Good morning, everyone. I'm Ro Dewan, Managing Director at J.P. Morgan in the Tech Investment Banking group. Today, we have with us Adam Singolda, founder and CEO of Taboola. Adam's deep background in data, analytics, and advertising has driven Taboola's success. Taboola is a global leader in the ad tech ecosystem, powering recommendations across the open web and e-commerce through its proprietary AI-based engine. Taboola partners with premium websites, devices, and mobile apps to recommend editorial content and ads on the open web. Taboola enables publishers to drive new audiences, increasing engagement and monetization opportunities across the ecosystem. Adam, let's kick off.
Let's do it.
To start off, it would be great to hear a little bit about Taboola's journey from inception to today. How has the company evolved over the past decade? And walk us through where you sit in the ad tech ecosystem, and then your longer-term vision for the business.
Sure. And thanks for having me. This is great. So I started the company about 2007. Before this, I spent seven years in the Israeli army as an engineer. And I couldn't find anything to watch on TV, and I thought, you know, "Why should I be looking for content? Content should be looking for me." And in many ways, it was an opportunity to kind of build like a search engine, but in reverse. You know, we only have 24 hours a day. You know, if you don't know what you're supposed to be looking for, you need something that can help you discover things you may love but never knew existed. And then, you know, many years after, now Taboola is, we're guiding for about $2 billion in revenue.
We're probably the biggest company in our space, and that space is... Take a step back, it's quite exciting to think about advertising in general. It's gonna reach about $1 trillion in size, so it's huge. If you think about it, you have two great companies. You have, you know, Google for search, fairly easy to buy search as an advertiser. It's easy to buy social, so you can buy Meta or Snap or smaller, but then you have the rest of the world. It's referred to as the open web or the open internet. In the open web, you have basically everyone, websites we love, apps on our TV. As of recent, you know, we're seeing companies like Uber is gonna generate over $1 billion in revenue this year.
We're seeing Amazon reporting that the second line of profit for them is ads. Advertising is the new, you know, it's the new thing, and in many ways, I believe that where it's going is we're gonna see. Search is kind of, it is what it is now. Social is, you know, it is what it is now, but the next big wave will be, I think, many, many great companies trying to tap into advertising, and all of them will need a friend. They're all, you know, they're all gonna need a technology that they can work with, partner with, kind of like advertising in a box, and specifically for performance advertisers that are looking to scale.
And that's the company we're building, kind of like the gateway into the open web, so it's easier for advertisers to spend, and it's easier for great companies to partner. And you can see, if you follow the last kind of year and a half, companies like Apple, if you now have an iPhone and you swipe right, and you see Apple News on your device, Taboola is the monetization partner for you. If you go to Yahoo Finance, which I'm sure many of us do multiple times a day, you'll see on the homepage recommendations, and then every third or fourth will be promoted by an advertiser. All of those are powered by Taboola, and I suspect over the next decade, we'll see many Fortune 1000 companies saying, you know, "What's our advertising strategy, and how are we going to do it?
There's a lot more focus now on AI. Taboola has been using machine learning and artificial intelligence for years. Walk us through the impact of AI on the open web.
First, I mean, I always, you know, wanna make, kind of clarify that I think AI is really hard to do. I mean, people say AI almost as easy as they drink coffee these days, but it's actually, if you think about it, there's a huge difference between kind of like deep learning, DL, machine learning, ML, and bullshit, BS. And I think there's so much going on, but the truth is that it's really hard to see the magic of AI in action. And when you go deeper, there's probably two types of AI that companies tap into.
The first one is just the matchmaking, what you see when you go to Google, what you see when you go to a website, what you see when you open your Instagram, and that's mainly powered by deep learning, which is really hard to do, and you need a lot of data, a lot of machines, a lot of technology to do that. We've been doing it for a long time. Scale matters, where we now reach about 600 million DAUs every day, so, the average American sees Taboola about two or three times a day.
People discover, they click on Taboola north of 50 billion times a year, and all of that data helps us train the engine to say, to use AI to say, "You may like..." And that's one of the biggest thing that made us successful, to kind of work with publishers and advertisers and help them find each other. The recent innovation we've done with AI is called Max Conversion, which essentially, if you're an advertiser, if you have a pizza oven and you want to get people that will buy your pizza oven, how do you do it? You have a great product. You know how it looks like, but what's the title? What's your bidding strategy? How much you should pay per click?
What's your CPM? Although, I mean, my wife has a flower business, and I keep asking her, like, you know, "What's your CPM?" She's like, "What are you talking about?" But I said, "What's your CPC?" You know, and she says she thinks I'm, I don't understand her business, which sounds like what it is. And this is the biggest opportunity for investors and in general for advertising. It's such a complicated space because, as a business, you want to spend money, you want to reach consumers, you want them to buy your product, but to get there, you need to know so many, the jargon and, and technologies and get to know different companies, and AI can make it simple.
AI can make it such that all you have to do is build a great business, and AI will find a way to type the title for you, come up with a thumbnail for you, come up with a bidding strategy automatically for you. So all of those things, we make available for clients, which this year will spend almost $2 billion with us. And 90% of our clients work with us directly. It's not programmatic, it's not all those, again, complicated things. So that's how we use AI to work. I would say mainly to oversimplify a complicated world and build a multi-billion dollar category that I think deserves to happen.
While we're on the topic of just the evolution of the ecosystem, let's talk for a couple minutes on cookie deprecation. So deprecation's been delayed until 2025. What are the implications to Taboola today and over time as that happens?
First of all, I mean, can they go already, those cookies? I mean, but, so, so for those who may not follow the industry, so cookies are those things that enable weird ads to follow you. You know, when you go to a website to buy shoes, and then suddenly the entire internet looks like the shoes you already bought. That's implemented using cookies, mainly third-party cookies. And then about in 2020, Apple decided this is not a good user experience and deprecated cookies back then. So in many ways, we've already, you know, that signal is already lost. And now in the future, Google say they'll do the same. So I think the world is gonna be, we're gonna, we're gonna see winners and losers as that happens.
I suspect companies who have a lot of first-party relationship with consumers will be more resilient to third-party cookies going away, and that's gonna create, you know, more auction, more budgets that will go to companies that can take it and make advertisers successful. And those who rely on cookies more, or maybe too much, might risk losing that, signal and not being able to do a good job for advertisers. The way I think about this industry is that it's mainly driven by performance advertisers. Clients want to see success on the back of recession and inflation, all those, you know, the last few years. Clients want to see that if they give you $5,000-$10,000 test, you can get some success quickly, and you can't do it unless you have scale, a lot of technology, and a lot of good data.
So, one, I think it's good for consumers that cookies will go away because I think we need a safe internet. I think it's, you know, it's a bit creepy to see ads that I don't wanna see, and I don't know how to get rid of that. So luckily for us, you know, big platforms like Apple and Google and Microsoft are doing the right stuff to make the internet safer. And on the other side, companies like Taboola, you know, I believe, have an opportunity to benefit from that transition because of our deep relationship with publishers, because of our deeper integrations with them, granting us more users than Snap, more daily users than Twitter on a daily basis. So we have enough reach now with first-party connection that make me feel good about this transition.
Whenever that happens, 'cause Google keep pushing it away as it seems, but whenever that happens, I think it's a good thing for the industry and hopefully for us as well.
Let's discuss the exclusive partnerships you have and just what that means with respect to these top-tier publishers, the quality of the inventory that you have access to, and just the implications for Taboola as a result of that relationship you have, and where you sit in the ecosystem.
So we work now with, I mentioned 600 million DAUs, daily active users. The way we reach consumers is through long-term exclusive relationships with thousands of publishers. I'm sure many of you are using Taboola all the time. If you go to NBC News, CNBC, ESPN, if you have an iPhone, if you go to any one of these beautiful, great websites to discover news and follow things you care about, you'll see usually at the bottom of the article, "You may like," giving you more news to read, or on the homepage, recommending you what to watch. That's all of that recommendation engine is powered by Taboola. So you're all using us, probably many times, and the reason those publishers work with us for three, five, Yahoo!
signed a 30-year partnership, is because we, you know, we help them drive audience growth, which they need. We help them monetize their business, which they need, and we help them engage consumers on their site. In many ways, their biggest competition is user attention, which is captured by social networks so heavily. So all of these great organizations, which we love, they all need a great partner that's not Google, that's not Facebook, you know, that they can rely on forever. And, you know, we feel very honored to work with, you know, Disney and all these amazing companies, many of them for over a decade now. It's... When I started Taboola, I remember this industry was very much driven by, you know, short-term agreements. You're here today. You're not here tomorrow. I think it's one of the probably Achilles heel of it, of this industry.
You know, if you were an investor 10 years ago, you saw companies come and go, and I wanted to build Taboola to be different, you know, to look and feel like a walled garden in a way that we have our own user base.
You could never have imagined a 30-year partnership back then?
No. I mean, I wanted 50 from Apollo, to be honest, but they told me only 30. I said, "You know what? I'll..." We kind of met in the middle, you know? But I love it. I mean, I think, you know, I'll be in my 70s renewing the Yahoo! relationship with Apollo. That's a good. That's the way, this is how it's done, you know? This is how you should do it. 'Cause relationships should be forever. It should be value driven, and you wanna build a business that has predictability. You know, I have a license to build a great advertising technology because I work with publishers forever. I'm not buying inventory, you know. I'm in their house. I'm representing them. In effect, we are journalism. We are the open web.
And fundamentally, that's a different type of company that gives us the, you know, the opportunity to invest in AI so much and build great advertising technologies because we know we have 600 million DAUs through those relationships. You know, when I started Taboola, I would go into a meeting, and then, you know, the revenue person would take the meeting. It would talk you know, talk shop about revenue and all that stuff. And now, you know, you walk into a Taboola meeting, and you have 10 people in the room. You know, we have the chief editor, and that person wants to know how we can help drive growth to audience. You have the subscription person who says, "How you can diversify my revenue?"
You have the commerce person that says, "Well, I see what you're doing with Time.com," and you build an e-commerce website for them. Tell me more about— And you have 10 people in the room, and that's so much fun, you know, for us and our people to be, to matter. Money matters, you know, but, but to be more than money for an organization, to empower everyone, is great. So that's- that allows us to kind of have these, like, long-term relationship with publishers, but mainly to build a company that has predictability, and supply access for the rest of time, so that we can then grow our ARPU. And I always say that Taboola is big enough now from a, from a reach, reach to consumers.
Again, I mentioned on the 600 million people we have now every day, we'll generate almost $2 billion, so call it $3.5 ARPU-ish. Facebook makes $200. Snap makes $33 a user. We're $3.5. Can we get to $33 soon? Probably not, but can we get to $6, $7, $10? I think so. So that means we can double or triple the company by just getting more demand, and that's our biggest focus. And you know, we're about the size of revenue of Twitter this year, but I think we can be bigger than them by next year, and mainly by making advertisers successful and growing ARPU over the next many years.
One of the things that's on investors' minds is performance advertising. Can you just unpack that a little bit for the audience, and what does that mean for Taboola?
Yeah, you, you have really two types of people spending money in advertising. The first one is more of a brand, right? Like, through an agency a lot of time. And they're, you know, Super Bowl ads, there's, like, these big splashy ads that are trying to get you to be aware of something. It's not bad, but it's usually more, it's, it's something that you have to keep winning again and again, that type of budget, and you need a lot of wine and dine, which I'm not great at. I mean, I love wine, but I'm not, I mean. But, but, you know, you need, it's a different type of IO business that you have to keep repurchasing and winning every quarter. Performance advertising, which is the vast majority of the industry, that's 80%, that's the lion's share of the $1 trillion I mentioned.
Those are the Expedias of the world. Those are like, you know, people. You know, we're now seeing a lot of great money coming out of China that we see that e-commerce, retailers, those dollars, if it works, it's unlimited, and that's a beautiful place to be. If you have great technology and you have enough reach to consumers, you're basically unlimited. You can grow as much as the client sees value in your technology. So we focus on that type of spend, which I think is what made Google and Facebook great. TikTok, which is growing super fast, is talking about $17 billion of bottom funnel commerce revenue this year.
So when you see all those companies grow fast, I think to grow fast, you have to grow through performance advertising first, and kind of look at the brand advertising as, the cherry on the top type of thing. We've seen a good company that's done a good job with agencies and brands, The Trade Desk. I think that The Trade Desk has done a great job in the open web, building a must-buy for brands and agencies. Good for them. This meeting is, like, five years ago for The Trade Desk. It's like they want to be the first open web, kind of must-buy for brands and agencies. They've done it. We want to be the first must-buy for performance advertising in the open web. No one has done it yet, and that's kind of what we're trying to bring.
And I think a company like that has to exist, and hopefully we can, we can continue to see that growth and build that one.
That's great. You touched a little bit on the Yahoo! partnership. Let's unpack that a little bit more. Maybe give, give the audience a recap on how that's going and just some more details on that.
Sure. So, but this is another fun example, that when I started Taboola and I raised money, you know, from great investors, from Fidelity and Baidu and many great people who invested as a private company, when I drew to them the market, Yahoo! was outside of the market. Apple was outside of the market. I never thought Yahoo! was in our ten, because I figured companies of that size, they don't need companies like Taboola when we were so much smaller. And what you see now is that companies of all sizes, you know, from Yahoo! to Apple and more, Microsoft, they're all partners of Taboola. Recently, we've seen Netflix, you know, sign with The Trade Desk and Magnite. You're seeing this ecosystem of Pinterest and Amazon, Facebook and Amazon. Everyone is, everyone is building relationships.
Yahoo!, with their new owners of Apollo, kind of looked at the business and saw an opportunity to make performance advertising better. We were, you know, fortunate enough to be spending real time with them, good amount of time with them, with the leadership. I knew Jim Lanzone from our CBSi days, his CBSi days when we partnered, and we did a good job. We're still working with CBSi. There was relationship and trust that was there, and, you know, relationships matter, and I think that's why we're at this event, too, 'cause in person matters more than... There's so much you can do on Zoom, and I think that, that's great, to have to be in that conversation and have an opportunity with them.
And they, they chose us to power exclusively, basically three things: One, on all of Yahoo! properties, we are the recommendation, the native advertising, performance advertising engine for them for the next 30 years. Two, we're connecting our data pipes so that we can create more contextual segments for clients to buy and succeed. And we talked about cookies. Scale matters, and have more granular kind of view about consumer's behavior is a big deal. And I think one of the great thing about our data, as opposed to Facebook's data, as opposed to Google's data, is that, you know, Google knows what you're searching for. Facebook knows what you tell them about yourself, which is a lot of time real, because, you know, you care about stuff, but would you really share with Facebook something about your health? Or would you... Probably not.
Would you share with Facebook something about your kids? Probably not. Would you share something that you're really passionate about, but maybe you're embarrassed to say you love? I don't know, maybe you really like wine or expensive watches or fast cars. I don't know, it's a bit embarrassing, like, I don't want my boss to see all those things. So you're sharing with Facebook the person you wish people thought you are. You know, there's like, it's you with a premium. And so that's what advertisers buy against on social. But the open web is the closest version to your true you, 'cause when you're at night on your mobile phone reading about something you really care about it. If something happens to a member of your family, you'll spend hours reading about it.
No one can stop you, and that's when we see you. When you care about something so much, you read about it, you get educated about it. So with Yahoo, we're connecting those pipes, 'cause obviously Yahoo is a huge publisher. So that's the second pillar of the partnership, and the third one is advertisers. Yahoo has a second, probably in size to The Trade Desk DSP, and we're migrating a lot of native advertisers into our ecosystem. So it's like a three-leg partnership, which we're very excited about. So I mentioned on my last letter that we're on time with migration, and then we'll start working on the synergies that will take time to kind of capturing the data and growing ARPU for Yahoo, growing ARPU for Taboola.
There's a lot of goodness, I believe, that can come from this relationship, and a lot more than what we've actually announced. You know, we have a nine-digit revenue partnership with Microsoft, where it's, where we bid onto Microsoft ecosystem when you go to MSN or on Edge. Yahoo has a huge display business, which we haven't yet participated in, but I think there's probably another Microsoft there. So there's a lot of things I believe we can do together. We're spending a lot of time with management. Apollo is great. You know, it's so much fun to work with them. They think big. So overall, I'm very happy and looking forward to keep sharing.
You mentioned scale. Scale matters, especially in this end market. Taboola had over $1.5 billion of revenue as we look over the last 12 months. What type of opportunities does that sort of scale enable you to unpack over time? So think about just the margin opportunity, the growth opportunities. How can you build upon that?
There's so many ways to answer that question, but if I had to choose one thing that is really hard to do, magic level hard, aliens, you know, on Earth type of hard, is to make a client, a business, an advertiser, successful quickly. If you think about it, someone comes to you, you know, Wayfair comes to you, and they say, "We want to sell furniture." Okay, here's a table. Find someone who wants to buy this table. The user never tells you they want to buy a table. You don't even know if they have the money to buy the table, but you're supposed to, within days... And I can tell you, the average client, within the first 10 days, decides if they churn or if they stay, which means you have up to 10 days to show them you're awesome.
You're so good. You're gonna find so many ad buyers, magically, and based on that decision, they'll decide to continue to work with you. This is really hard. I think less than five companies in the history of time have really done a good job doing that, probably Google, Facebook, and maybe a few others, and I think scale helps a lot. I mean, if you have to now start a company, even if you're big, and compete with us, you need a lot of data and a lot of users to quickly be able to matchmake between what a client wants to what a user potentially wants to do, and that is the biggest upside I think a company can get. I believe, like I said, I think we can double and triple Taboola by just doing that better.
But it's the hardest thing to do, and you need a lot of scale to do it. And I always you know, when you look at companies like in the search world, right? Like, Google is so good. They're so big. The likelihood another search engine will be better at than monetizing, it's so low. Can it be done? It can be done, but they have 10 million advertisers. They're very good at this. Scale is a big deal when it comes to data and amount of advertisers, and I think this is probably one of the biggest benefits we have, being the biggest in the open web, though we're still much smaller than Google and Facebook and others. So we have a lot of work to do, but I think that's the biggest upside we have.
Got it. In your recent shareholder letter, you noted that 20% of revenue is coming from top-tier brands and agencies, and you talked about the recent launch of Taboola Select. Let's talk a little bit more about Taboola Select and the interplay between your access to premium inventory, the traction you've seen with advertisers, and how that came together, and just the genesis of Taboola Select, effectively.
Yeah, it's interesting. We've actually a lot, a lot through and thanks to the relationship with Yahoo, as they migrated a lot of bigger brands who were looking to buy performance, so they were looking to get clients and app downloads and things that they can measure, but they were big brands. We saw that it's they want the performance, and they want to be in an environment where they're kind of on their own. It's like, you know, it's like they want a townhouse, you know, it's just them. And we saw that with Apple. If you go to your iPhone, and you see the ad experience on your iPhone, it's kind of like on its own. It's very premium. There's just you, and then content above you and content below you.
If you go to Yahoo homepage, there's an ad, there's content above you, content below you. So what we saw is that a brand will pay a premium if you can get them performance, plus you can create an environment where it's completely safe or secluded for them. And we launched Taboola Select, which is basically like this index that says the top 15% of our network, you know, the Disneys and the NBCs, and Apples and Yahoos of the world, BBC, and basically all of our great publishers, we'll create an independent ad, like a standalone ad experience, so you're getting the best of the best, plus you're on your own, plus it's gonna work for you. But you'll pay for it.
And we've seen great success, and I mentioned in my letter, we had this one personal finance brand that was migrating from Yahoo!, and they spent, you know, their real budget, they tried with us, and they switched to our AI, which I mentioned, called Max Conversion, and within days, they were able to get more clients for the same price. So they were able to grow their, the budget significantly, and that was material growth to us. And I told my board, "Wow, if I can only have 1,000 of those, we won." So on the back of that, we wanted to scale this experience for brands and agencies, but still focused on performance. I'm not against top of the funnel. You know, it's about 10% of our revenue is kind of top of the funnel.
I'm not against it, but I really wanna make sure that we are a must-buy. You know, when you wanna drive performance, you're a big brand, or you're a mid-funnel, you're a mid-sized business, or even long tail, I want you to think search Google, social, Facebook, and Taboola for the open web for performance advertising. And Taboola Select basically unlocks the top. The bigger brands will say, "Well, nobody got fired for advertising on iPhone," type of thing, on scale.
One of my favorite facets of Taboola is Taboola News. That business recently surpassed $100 million in revenue. What's contributed to the success of that business, and what's next for Taboola News?
So Taboola News, for those who may not know, just to level set, it—like I said, Taboola works with many great publishers all around the world. We have offices in 20 countries. We're a very global business. We said we have all these publishers who trust us and, you know, work with us for three, five, 10, 30 years. What if we aggregate all of them and create a feed and install it on Samsung devices, on Xiaomi devices, on any device that needs content to engage consumers? Because like I mentioned, the true competition for Samsung is not Apple. It's in many ways, in my opinion, it's TikTok and Facebook and Google, because the competition is time. You're fighting for attention. You're not fighting, you're not fighting for who sells another device.
It's about the ARPU you can grow up, because you have so many services to offer consumers once they work with you. So if you believe that strategy, which I think, if you follow again, Apple and Amazon and others, that is a good strategy, then content is a great way to engage consumers. 'Cause if consumers will give you their time, they'll give you other stuff, too, or at least they'll consider doing so. So we've aggregated all of that content, and we started partnering with Android manufacturers, and we said, "We'll get you in front of consumers, and we'll offer them news." And that, so that's that business is a startup within Taboola that has grown really fast. It's probably one of our fastest-growing lines of business.
It crossed $100 million last year, and it has a similar margin, 35%-40% margin to the rest of the business, and it's a small team. I mean, it's, you know, a few dozens of people. So it's great, and I think over time, this could be a billion-dollar business on its own, you know? So because I think over time, every hardware device, IoT, cars, they're all gonna need content.
I'd like to wrap on another area that's a key focus area for investors: retail, media, and e-commerce. There's been a lot of interest in that space. Tell us a little bit more about Taboola's e-commerce strategy and how your solution fits just into the broader retail media e-commerce ecosystem.
About 3 years ago, we saw that, you know, great businesses like Wirecutter of The New York Times, if any one of you tried it, or I mean, Condé Nast has a lot of that, Daily Mail. It's all these great publishers which consumers trust. Sometimes they even trust and they pay them subscription. Some of them, we saw that if the publisher writes a piece of content to review a line of products, consumers really trust it. How many times before you bought something on Amazon, you search on Google to see if you can find someone who wrote a review about it, or you watched a video about it? How many times before you bought a mattress, you said, "Before I buy it, let me just review and see, what people think about it"?
How many times, if you moved to suburbia, which I just did, and you wanted to buy, you know, I bought a trampoline for my kids. I'm not a trampoline expert. If I search on Amazon, bazillion things come up. How do I know? I need someone to tell me, "That's a good trampoline. I've tried this. This is expensive. This is the upcoming one," and then I make a decision. And by the way, they may send me back to Amazon, but before I buy, I want trust to be established, and that's the open web. So we saw there's an opportunity. We made an acquisition, making a big bet that e-commerce will be a big part of our growth as well as the open web's growth.
Because consumers need so much more trust in the world of social media and craziness and TikTok-ness and all those things, we said, "You know, consumers really need someone they can trust," and who do you trust more than your local publisher, or your national site you go to all the time, or your sports team website, and all those things? So we took a big bet, which I'm very happy we did. It's every quarter since this e-commerce business keep beating my expectation about how fast and how well it can be. And then retail media, and in general, e-commerce, what we're seeing is that if you're a Best Buy or an Amazon or anyone in between, you want to make advertising being a part of your business.
You want to allow promotion of products, promotion of stores, and that's all e-commerce great, budgets that are growing super fast, and we're capturing a lot of that budgets as well, and we flow it to publisher review, like I mentioned, reviews of products on publisher sites. So we help publishers write that content, we help them drive traffic to it, and we help them monetize it, and it's a great diversification for our business and growth and differentiation and all those good things, so, we love it.
Adam, my friend, we're out of time. This was fantastic.
Thanks for having me.
Always a pleasure to host you at TMC.
Thanks.