the desert for a while. We tried selling directly to agencies and advertisers, but we never really cracked the code of making this a repeatable process.
Five years on and with less money in the bank than I care to admit, we gathered the team for an honest look in the mirror and took a sharp pivot to offer our technology on the sell side as a display mediation platform. This was a great change for the business. We landed a few big customers and soon had 65 clients in total. We became profitable with a SaaS model and life seemed good.
At this point, thankfully, we had the foresight to see that we didn’t have a strong enough differentiator to stand out as a display platform for publishers. Most of our clients were middle-men, and we were fighting a declining market with diminishing pricing. So even though we were trending up and to the right, we decided to pivot again, this time with the goal of gaining more power and control. We decided we wanted to be at the forefront, and for once not chase more mature platforms. It was obvious to us that the market growth is in video, but we could not focus on “pre-roll”, which already had some clear leaders.
At the time, outstream was a new market, and we decided to go publisher-direct. We built a portfolio of outstream ad formats to help publishers create video experiences on pages that traditionally did not have video, and a platform that relied entirely on programmatic demand, with a focus on a better balance between user experience and revenue. The focus on user experience for this slice of the market was pretty unique at the time, and the additional analytics and insights we provided gave us a competitive differentiation.
Throughout our growth with video, we resisted the temptation to pursue related short-term revenue opportunities like pre-roll, video arbitrage by buying, selling video impressions, and decided to only focus on running video in our own units.
Two years into our video journey, even at $50M in annual revenue and 60 employees, we constantly felt pressured. When you are small and independent and every dollar counts, there is always a company more aggressive than you, sometimes willing to push the ethical limits on things like viewability metrics or what aggregators or demand partners they are willing to work with. It was hard to be one of the good guys and build a real business at the same time. We would sign publishers, generate significant revenue for them, only then to be told by a publisher a month later that another vendor is offering 10-20% more. Looking at those implementations, we would see these competitor solutions often made up the difference through shady tactics, hurting the user experience, or the advertiser experience by stacking ads or playing out of view, breaking the entire premise of outstream.
Do you go dark, in hopes of going back to the light later? There wasn’t a week that went by without us having to face a short-term/long-term revenue decision. With the support of the team, I believe we were able to consistently make the right decisions, and were relieved to see that in most cases those publishers would come back – either when users complained about the other solutions or where the revenue dried up as advertisers would catch on.
Then, in early 2016, we started receiving offers to buy the company. Initially in my gut I didn’t want to sell – after all, we were finally running a nicely profitable business, growing, and offering a product I’m proud of. We were in a position to double down, raise money, and try to win the market. After all, the truth is, we initially set out to ‘be’ Taboola, not acquired by it.
However, when we met Taboola CEO Adam Singolda and COO Eldad Maniv, it felt right on many levels. We saw that with the support of this big company, we could focus on building great products, generating value and supporting the open web as well as expand to new avenues.
Just as important, the cultural fit was great. Taboola’s due-diligence was exceptional and we heard from publishers how well they could execute. They didn’t waste any time, they kept their head down, they were humble, and they delivered. It became clear that together at Taboola, we could become a force in the video space.
We finalized the deal on August 22, 2016, and I’m extremely proud of the fact that all of our team joined and almost all are still here a year later. As for growth, ConvertMedia had 150 publishers on board pre-merger – we were proud of each and every one of those wins. Just to demonstrate the “power of Taboola” – we launched video on another 230 publishers in Q4 – not a bad start. And then, by Q1 of 2017, we had about 3500 customers using our video solution – a happy embarrassment to the old ConvertMedia sales efforts!
Now, we’re even selling to agencies and brands direct again through Taboola’s media sales team, but this time with a repeatable process and successful product.
With the acquisition, we set an ambitious goal to create a synergetic way of pairing what Taboola had already built with what video could add to it. We did not just want to have our solution as a 2nd product (or as Adam put it, “let’s not be a two-headed dragon”), but worked on creating a truly integrated one. Together, we re-invented the Taboola Open Web Feed, the next-generation of discovery.
While I’ve been at it for many years, it seems that the journey is just beginning. A one year anniversary is a good time to reflect on the last 10 years. A lot has changed, a lot was learned, and not surprisingly – there is a lot more work is to be done. Perhaps the most important thing that happened at ConvertMedia, as with Taboola, is the people. It’s way more than video, more than revenue, and more than business – we became a bigger family, one I’m proud to be part of.
Because at the end of the day, people are everything.