Business model of Taboola

Customer Segments

Taboola has a multi-sided business model, with two interdependent customer segments that are both needed in order to operate: content creators/providers (publishers, marketers, and agencies) and consumers who view their content.

Value Proposition

Taboola offers five primary value propositions: accessibility, customization, risk reduction, performance, and brand/status.

The company creates accessibility by providing many options. Its platform can be used on desktop and laptop computers, smartphones, tablets, and connected TVs.

The company enables customization by providing publishers with significant autonomy. Its platform enables them to use inline editorial controls to promote content that their users like, choose when to refresh content, and filter content they do not want to recommend.

Taboola indexes millions of articles and videos, providing much flexibility with regard to design of the content experience. Taboola also enables customization by allowing its user community of consumers to provide feedback on their preferred content. Specifically, they can click “X” on articles or videos they do not like and write a message as to why. Afterwards, they will never see the piece again in the future, and any future recommended articles and videos will take their preferences into account.

The company reduces risk by maintaining high standards. Its content guidelines for advertisements prohibit any content that contains malware, spyware, or automatic downloading of applications without the express consent of users. It also restricts “cloaking”, a technique used to disguise the true destination that users are sent to, and scripts that take over a user’s webpage or browser or otherwise limit their control in any way. Lastly, it bans advertising to children under the age of 13.

The company has demonstrated strong performance through tangible results. High-profile examples of positive outcomes for clients include the following:

• LendingTree used Taboola’s solution to engage users far down the “consideration funnel”, resulting in a 100% increase in conversion rates and a 65% reduction in cost-per-acquisitions
• Men’s lifestyle website Grizly used Taboola’s solution to optimize its content strategy, resulting in a 60-70% increase in pages read per visit and a 200% increase in overall profits
• Luxury travel site Secret Escapes used Taboola’s solution to more effectively target audiences, resulting in a 288% increase in clickthrough rates within just three months
• Online language learning company Babbel used Taboola’s solution to enhance its customer acquisition strategy, resulting in 100,000 new leads per month
• Online discovery site Flintbox used Taboola’s solution to shape its content marketing campaign, resulting in a 20% reduction in cost-per-action compared with social or search

The company has established a strong brand due to its success. It was one of the first players in the adtech realm to run native advertising. It touts itself as the leading content discovery platform, providing 360 billion recommendations to more than one billion monthly unique visitors (including 250 million through mobile) and reaching 88% of U.S. Internet users. It has thousands of publishers on its platform, including prominent ones such as USA Today, NBC, The Weather Channel, Fox Sports, and Tribune. Lastly, it has over 450 employees in nine offices worldwide: New York, Los Angeles, London, Tel Aviv, New Delhi, Sao Paulo, Shanghai, Tokyo, and Bangkok.

Channels

Taboola’s main channels are its direct sales team and website. The company promotes its offering through its social media pages, public classes, and participation in forums, summits, and conferences.

Customer Relationships

Taboola’s customer relationship with content providers is primarily of a personal assistance nature. The company works closely with firms to design their content marketing strategy and campaigns. Taboola’s customer relationship with consumers is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The company’s website features a “Resources” section that includes data sheets, eBooks, case studies, infographics, videos and webinars. The site also features a glossary and answers to frequently asked questions. Lastly, it provides access to a monthly newsletter with news and tips.

Key Activities

Taboola’s business model entails maintaining a common platform between two parties:  content providers and consumers. The platform includes its website and mobile app.

Key Partners

Taboola forms partnerships from time-to-time with media companies in order to provide enhanced offerings for consumers. High-profile partners include Business Insider, Disqus, and NY Magazine.

Key Resources

Taboola’s main resource is its proprietary software platform, serves over one billion monthly unique visitors and thousands of content providers.

It depends on its engineering employees to maintain and update the platform, its sales employees to promote it, and its customer service personnel to provide support.

As a startup it has relied heavily on funding from outside parties, raising $160 million from 14 investors as of June 2015.

Cost Structure

Taboola has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is likely sales/marketing, a fixed cost. Other major drivers are in the areas of customer support/operations and administration, both fixed expenses.

Revenue Streams

Taboola has two revenue streams:

• Subscription Revenues – Revenues it generates from fees it charges content providers to publish their material on its platform on a regular basis.
• Advertising Revenues – Revenues it generates from fees it charges third-party brands to advertise their products and services on its platform and collect information about users.