Taboola will be going public

Taboola, which serves up catchy clickbait links on websites, bet until four months ago that its future lay in merging with its chief rival.

Now the company is opting for a different route: going public via Wall Street’s hottest trend.

Taboola announced Monday that it would merge with a so-called special-purpose acquisition company, a kind of publicly traded deal vehicle that has exploded in popularity.

The deal, which values Taboola at about $2.6 billion and is backed by investors such as mutual fund giants Fidelity and Black Rock, sets up a new act for a company that occupies one of the most mocked — and yet highly persistent — niches in online advertising. It will help Taboola in what its chief executive, Adam Singolda, says is its mission: become a counterweight to digital ad giants such as Google and Facebook.

“We will have currency and access to cash to expand into new areas,” he said, adding that the current online ads landscape is “a huge market that’s fragmented.”

Taboola runs what is known as a content recommendation platform, helping companies place “chumbox” ads on websites.

Named for the angler’s practice of using chunks of dead fish to attract other fish, they often appear at the bottom of webpages as eye-catching thumbnail images promising links to listicles about cute puppies and testimonials such as “Top Doc: This Fruit Stops Weight Gain in its Tracks.”

The companies advertising through Taboola pay once viewers click on a link, and Taboola sends a portion of that revenue to the publishers that hosted the link, which include news organizations such as CBS and CNBC. Singolda said that, in addition to driving tens of billions of clicks a year, Taboola helped publishers by attracting new audiences to their sites and offering insights into viewers’ behavior.

But Taboola, such as the rest of the ad industry, has faced concerns about inadvertently funding misinformation through ad spending. A recent report from Vice linked Taboola to unproven health remedies and sites known for advancing conspiracy theories.

Singolda said Taboola did not allow political ads or links offering unsupported claims but acknowledged that there were “a lot of issues” with coronavirus-related misinformation. He said the company employed more than 50 full-time content moderators manually reviewing half a million pages a week.

“We’re not perfect — we make mistakes, and then we fix it,” he said.

Taboola, which was started in Israel and is now based in New York, is profitable, according to Singolda, who said it collected a projected $1.2 billion in gross revenue last year — $379 million in net revenue, excluding payouts to publishers.

In late 2019, Taboola saw a path to even greater growth in a merger with Outbrain, its chumbox archrival. That October, in a long-expected deal, the two announced plans to combine under the Taboola name.

But within a year, both companies’ financial situations had changed. Antitrust regulators in Britain and Israel were still investigating the deal. The pandemic drew more viewers online but also forced websites to reevaluate their spending and become “way more lean and mean,” Singolda said.

The merger fell apart in September.

Singolda said going public would give Taboola greater financial resources, notably the ability to sell publicly traded shares — which could help it make more acquisitions. (In addition to the ION fund’s money, Taboola has raised $285 million, from Fidelity, BlackRock and others.)