Okay. All right, let's kick this puppy off.
Let's do this.
Adam, thank you so much for being here.
Thanks for having me.
Appreciate you guys supporting the conference. Let's kick it off, big picture. You talked about the priority for 2024 being the migration of Yahoo advertisers to Taboola. Talk about where you are in that process, and what operational hurdles are in front of you, as I think you move towards the timeline of doing, of completing this in 3Q?
Yeah. So, a few things that we speak about that are great. So first of all, as a quick reminder, Yahoo kind of has three legs into the partnership. There is the supply side, which is Yahoo Finance, Yahoo News, Mail. There is the contextual data integrations, for just, you know, seeing more of what people are reading about and making decisions, which will become even more important as cookies are being deprecated later in the year. And the third one is just advertiser migration. This is our main focus right now, like you just said, and we're seeing a few things. First of all, we're seeing great clientele, types of advertisers we kind of never had before, which actually I never really thought of that even when we did the partnership originally.
I never realized that, you know, these are some of the best names, and they buy performance. So these are Verizon, and Citi, and Hulu, and just unbelievable names. What's great about this transition is that... So these guys used to buy Yahoo using Yahoo's technology. Now they're buying Yahoo using Taboola's technology. So they're buying the same supply, same reach, same people, but different way of getting them, and they're getting more from Yahoo through Taboola, which is exactly what we were hoping and to see. They either get more clients for the same budget, or they get, they're able to buy for a more affordable acquisition cost. They're getting just a more affordable acquisition cost. And this is... So they're happy.
We're very happy because now we're saying, "Wow, that's a whole new segment of clients we've never had, and we can grow it." Where we are now in Q1, we did say that it's ramping fast. We expect over $100 million in the first quarter, which is still a mix of Taboola's advertisers and Yahoo's advertisers. So that's why it's kind of still a mix. We're filling this bucket. It's a big one, and by Q3, we're on time to fully finish the migration of those advertisers.
What are the operational hurdles?
Yeah, so,
-to be able to get there in 3Q?
... So I never hear hurdles, as like more. I'm such an optimistic person. I never have challenges. But basically, it's the same thing we spoke last time, which is, these are clients. We don't want to push them too fast. We want them to test it out, see that it works, see that they get the performance they were hoping to get, and then ramp it up. So the hurdle can be, you know, just how fast can you do it? Will any challenges come? But basically, this is the main track we have, and that's the main potential challenge as well, because these are people, clients, they used to buy it in a certain way. We're moving them. So this is the main track. So this is the main, also, potential hurdle.
In terms of advertisers ramping spend on the Taboola platform as they transition from Gemini, is that mostly larger advertisers that are now doing more testing? Is it smaller? Is there any-
That hasn't started yet.
Hasn't... Okay.
No, no. So, this is one of the probably bigger synergies that is in that partnership. So right now, we're focused on migration of Yahoo advertisers to buy Yahoo through Taboola, and as time goes by, we would open up, you know. And I spoke about that also on our call. We're not only gonna open up Taboola, you know, Disney, and NBC, and CBS, and USA Today, and McClatchy, all of our great partnerships. We're also learning from Yahoo how to serve those advertisers in a way that they like it, right? So if you go to Yahoo Finance or Yahoo News, you'll see on the homepage, these are beautiful, big ads, kind of isolated, and advertisers like it, especially those type of advertisers, enterprise, big brands, they like it.
And this kind of educating us on how could we learn from this experience from a UX perspective, and make and get it to the rest of Taboola. So, there's an opportunity for Taboola here to really evolve, not only by getting those budgets and advertisers, but also evolving our publisher side and creating more formats and things that they like.
Okay. In terms of the ad inventory supply, is that 100% migrated after this $100 million that's moved over, or is there more inventory to come after this? Is that fully phased?
So the inventory is 100% accessible to us.
Okay.
But by Q3, we will fill that with all of Yahoo's advertisers, and then we'll start getting the synergy of Taboola's advertiser and Yahoo advertisers together, basically growing both Yahoo and the Taboola network. So if you think about it from a timeline perspective, by Q3, we want to migrate advertisers, and then the Yahoo bucket, if you will, is full, and the Taboola bucket is full, and then we can grow both of them up. Because you're gonna cross-sell between Taboola's advertisers and Yahoo advertisers on both sides. We will, you know, potentially launch new formats and things that can grow yield and create more opportunities for those clients. And with the data integrations, and we'll come up with more contextual segments that will make it easier for advertisers to succeed. So that starts post-Q3.
Okay. One, one of the questions that we've gotten following last quarter was about the $100 million and that aspect you're talking about in terms of filling up the buckets.
Mm-hmm.
And so just, just help us understand that $100 million versus demand moving onto the platform. Like, where are we in terms of being able to fill up the buckets today? Right, understood we'll get there in 3Q, but where are we today?
... so today, the $100 million represents a mix of Taboola's advertisers and Yahoo's advertisers. That's why it's, you know, to us, it's all revenue, right? But it will be fully incremental as we continue to migrate more advertisers. So right now, the $100 million just represent a mix of our sellers selling to advertisers that find themselves into Yahoo, and Yahoo advertisers that are only currently buying Yahoo. So that's where we are right now. And that's the plan. In fact, I think it's a great number. I mean, $100 million represents, you know, real kind of scale, and we're seeing... And most important, we're seeing good performance of those advertisers, which was a key part of it.
Like, you know, as we move those advertisers to Taboola, we wanted to make sure that they're seeing what we were hoping for them to see, and that was also what Yahoo expected, to see, you know, growth, opportunity for them and for us. So this is where we are right now. It's a mix. We haven't broken down how much of it is each side, right? But it does represent a mix of both advertisers.
Okay. If I think about the billion-dollar goal for Yahoo that you guys have laid out, it sounds like, you know, if I take the $100 million, and I extrapolate that and bring it to full year, it sounds about half of that goal is Yahoo supply, and the other half is then data and yield. Is that the right way to think about the mix of that billion dollars, or is there any way you can help me in terms of that logic?
Yeah, we never really broke down how much of the $1 billion, which I think could be more than $1 billion, is just the supply side versus... So you have two, like, there's like a few steps here. There's the Yahoo supply, the way it was, just moving advertisers through Taboola, and then you have yield expansion on both sides, which should continue to make-
Mm-hmm
... basically the entire pie there, and that's how you get to the $1 billion. We haven't broken down how much of it. For reasons I'm sure you can imagine, you know, we don't want to speak on behalf of Yahoo. So we haven't broken down how much of it is each side, and I think it's gonna become harder to even break that down because if it's a Taboola advertiser buying Yahoo or a Yahoo advertiser buying Taboola, which dollar is it? So that's why Steve on the call mentioned we're gonna, we're not gonna try to shy away from breaking down things. We wanna give investors a good feeling that we're, this is on track. It's big.
$100 million is big enough to be happy about where we are, but it's gonna become harder to break down the advertising side buying on both sides. So, I'm not sure if that answers your question, but you can extrapolate some math just to give yourself a math, you know, some number in your head, but we don't wanna do it on behalf of Yahoo and make it, you know-
Sure. Sure. Apple was certainly a kind of a attention-grabbing fact coming off of the last call. Help explain what the partnership is, and then how does it contribute to financials over 2024 and then 2025?
Yeah, I was laughing with the team that we had so many questions about Yahoo last year, and now all the questions so far have been about Apple. So we're switching, you know, we're switching the topic, which is fun. So the Apple partnership is exciting for a bunch of reasons. So first of all, what it is, if you have an iPhone and you swipe right. Have you seen the ads on Apple News? I can show it to you. So it looks like this. If you swipe right and you go to Apple News on your phone, it will. I don't have internet here. If you swipe right, you see ads on the feed.
Yep.
And so that will be by Taboola. We spoke about Canada and Australia on the call as the markets that we're ramping up right now. It's great for a bunch of reasons. First of all, it's not as big as Yahoo!, but it will become one of our, we believe, one of our bigger partners, so it can be material to Taboola. Two, it's a great vote of confidence when a company like Apple chooses Taboola, you know, want to work with us, and we're humbled and honored to be in that position. You know, it's one of the most amazing companies on earth, and there's a lot going on in advertising, as you know, and to be working with Apple is such a great for our employees, for our advertising community.
It's just amazing to be in a place where on the back of Yahoo partnership a year ago, now we have Apple, so that's really great. Three, it's so premium that... And you can sense my excitement working with Yahoo now, getting to see those amazing clients buying Taboola. This hopefully will further kind of elevate our brand and help us get more of those advertisers to buy Yahoo, Taboola network, and now Apple.
Mm-hmm.
And last but not least, so it's not only sizable, it's not only great for the brand, it's not only great for clients and advertisers to buy it, I think it also gives us one more step forward towards being the company that big consumer brands rely on to monetize native advertising, performance advertising. Which is awesome, because I think, you know, advertising space, which I believe will reach $1 trillion in years to come, it's so lucrative for these big companies. It's the second line of EBITDA to Amazon. You know, we're seeing, you know, Walmart is all over this. Uber launched ads. DoorDash is into advertising. Netflix works with Microsoft. Pinterest and Amazon did that deal.
Mm-hmm.
Meta and Amazon did that. Everyone is, you know, doing deals. And I think while it's, it makes sense for these platforms to sell to the top of the market, they're not gonna sell to 20, 30, 40,000, 100,000 performance advertisers, and that can be us. So I think that, you know, with Yahoo and now Apple, hopefully we'll be able to continue to be invited to these events and be on stage with you and speak about great consumer, iconic consumer brands that all of us love and use, that are choosing Taboola to tap into the advertising space.
Can you provide more details specifically on Apple, though? Is that Taboola News?
No.
Are you guys powering...? So you guys are bidding into, are you guys the exclusive partner for, like, Canada, or?
So-
What is it?
I don't know that we can speak about the deal terms.
Sure.
But we're not. Apple is sourcing the news.
Okay.
Much like Yahoo is writing news and sourcing news. We are the monetization partner in those markets.
Okay. Okay.
So think of it like as a big publisher.
Yep. Yep. And then non-exclusive, right? Can you say that?
I can't speak to that.
Okay. It felt like the Apple win, and you just, you kind of previewed it, it's a bigger opportunity in terms of retail at large, right? Is that the right read? Is there a potential within, like, retail media networks or some other form that's outside of what you guys are already doing today within kind of core digital publishers?
I think the retail media, specifically the opportunity for Taboola is more, as advertisers versus as publisher suppliers. Like, I don't think that we have an aspiration, at least not near term, to go to a Best Buy and compete for the business of serving ads on Best Buy, necessarily not right now. However, I do think that as they do it with someone-
Mm-hmm
... they'll have a lot of dollars that will need to leave, you know, to extend beyond Best Buy, and Taboola is a great e-commerce channel, right? 20% of our business is e-commerce. It's growing. It works. Everyone wants to diversify outside of Amazon. So we can be a great place for retailers to spend dollars and reach consumers, again, in a safe, partner-like way. So I do think we'll get some benefits from that, so more as an advertiser. Then specifically about Yahoo, Apple, who is next? I think it can be, you know, any consumer company we all use daily, that would like... My guess is that Fortune 500 CEOs are having their board of directors asking them to present what is their advertising strategy.
No company that reaches many, many consumers can allow themselves to ignore taking a piece of that soon trillion-dollar market when they're looking around and seeing people speaking about forecasting billions of dollars in revenue, which is very critical to their bottom line. So, I expect all of these companies are having that meeting right now.
Mm-hmm.
I hope they say, "By the way, did you see what Apollo and Yahoo did with Taboola? Did you see what Apple did with Taboola?" Hopefully, some of them consider working with us too. Who can that be? I think it can be any company that if you reach 100 million people or more, you should talk to Taboola.
Yep. Okay. Transitioning a little bit, Microsoft and kind of the volatility was one of the issues in terms of 1Q. What's your visibility into that?
Of Q4.
4Q and 1Q, right?
Well, no, so it's in the guidance, so ...
Yeah, yeah.
So in Q4, we said that if it wasn't for some... First of all, what happened was that they had a need to shut down a canvas that they operate for reasons that have nothing to do with Taboola. So in that moment, it created some revenue gap that we reported. Not a big one, but, you know, enough. And then, we embedded whatever gap that is in the guidance, so we're fine 2024-wise. And, we think this might be an opportunity for us over time, because Microsoft, if they bring it back, we would be good people to work with, maybe in a bigger way, because we did nothing wrong. So that's basically the Q4 experience.
What's the visibility into that, those ad formats coming back?
I mean, we don't know. But you know, our assumption is very conservative in terms of the guidance. So from a guidance perspective, I think we're fine, and if it comes back in a bigger way and all those things, it's a great opportunity for us.
Okay. A bigger picture question on the publisher side: What, what's the growth algorithm for publishers from here? We'll start there.
I think there are three things publishers can do to grow the business. One is adopt AI as much as they can to increase the engagement they get from consumers. So the average person now, when they go to a website, they spend about 90 seconds. The average person spends on Facebook 50 minutes, and on TikTok an hour, over an hour a day. So can we get people to engage more, read more, watch more, because they see the things they want to see? And I think there's a huge cultural, actually, evolution here, because what it means to adopt AI, it means putting AI on the homepage, which historically used to be owned by editorial teams. So can they work with AI more? It means making the article page dynamic based on who is here, how did they get here?
So there's a lot of opportunities to further engage consumers more with AI, and Taboola is all over this. The second thing is audience. Where else can you get traffic from? Historically, it was Google and Facebook. By the way, great stat I just put on my LinkedIn. I'm not sure if you've seen it, but today Facebook was down for one hour. Do you know what happened to the internet? So the internet, which Taboola is a good proxy for the internet 'cause we're fairly big, went up 30% in an hour, right? So you can see how much social networks, how much oxygen they suck out of humanity, and what happens when it's down. So the internet just went up 30%. Publishers went up. So the-
Can I actually stop you there? One of the big trends over the last, I don't know, call it two years, has been short-form video, right? Like there was the rise of TikTok, basically 2021, 2022. Reels was certainly 2023.... Did that have, like, a ripple effect in terms of your business?
No.
You don't feel like social took share of time spent during that time, and that, to your point, that that wouldn't have impacted Taboola?
No, 'cause I, 'cause I think social fights with social. So I think, I think TikTok takes from Facebook, Facebook takes from, from X. Like, I, I don't think if you're in a mindset of TikTok or Reels or things of that nature, you're not in... Your mindset is not search, and it's not Open Web. These are different things. So we're, we're not seeing, by the way, categorically, we're not seeing across our network any material shift in traffic. However, to your question, publishers can, like three things they can do: They can engage consumers with AI, they can get more traffic by putting their news in other places, OEMs, as an example, but there's more they can do, and the third one is improving yield. I think publishers can double and triple yield.
So right now, if you look at our yield right now, we have about 600 million people a day. We generate about almost $2 billion in revenue, so $3.50 a person, roughly. Snap is at $33, Facebook is at $200. Can we get our yield to $7? Can we get it to $10? How much can we grow yield by getting more advertisers, getting advertisers to adopt AI, like max conversion, and getting more data? How better can Taboola be? And that spread is the open web growth. I believe that the open web, which is now $80 billion, should really be $200 billion.
Is that a derivation, though, of time spent, that initial stat that you laid out, where it's 50 minutes with Facebook?
It's engagement.
Sure.
It's more time, and how do you monetize that time? Yes, I think it's a combination of those two things, and also audience, if you can bring more people to... If I can grow the pie. So all of these, all of these three things affect revenue in the end, audience engagement, and yield. But I'm optimistic that there's so much to be done because we're doing so little. I mean, we're still monetizing most of the Open Web with banners. Not to ding anyone in that space, but I mean, no one in this room clicked on a banner recently they can remember, and if they did, it was probably a mistake. And you all, and we all click on Instagram ads all the time, and we, and we like it. It's good.
And we click on Amazon ads all the time, and I think you click on Taboola ads all the time, and we see it in the numbers. The click-through rates to a Taboola ad is easily 10x banners, easily. So I think the Open Web is just very under-monetized. We're still doing something that we used to do 20, 30 years ago. So I'm optimistic it can get better. And I think, you know, if you're overexposed to search and social, you might be at risk. We're seeing some of those news, but that's a very specific segment.
Where I was going with this question, right, is that there's certainly been a lot of pressure in terms of digital publishers, right? Vice shut down, Jezebel shut down. There have been countless number of examples of pressure on digital publishers. How does that relate to Taboola, or how do you think about the pressure on your customers who are publishers and the risk that extends upward?
I think there's more pressure on publishers that were born into a social ecosystem. So if you were born into an era where social traffic is the main source of traffic and search, and you're a bit more exposed there, then there's more volatility in that type of business. However, I think if you're more of a... If you're a publisher that has more direct traffic and you engage consumers in a good way, I think you're less exposed. And from my perspective, this whole thing is an opportunity, because the biggest shift is cultural shift. To get publishers to adopt AI faster and to use, you know, advanced technology in a more significant way, is the biggest thing that's never happened up until now.
So I think all of these changes can really make an impact culturally, so that publishers and advertisers are using AI and GenAI in a much more robust way, and that will really grow, potentially can grow, grow the pie. So to me, sometimes in life, and we know it from our personal life, you only change when you have to, 'cause you're facing a wall. Like, 2022 made all of us change, right? 2022... Up until 2022, all of us got money for free. Money just came our way somehow, and then 2022, 2022 happened, and we realized that, no, we actually have to be great to grow the business, right? There's no more free money, and but perhaps never, it will come back, right?
We only assume growth if we believe we can create that growth, not because it's coming our way. I think that cultural change might actually create an opportunity for publishers.
I wanna talk about self-service. You made the comparison to Meta's 10 million advertisers on the last call. Where's self-service today, and what are the key unlocks to get to something that is a much larger number than, I think, the 17,000 advertisers you guys have?
Yeah, I love self-service.
Seventeen thousand.
I really like that business. It's a great way to meet, you know, new clients, new advertisers, that, and many of them... So the way to think about it is, about a third of our revenue came from self-service. What happens a lot of times, they come in through a self-service channel, and they get, they grow, and they get upgraded to be managed service. So it's a very important funnel for Taboola. If you click on By Taboola on any one of our publisher sites, you land on a self-service path.
Yep.
So that's how most of our self-service, that's how they come to us, most of them. The biggest unlock, what we're seeing right now with them, is actually GenAI is a great utility. They're using GenAI in a fairly significant way, about 1 in 4. It actually now makes me feel that maybe all of our business should be using GenAI, because what the feedback I'm getting back from self-service is that, because they adopt GenAI way more than anyone else in our business today, the creatives we suggest to them, not only do they tend to work better, because we prompt GenAI with data, historic data from advertisers like them, it's automatically adhering our policy. So let's just sit on this for a second.
We have 100 people moderating ads to make sure that the quality is above the line, and adheres to our policy. You can't say: If you buy these flowers, for sure, you'll be a happy person. You can't make promises. Like, there's a lot of things we don't allow. GenAI is perfect because it digested our policy.
Mm-hmm
... and it creates titles that are always perfect. So the policy team doesn't need to moderate those, and it actually creates a lot, a much less frustration to the, to the advertisers, because a lot of times they're not doing things deliberately bad. They don't know what necessarily is good or bad. So this is great, actually. I think over time, I'm imagining, what if a big chunk of our business was using GenAI to create those titles? Which I think could be another source of growth from the 15-20 thousand to 25-30, and more. But the biggest thing to get more advertisers is, I think, technology.
Like, the more we get Max Conversion and Max Revenue to continuously improve, we'll have less churn and better NDRs, which will increase the pool of advertisers that are considering Taboola as a good channel.
Yep. We're officially in overtime. Adam, thank you so much for-
Thanks for having me.
... being here.