Good morning, everyone. Good morning, good morning. Welcome to Taboola's 2025 Investor Day. We're very excited. This has been a labor of love these last several months. The obligatory Safe Harbor slide. We have an action-packed schedule for you guys. Not only are our leaders, our executive leaders, going to be speaking today, but we have a wonderful set of panels, actually multiple panels today, where people from the industry will be able to talk about how they see things evolving. Let's first start with vision and strategy. Adam Singolda, our Founder and CEO, will kick it off, followed by Tom Inbal, who will be talking about our market opportunity and go into that competitive landscape that I know all of you are very interested in. It'll be followed by a publisher panel, so again, voice of a publisher and our supply-side partners.
We'll do a short 10-minute break. Then we'll kick it off again for our second half, where we'll have the product strategy team discuss Realize, which I know you've all heard a lot about. We'll go and do a bit of a deeper dive into Realize. Then we'll have another voice of customer with an advertiser panel, which I think is going to be very interesting for all of you, hosted by our very own Nadav Perry. We'll then go into execution. How are we going to make this happen? We'll go deeper into the execution strategy and specifically our go-to-market strategy, once again, to make Realize successful and unlock that extra demand spend that we're going after. Steve Walker will pull it all together with a financial overview.
After some short remarks from Adam at the end, we will obviously give you an opportunity for Q&A. Then demo stations, everything, some hors d'oeuvres. Again, in that Q&A session, it will be a great opportunity for you to ask whatever questions you have after the end of the day. Without further ado, let's get started.
This is an exciting day for me. I've spent the last decade passionately believing that a thriving open web is essential to us all. For too long, the power of online advertising has been locked away. Great businesses struggle to grow, messed up on search and social platforms, or forced to navigate a confusing maze of ethics. Am I right, Greg?
What's going on?
Exactly. I got you. We pioneered native advertising. May I? We connected thousands of advertisers and users through those bundle of article recommendation widgets. We did good, but something was still missing.
Who are you?
I know. We can do better. Today, we are reimagining performance advertising beyond search and social, harnessing the power of AI, expanding far beyond native. It's a whole new Taboola. We call it Realize, our new advertiser platform. Poor guy.
Sorry.
Don't worry about it. I got you.
OK, guys, search and social are stagnant. DSPs give us tools, but no results. We are seeing signs of fatigue everywhere. Any ideas?
Yes.
You are?
Let's do this. Hey, Abby. I want to start a campaign to sell mortgages.
I can pay $500 a lead. Now let's choose an audience.
Say launch.
Launch.
It's that easy. Outcomes at scale beyond search and social. Thanks, Abby. Great companies deserve to grow, and the world beyond search and social needs to thrive. This is what motivates us at Taboola. This is the new Taboola. Performance advertising beyond search and social.
Seriously, who was that guy?
All right. Seriously, who was that guy? Advertising is only expensive when it doesn't work. Let's get to it. You see, you know now more than ever, performance advertising matters. Growing your business matters. Spending a dollar today knowing that you're going to make $4 return tomorrow. Now I know what you're thinking. What if Jeff Bezos has anything to do with this Investor Day? I just came back from Bangkok, from London, here in New York, and I presented this to 700 salespeople all over the world. I refer to it as our Amazon moment. You see? Here's what I told people. I said Amazon started in 1994 selling books. Then by the year 2000, they won the market. They decided to go from books to everything commerce. That strategy worked. Last year, Amazon crossed the $600 billion mark.
Amazon now is the leader in all of commerce. A few weeks ago, I referred to the team and I called it as our Amazon moment, going from native advertising to everything performance. On that note, welcome, everyone. Thank you so much for coming here, New York City, Investor Day 2025, concrete jungle where dreams are made of. I am going to talk about three things. I am going to go through the ride since I started Taboola and all the way to this moment right now when we won the native advertising market. I am then going to expand into how this new strategy would realize we have no more limits. I am going to finish with what maybe is the most important thing, which is why we are going to win this market. I do not think many of you have seen this, actually, but here it is.
This is our very first native ad. It was in a publisher called 5min. It was a saw right here. Those were the days. We did what the best startups ever do. We found a niche market called native advertising. We launched a widget. We launched a feed. We won the space. It was more than that. Not only did we become the biggest native advertiser, and when we started, we had competitors as big as 40x Taboola when I started the company. Not only did we become the biggest, but also we built something that never happened before. It was a true for the first time win-win culture type of company. We only grew if our publishers grew with us.
You're going to get Evangeline and some of our publishers later today talking about the publishing industry and how things are going. You'll feel what I feel, these dynamics of working truly together. Publishers loved us back. They gave us something they've never done before: three years, five years, 10 years, 30 years, exclusive long-term relationships, all driven by Taboola's technology and crazy execution. You may wonder what was so special about Taboola that we could create so much value throughout this journey. You see, when we all, all of us, post things on social, whether we like it or we post it, we tend to do things based on our desired self, the person we wish we were. In this case, that's my Instagram account. You can see me posting a humongous Lego McLaren.
Now, this by no means, sadly for me, says that I'm about or I'm in market to buy a McLaren or a huge Lego car. However, the open web is very, very different. You see, when I moved to New Jersey, and I convinced my wife that that was the right move in New York to New Jersey, and I was right, we were in market. We said we have to buy, we want to buy a trampoline for the kids. What do I know about trampoline? I was obviously starting to do some research. I was like, what's the best trampoline, the safest trampoline, the cheapest trampoline, the most expensive trampoline? I read about it, and I bought it. You see, in many ways, my intent is more important than my profile. This is when Taboola meets all of us.
It's when we have this authentic version of ourselves because we're curious about something. We want to lean in before we make a decision that is dear to our heart. Now, when it comes to our advertising business, and I remind you, that is how we make money. Advertisers pay us to drive growth for their business. We did the impossible here as well. You see, when I started, and even up until now, most advertising companies, the way they work, they work with exchanges. Maybe there's a third-party company providing ads for them. It is very rare when you step outside of Google, Facebook, Snap, and some walled gardens when you see a company that has a direct relationship with publishers, but also a direct relationship with advertisers. That strategy worked. In many ways, we kind of built a walled garden outside, a walled garden that's open.
It worked. It was not only that that we have done. We have done great business with publishers. We have done great business with advertisers. We did even more. We got iconic brands to say, I love Taboola. Companies like Yahoo signed with Taboola for 30 years. I will be in my 70s when I renew this relationship. There is so much growth for Yahoo, and there is so much growth for us working with Monica on our Board and Jim Lanzone and Matt Sanchez and Rob Wing. There is so much to do here. We signed with Apple. How incredible is that when a company like Apple that can choose anyone, anyone in the world says Taboola will be our partner? We trust the quality, the performance, and we are going to make it work together. In many ways, Taboola is like a safe bet.
It's like the famous IBM saying, no one gets fired for choosing Taboola. Financially, we built a very impressive business too. You see, from 2014, when we generated $200 million in revenue, 10 years after, almost 10x the size, we built this business. We now generate $1 million every four hours-ish, which means that by lunchtime, we'll make $1 million. In 2024, we've generated about $500,000 of free cash flow every day. It is very rare for a company on that journey to be driving those financials. All of this is thanks to our incredible team. I'm so excited for all of you to meet some of them speaking later today here, demoing the products later. Please engage and ask us any question that's on your mind.
Last but not least for me, and you've heard me say this before, you can copy anything. I can see your website and copy it. I can see your pitch deck and copy it. I could try to hire great people. What you can never do, and that's the hardest task, is to build a team of people that are passionately executing together towards a mission they're aligned on doing. You see, only emotional people believe that if they were first, they deserve to win. Google wasn't first, became the biggest. Facebook wasn't first, became the biggest. Amazon wasn't first, became the biggest. Taboola was not first, became the biggest in native advertising. You'll see my team today, and you will feel what I feel. Good days, bad days, we've proven that it doesn't matter who was first in a market.
The only thing that matters is who is the best. Now, with this new strategy, we realize I feel like we have no limits. There is nothing we can do as we look to provide value to our clients and partners. You see, over the last few years, we have kind of developed this conviction inside the Taboola team that there is so much more we can do, more we can do for our ecosystem at large. Advertisers, they love native advertising. It works. We have 15,000-20,000 of them. We generated almost $1.8 billion of performance advertising. They like it. It is still a small portion of what they do. They still want so much more from us as it relates to performance advertising, driving growth to their business. Publishers, they love native. We have been doing this for a long time, three years, five years, 30 years.
We're the chosen one. Even then, native is 20% of the revenue. Most of it is display. They want us to do more. They trust us to do more. They deserve more. Even Taboola, we want more. We don't want to be the leaders of a $2 billion, $3 billion, $4 billion, $5 billion native advertising market. No. We want to lead a $55 billion market. Even for us, simply put, we wanted more. Introducing Realize, performance advertising beyond search and social. You're going to get a lot of it later today. It's going to be incredible. You're going to see so much more about it. I'll give you some of the net new stuff that makes me so excited about capturing this market with Realize. New demand. You can now go to Realize, which is the only way you can buy ads from Taboola now.
You can click a button and import your meta creatives and get to work. You can upload your display creatives that you have on PMax and get to work. No longer will we demand to specialize just for us. You do you, and we'll make it work. New supply, net new supply. You've seen our announcement with Microsoft a week ago or two weeks ago as we expanded from MSN, which was native advertising, into other parts of the business where we can now bring the net new demand. All of our publishers have a lot of display great supply, all of them. Performance pricing, this is really cool. Can you imagine that these tens of billions of dollars of display ads you have to pay CPM, which means you pay because someone saw the ad? What the hell is this?
Why can't I just pay if someone clicked on it? Why can't I bring a performance culture to a big market, which we intend to do? With Realize, you can say, here's my display. By the way, I'm only paying if someone clicked on it. Show me it works. Show me you can show that banner, that display ad, that social creative to someone who really likes it. Show me the intent, and I'll pay. That is net new. You'll hear about that later today. Predictive audiences. Do you remember when Facebook launched lookalike models and you can launch a campaign based on people like these people? This is a performance version of that.
If you work with Taboola now, and we got you 100 pizza ovens using Taboola, with predictive audiences, we can now show you, and Abby might tell you, by the way, you should check it out. There's something for you here. We'll say you already got 100 pizza ovens with Taboola with Realize. Do you want 50 more? Because we think we can get you at the same price, more conversions, lookalike. Now you're an advertiser. You're already getting performance, and Realize is suggesting to you and showing you visually what you can do more. Remember that for us, we have so much supply. We reach 600 million people every single day. For us, more demand, more budget, more advertiser success means growth. We're laser-focused, laser, laser-focused on advertiser success and more demand and more growth. Last but not least, it is gorgeous.
You've got to realize it's beautiful. It was built from the ground up. It's easy for people to use, easy to understand, easy to get going. Now with Abby, straight in the middle, you have a friend you can talk to, and you can do more with Taboola. Realize is a winning strategy for everyone: advertisers, publishers, OEM. Everyone likes it. Starting with the advertiser point of view, how do they think about Realize? They're saying, you know, today, when we buy in this huge market, we either buy branding, important, not our business, or we buy performance. If an advertiser wants to buy performance, and I remind you, this is where the industry is going. I talked to someone earlier today about when the pandemic started, we thought, you know, it's going to end, and then it ended, and then recession, and then wars. It's a complicated world.
Maybe this is just a new world. In that world, performance advertising is the most important thing because I can rely on it for continuing to drive value. Performance, if you're here, which I think is where it's going to be most of it, obviously you buy search. Of course, you buy social. If you talk to advertisers, the experience they have, at some point, they maxed out. I can't buy any more Google or Facebook. How much can I get? I bought as much as I could. They want to do more. They need more performance. They want to grow the business. They're going outside. We've identified about $55 billion of spend. You're going to hear Tom Inbal, strategy and marketing leader, speaking about that a lot more after me.
Basically, you have $25 billion of spend of SSPs and DSPs and affiliate marketing and folks that run ads on our publishers and our apps. You have $30 billion in social today that we think are not driving the value that they need to drive. What advertisers tell us is that when you start working with social networks, the beginning is great. You get what you want. It gets a bit more expensive, a bit more expensive, too expensive. That too expensive portion in aggregate is $30 billion. They would love to take it out. We think that we can offer those advertisers that feel like that top end, that last stretch is a waste of money to give it to us, and we will give it to the open web, to our publishers and our partners. Awesome.
This is about a $55 billion opportunity we're going to be laser-focused on for the next 5, 10+ years. Many people ask me, but Adam, OK, $55 billion, good. Where's the next billion two coming from? What are you doing? Whose money are you taking tomorrow morning? How do you go from two to four, $2 to $10 billion later? Give me the $2 to $4 billion, $2 to $6 billion. One investor told me yesterday, don't say $2 to $4. Say $2 to $6. How do you go from $2 to $6 billion? I'm going to tell you. In that $25 billion, about $10 billion is this map. Now, if you look at this map, can anyone tell me one company that you recognize here? No. Why can't you recognize anyone? Because they're too many, too small, too little value, not good.
Advertisers, the world deserves someone here, one that can be an alternative to search and social that advertisers can rely on. It is not fair to ask advertisers to get to know bazillion companies. Too much, too little, not good enough. This is going to be the first place we are going to go in and try to take share. Now we have a huge advantage. Because we built a great native advertising business, we have code on page. That means when you go to CNBC again, we do not know your name, but we know you are the same person. We know what you read. We know what you clicked on. Maybe you bought a pizza oven. We know all those things. Now there is a huge display market above us. When we bid into that auction, into that display, we know something no one else does. No one.
We have first-party data no one else does. We've trained our AI against $1.8 billion of conversions last year, more than 500 million conversions. No one has more conversions outside of the platforms than us. No one has more first-party data than us. When we go and bid, we only bid on our publishers. We're not spraying and praying. We're going where we know that we have a great advantage and that we know something no one else does. We think we can do a good job here. Switching gears to the publisher side, I spend a lot of time with publishers. Publishers love this. I just talked to Grant. He was my dear friend and publisher for over a decade. We had coffee. We talked about these dynamics. I heard this over 100x . Here's what's happening.
Publishers are saying over the last few years, programmatic, this, the display piece, which is most of it, is going down. Why is it going down? It's going down for probably two reasons. Number one, DSPs have shifted over the last few years to become CTV companies. Advertising a big screen and less display on publisher sites, that's less great for publishers. The second thing that happened is walled garden companies have shifted their performance budgets from publishers into their owned and operated sites. Why? Because here they keep 100% of the revenue. And here they have to pay the publisher something. Here, that's beneficial to those platforms. For those two reasons, what we're hearing from our publisher partners is that programmatic revenue is going down. What are we going to do with Realize? We're going to be the Robin Hood in this story.
We're going to be bringing back those budgets to publishers. We're going to go out, take those performance budgets, any creative people want, and push it back to all of our publisher partners and bring back display and programmatic revenue. Advertisers win and publishers win. It gets even more exciting. As I look over the next decade at what does it even mean, open web? What does it even mean, a publisher? This is completely evolving and expanding. You see, everyone wants a piece of the advertising market. Uber, which is supposed to be what I use to go from here to there, generated more than $1 billion in ads last year. Amazon, first line of revenue of EBITDA, ads. Netflix is showing ads to 70 million people. We announced recently a partnership with LINE, which is the biggest messaging app outside of the U.S. and Europe.
It's in Asia Pacific because they, too, said there's an opportunity here. I predict that over the next 10 years, thousands of great utility apps will become publishers. They're going to want to make money from ads. I can tell you, many of them will be a bit scared to get a walled garden to work with them because it's a bit scary to get like a big walled garden to sniff around your data and making ads for you, making revenue for you. Taboola is a safe bet. As I finish my presentation and I get to the last part, we started this day with this Amazon moment. Amazon went from books to all of commerce. Taboola is going from native to all of performance. That's how we started. I spoke about why we're going to win this market.
Look, display has been around for 30 years. Why should we get a lot of it? Some of the reasons that I wrote here are the key ones, in my opinion. One, we have unique supply. We work with incredible publishers all over the world. I talked about this, too. We have more first-party data. We trained our AI against that data than anyone outside of the big platforms. When we bid on that spot, we know something no one else does. We've done this study. You'll see this soon. Taboola is already known for great performance advertising. This is not an adjacency. We're just doing more of the same thing you already know of us. When you come to us, you know you're going to get results. This is just a way for you to get a lot more results with Taboola.
Last but not least, a culture that drives execution. I always think that those who own data and distribution win the world. We've won the native advertising space. We're so ready to win this new, bigger market. On that note, I would like to first thank you, everyone, for being here today. I hope this is cool and fun and helpful. I will invite Tom Inbal, Head of Strategy and Marketing, to give you a deeper dive about the market, how you're going to win it, and all those good things.
Thank you. Thank you, Adam. Hard act to follow. Not working. That's me. Thank you. That's me. All right. It's off sync completely. Maybe we can reboot for a minute. Sorry, guys. Bear with us. Keep going back. That's right. OK, cool. $700 billion was spent on digital advertising last year. The majority of that, around $450 billion, was on performance advertising. We keep using that phrase. That's mid to bottom funnel advertising. What does that mean? It's there to drive action, conversion, sales. It's the stuff after the click. Sales is really kind of the point. The point is millions of advertisers are spending $450 billion to drive $2 trillion of revenue for their businesses. That's the point. Now, we know that this, it's growth fuel, right? It's growth fuel. That $2 trillion number, it's a pretty nice number. It means that on average, the millions of advertisers are getting pretty decent ROAS.
That's like a 4x, even more than a 4x ROAS. Great, right? That average is nonsense. We all know that. It's nonsense. There are winners and losers. There are advertisers with 10x ROAS. Advertisers with ROAS less than 1. That $2 trillion number, it's growing around 3% per annum. That's true for consumer spending. It's true for GDP. I'm sure we all agree that most of those advertisers are gunning for growth that's more than 3% per annum. Not everybody's a winner, for sure. You're a performance advertiser. You want to be a winner. First thing you do, Adam said it, you go to search and social. You're not wrong because they work like gangbusters. They work. You're smart enough to know that. You're also smart enough to know the problem with relying too heavily on just search and social.
First is you want to be a winner in that $2 trillion zero-sum game. If you're just doing search and social, everybody is doing search and social. How is that a leg up? You can't just be doing that and expect to be a winner. Second is it keeps becoming more and more expensive. It's harder to get what you need from these channels. Meta CPMs went up 30% last year. User growth, single digit. Ad load, maxed out. They want to drive double-digit growth for their company. CPMs go up 30%. Google search, click volume up around 3%. Google search revenue is up around 15% because the CPCs went up around 10%. Advertisers just can't afford to keep paying these higher and higher prices, essentially fueling the growth of somebody else's business rather than their own. There's an issue here.
Works amazing, but can't be just that and too expensive. Now, that is no secret at all. Look at where the money is already. You've got the $280 billion going to search. Then you've got the $200 billion going to social. Fine. You already have $200 billion going to the other display and video. It's other because most of social is display and video. There's already $200 billion going outside of search and social. Everybody knows that this isn't enough. There's no question that we need more than that to be winners. Let's put search aside for a minute. Different ballgame. Spend the next 10 minutes talking about two opportunities that matter for us. It's that social box and the other display and video box. Adam started on this earlier. I'll try to pick up where he left off.
Let's start other display and video, non-social display and video. First of all, there's a lot of that that's happening on walled gardens. Amazon.com, YouTube, attracting a lot of display dollars, a lot of display and video dollars, not relevant for us because they don't play well with others. That's not where we can land our ads. You've got the $80 billion on the open web. You've heard us reference this number many times. Even within that 80, there are whole portions of that 80 where we don't have advantage or we don't even operate. CTV, for example, 95%-97% branding, not a game for us. We don't work there. Different types of branding, display, not part of our world.
Taking all of that out, taking out all that branding piece and the stuff we don't do and don't mean to do, you're left with $25 billion. Adam mentioned CTV sucking a lot of the display dollars out. That's happening in the branding space. It's happening in this white space. It's not really happening in this 25. It's a different game. There is this 25 that Adam was referencing. When we think of this 25, we need to talk about coffee. Some of you may remember back in the 1990s when Starbucks was blowing up. By the 2000s, they had 3,500 locations everywhere. Third place coffee culture was mainstream. Everybody was sure that the future of coffee is out of home consumption. Coffee at home is dying. Coffee at home is dying. Coffee at home looked like this in the 1990s. Drip machines, instant coffee, no freshness, no quality.
Along came the disruptors. Nespresso had been around since the 1980s. It really started picking up. They blew up. Keurig introduced K-Cups, exploded in popularity. Suddenly, people could have a decent cup of coffee at home. They did not need to go to Starbucks as much. The market for coffee at home was not dying. The market for bad coffee at home was dying. Why am I telling you this? Because I have heard a lot of people talk about display is dying. That $25 billion is all display and video. Display is not dying. It is the same misconception. Display is thriving. It is working very well where it is done right. Social is display and video. 60% of social in the U.S. is on formats that have no social amplification, stuff like instream video. Nobody is sharing this. Nobody is liking this. Nobody is posting this.
It's a display network that happens to have people attached to it as a social platform. But it could just as easily be served on another site or another app. But it works because it's done right. Retail media, another big growing space of display ads that are being done right. YouTube makes a lot of money and a lot of its growth from display ads. Display is thriving. It's growing. It works. It's fine when it's done right. The problem is that in the programmatic open web ecosystem, it's not. This is drip coffee. This is drip coffee done without the right data, without an algorithm that knows how to optimize for a CPA or a conversion or a business outcome. So that's the drip coffee.
That's also the opportunity, the same way it was an opportunity to offer great coffee at home and blow up and become multi-billion dollar companies. That is the opportunity for Realize. We're Nespressoing that market. We're going to bring that great coffee at home and fix that problem. We know that the money wants to go there. All the creative assets are sitting there waiting for it. There's a massive latent demand that we're going to tap into with Realize. That's kind of the play. That's coffee at home. It's good coffee at home. Now, speaking of that latent demand, Adam mentioned that 10 within the 25. A bit more detail on that. That 10 is being spent mainly with two types of companies, DSPs and other ad tech players. Now, remember, this is just the open web. It's just performance.
A lot of the money that those companies are working with is not even in our $25. In that zone, we have very clear advantages with Realize. We are going to have Hannah and Eyal come up and really go into the details. I am going to want to say something that is a bit higher level. We are being very clear now, today, and with Realize where we specialize, how we are going to contribute for the advertisers to be a winner in the $2 trillion zero-sum game. That means we are focused on performance. We are specialized in performance. No one else has the tech and commercial assets to be a scaled performance play outside of search and social. You want an algorithm driving. You want transparency and control. You want scale that moves the needle. You want first-party advantage. Only game in town. Supply path optimization. Ever heard of it?
We're the best because there's no path. The advertiser spends money with Realize. It goes to the publisher. It lands on the page. There's no path. It's the ultimate SPO. These are just high level. Again, smarter people will get into it. I'm saying we know what we're about. We know where we're focused. We're not trying to boil the ocean. We're not trying to go after the whole 80 or the whole 200 or the whole big hairy number. We know what we're about. In that space, performance buying, there's a lot of these dollars being spent on these platforms. They're not specialized the way we are. They don't have the assets. We certainly have an advantage. That's what we're going to go after. That's that first $10 billion.
You start with that 80, 25, took away people who have some performance specialization, like Amazon, like Criteo, not even counting on getting those dollars, just with the other players in town, where we have a very distinct and obvious advantage. That's a $10 billion opportunity. That's kind of first line of sight, as Adam mentioned before. Let's go to the second opportunity, which is social. Social, $200 billion of spend. It works. I'm not going to tell you it doesn't absolutely work. Now, social has its challenges. We've got regulation going at social, everything from bans, data consent enforcement, antitrust actions, canceling fact-checking, putting UGC, like unmoderated UGC, trying to serve ads against that. Does it open up an opportunity for us with brand-sensitive advertising? It does. Honestly, we're a performance platform. The bigger issue is that social has a problem of diminishing returns.
That's not a problem of reputation. It's a problem of does it work. That is the bigger opportunity. Adam mentioned this earlier. I want to get into it. Why are advertisers happy to diversify performance spending? What does diminishing returns mean? Excuse me. I know I'm probably preaching to the choir. Still, in our industry, it means my first $10,000 that I spent on social, great amount of conversions. I'm very happy my CPA is low. I spent my next $10,000. Went down a bit. I'm still fine. So on. There's a point where I'm starting to pay too much. Now, notice, I'm happy with my average CPA. The bundle's fine. That last piece is making things worse for me. I'm getting my value off of the beginning of this. We heard this. We went out. We spoke to 100 advertisers for discovery, for Realize.
They all brought this up. We said, we got to know more about it. So we did a study. We did a survey with Qualtrics. We talked to over 300 advertisers, both in brands and within agencies. Said, are you seeing this? And we gave them this exact description. Top of the survey. Said, this is this thing. Do you see this? Do you experience this? 75% said, yes, we do. Said, OK. That was not a surprise because it kind of lined up with what we heard in discovery. Said, OK, this is a real thing. Everybody's seeing this. But how big is it? How meaningful? When does it start? This one actually was a surprise. 45% of respondents are seeing notable diminishing returns, somewhere between 50%-70% of their budget being depleted. For a third of them, it happens before they've spent half of their money.
This is a big problem. Extrapolating those numbers, we believe that there's around $30 billion of spend that's suffering from diminishing returns, that's experiencing these diminishing returns. That means that, again, advertisers are still happy with their average. But some last part, 30%, 50%, 15%, is making their ROAS go down, making their CPA go up. They are actively looking at a better way to do things. We asked them, why is this happening? Why do you think you're experiencing diminishing returns? Two biggest answers, user fatigue and saturation. User fatigue means I've got the same users are seeing the ad again and again, same ad again and again. So they're not reacting to it. Second is, I've tapped out on my users. I've reached everyone I can reach. I can't do any more here. I'm maxed out. Those are the two big answers.
Couple that with the rise in prices, which is just a fact of life on social and their price takers, you understand why they're actively experimenting and looking for kind of a better mix. Knowing that, it's very obvious to us that we can be that kind of alternative, that better mix. Why? Frankly speaking, Realize is the closest thing to social outside of social. If you're an advertiser, why did you go to social? You went to social because you wanted to reach a huge amount of users with great data and an algorithm that can drive your spend and optimize for some business outcome. This should all be sounding familiar because I just described Realize. But it's also safe. And you have a fresh approach to fresh users because you're already maxed out. Applying that same logic to the $30 billion. Again, not even the $30 billion.
Let's go even more focused into the $30 billion. What happens if we just look at the advertisers that are suffering the most from diminishing returns, the guys that are seeing it already at 50%? We're looking at verticals where we know we're doing a great job. We know we have advantage. We have that amazing first-party data. We have the audiences they want, intentful audiences. That's a $10 billion opportunity within the 30. Just again, kind of focused on where we feel we have the most immediate opportunity, the biggest competitive advantage. If I scroll back to those two opportunities, there's the $55 Adam was referencing, $30 + $25. There's around $20 billion in areas where we feel we have competitive advantage, where you should, if you're an advertiser, you should put us in the mix. We're going to be complementary to the mix.
We're going to give you a better overall outcome than what you've been getting. You're going to have a scaled play to do that. You're not going to have to sew together 15 different relationships with vendors, some of which may not be around in a year or two. That's kind of the opportunity here. Search and social is not enough. We're going to use our unique assets to specialize only on performance and focus only where we have a distinct competitive advantage. We know that by adding Taboola to their mix, they can get better results. The advertisers can be winners in the $2 trillion zero-sum game with a better mix. If we do that, the prize is massive. That's kind of the long and short of what we believe about the market opportunity for Realize. Now, Adam mentioned it earlier.
I said it now again. All this very much tied to our unique publisher relationships, that really special situation we have with publishers and the code on page and the longevity. I'm happy to welcome Evangeline, who leads our U.S. publisher business, to talk to you more about that very special asset.
Thank you. Hello. Hi, everyone. Excited to be here. I'm Evangeline McDermott, and I oversee our U.S. Enterprise Publisher business. I'll let each of our panelists introduce themselves.
Thank you for having me. My name is Felix Zeng. I lead programmatic for The Weather Company.
Also, thank you for having me. My name is Tim Wolfe. I'm the Senior Vice President of Revenue Operations for Gannett.
Hi. Thank you for having me, Evangeline. I'm Grant Whitmore. I run ad tech and programmatic revenue at Advance Local.
Thank you for being here. For those of you who do not know, we have been working with these companies for an average of 8 to 10 years, some just over 10 years. I want to call that out because that is really, really special to us, working directly with our publishers day in and day out. I want to start by just asking you, what do you think the driving force behind that longevity of our partnership has been, starting with you, Felix?
Sure. I think what Taboola brings to us is there are two aspects. First, the monetization, which you saw a number of slides on. They continue seeking improvements like Realize, which allows us to monetize more placements on the page, helping us to deal with fewer partners, which is an efficiency play for publishers.
The second part that we did not go deeply into is Taboola also helps us with traffic and helping us with distribution. Taboola News, which was briefly shown, helps distribute weather information across the world to wherever Taboola is showing. That allows us to get weather data as well. On both sides, Taboola has been a good partner of ours.
Tim?
Similar response. I would say I think it has been, what, 10 or 11 years that we have been together. We look at it as, at this point, a true partnership. I mean, I do not know if a quarter goes by that we are not trying to optimize and figure out things. We can have, frankly, very frank conversations about, hey, this is working for us, or you guys can say the same that this is not working for you.
Just continuing to evolve and grow and expand, not too dissimilar from what Felix said in terms of growing from the native positions in the feed unit to eventually to the header bidding aspect of things and just continuing to grow now even more with Realize.
They both said all the good words. I'll make this a little bit more emotional. Having worked in publishing for my entire career, which is about 30 years long now, there are a lot of companies that have talked about being a friend to publishing. I've worked with Taboola now across four different companies in the 10 years that I have been associated with them.
What I have seen is a lot of the companies that maybe begin with a good intention about supporting news organizations or being a friend to publishing, market factors or something else catches up with them, and they take a turn. They are no longer a friend to publishing. In fact, they will pull back from supporting things like local news, which are super, super important in the world that we live in today. To have had the opportunity to work with Taboola for as long as I have across a variety of organizations and have them remain a friend to publishers for the reasons that Felix and Tim both articulated so clearly means a lot.
It means that they get to be in the room when we are figuring out some of the biggest challenges that we are facing in this rapidly changing environment that we're adapting to quickly. It means that the teams are bringing us solutions to help us figure out the traffic issues that sort of beat us up when platforms make decisions to move in a particular direction or when revenue starts to dry up in a particular category. That is what it means to me.
Thank you. Piggybacking off of that, you brought up some challenges. Before we get into your perspective on Realize, which is the highlight of today, I do want to kind of lay the groundwork of the publishing landscape and get your perspective. I think it's special today that we have three publisher companies that are similar in many ways, but also different in other ways. Some have national brands. Some have global brands, unique data outside of just news content. It's great to get a diversity of perspective here. I'll start back with you, Grant, because you touched on some of those challenges, traffic being one of them. Could you elaborate a little bit more on that?
Yeah. I mean, I don't think it's a surprise to any of us here. We're all in a fight for mind share and screen time. To have options in terms of figuring out where we need to meet people to engage with them is super critical to our newsrooms. We believe emphatically at Advance Local that an informed populace makes better decisions in their lives and better decisions for society.
It means that we absolutely will engage with platforms. We get to do it more when they make it easy for us. Sometimes they make it hard, and they'll pull the plug on various initiatives. That's never great. We always have to have our feet in buckets. That doesn't sound right. We always have to have a variety of wells that we are drawing that audience from. Taboola makes that easy for us. It also makes it easy for us to monetize our owned and operated audiences, which are very much valuable.
Tim, what are you facing at Gannett? How does Taboola support you?
Yeah. I mean, agreeing everything here with what Grant said in terms of things that change, algorithms change, traffic changes.
I think one of the biggest things that's started to come out of our relationship with Taboola, more specifically in kind of going back to kind of the Homepage For You. For a publisher like us, we are kind of beholden to the news cycle. Generally speaking, some consider it a commoditized category. We care very much about our users, our audiences that we do attract. With the help of Taboola, specifically Homepage For You, I think we're working on an Article for You now. Being able to get that one incremental page view, that one incremental click for continued and hopefully eventually habitual consumption of our content is incredibly important. From a monetization perspective, that one incremental click is incredibly valuable, incredibly valuable to us.
I'll take a different side. I think advertisers are looking to work more with less partners.
Publishers are also really scrutinizing the number of partners that they're working with. We've been taking the number of partners down from 24 last year to 20 this year. We'll continue that trend to focus on fewer partners. With the introduction of Realize, Taboola is becoming a more important partner because they're able to monetize more than just the native placements. That means they're far more useful as one of the remaining partners that when we scrutinize down, that will help us in 2026 and beyond.
Great. Yes, let's get into Realize. We want to hear more about that publisher perspective. You all kind of touched on it. Can you share early successes that you're seeing? I want to start with you, Tim, because we came to you almost a year ago at this point, starting to build those pipes.
I know Realize is on the advertising side. We just announced it. Working with our publishers on this strategy for a long time, well before we launch it and make sure we prove out success. Can you talk about that?
Sure. I mean, what we're talking about specifically is kind of Taboola's kind of introduction. We worked very closely with them, getting them integrated and launched into header bidding. It was a bit of a slow roll at first, a lot of work on both sides to get everything kind of up and running. Unfortunately, I still have 24 partners in my stack. The point there being is that Taboola coming in kind of at the very bottom has now kind of worked its way up to eighth. It is the eighth largest revenue contributor in our programmatic stack, which is significant.
I mean, obviously, we know Google. Google probably dominates and sits clearly at the top of everyone's programmatic stack. It has been huge. That growth on the header bidding side of things is about a 10% lift for Gannett in its revenue contribution from Taboola overall. It has been tremendously successful. From a performance perspective, we talk about performance. We think, OK, cheap CPMs, maybe we publishers and new buyers have a conflicting interest here. I want to sell it for as high as I want. You want to buy it for as cheaply as you want. In the grand scheme, Taboola is sitting kind of right there, really in the middle, and being very performant from an efficiency and an eCPM and an effectiveness perspective as well.
Anyone else want to talk about early success with Taboola tapping into display, doubling down on performance, going beyond native?
Yeah. One thing everybody might not know is when you see a display advertising unit on a website, it's not a determined advertiser. Most of the time, it is a competition, an auction among many, many different buyers. When you have Taboola bidding into that placement, it creates additional pressure that lifts the CPMs that publishers ultimately see. By them participating, it helps publishers. From our end, it's early, but we're seeing better than what we expected from those auctions with the addition of Taboola.
I think piggybacking on what Felix just said, that what Adam talked about in the preamble was real. There has been an outflow of banner display into CTV. You can look at any sort of EMARKETER report and see that the part of sort of programmatic that has been growing has been video and CTV.
The part that has been declining has been banner display. To get this additional performance demand, which really hasn't been delivered at scale to the open web before, is an important part of supporting, we call it price pressure in the auction, so that we are able to realize higher effective CPMs, which is the measure against which the value of a page is created for most publishers outside of the subscription effort and things that they do. I look at it as a really, really healthy development for Taboola to be able to deliver this type of advertiser to us, which really hasn't been able to find a way in effectively prior to this.
I just want to thank you all because it's thanks to our publishers who have been coming to us with those challenges, programmatic revenue, display revenue declining, that we are listening.
We're incorporating that into the roadmap. Now we're here, and we're announcing Realize. It's been really, really exciting to be on this journey with you all. Last thing, we touched on it, Homepage For You, Article Page for You. If any of you were here on our first Investor Day when we IPOed, we introduced that product. It is now part of a whole host of products. It's part of our audience platform, which is providing tremendous value for publishers. Not a direct revenue play, but indirectly driving revenue up. Can you touch more on that? Tim, I'm going to start with you because Gannett was an early adopter of that audience platform.
Yeah. As you mentioned, and as Grant touched on as well, I mean, the importance of one so from a news perspective, it's interesting.
Newsrooms, historically, we've always pushed content to you, published content to you that we thought was the most important and relevant news for you for that day, allowing Taboola to come in and start to customize and craft what that ultimately looks like and make it be more of a pull type of experience relative to all of the data and all the insights that Taboola is able to share. We saw, I don't remember the numbers off the top of my head. I think it was like a 30% lift in clicks from our homepage. As Grant kind of touched on, getting users to article pages.
We look at things in terms of total monetization of different types of pages, whether they're articles, whether they're galleries, whether they're fronts. The inclusion or exclusion of video drives a significant lift in not only our total page views, but in our total and overall monetization, especially when we can get that user to one incremental page view. We see it directly in the data from the, call it Taboola curated homepages versus, I know, our own manually curated homepages, that there is a performance increase that is noticeable. It's impor tant, and it's incredibly effective.
Yeah. That algorithm, we talked a lot about Taboola tech and algorithm. We're not only using it for monetization purposes, but for the purpose of growing the audience. Audience is key. Everything we do, we have to focus on maintaining and growing the audience outside of search and social. Felix, we have, yeah, did you want to add something?
I was just going to add the thing that we're about to test now that we're working very closely to test is actually, it's going to sound weird. Taboola now competing in header bidding for display inventory. We're also looking to actually directly schedule Taboola into some of our ad units and really start to run a test whereby kind of giving them more real estate on the page, potentially, where there will be incorporated advertising, but also recirculation as well in the banner. That is something that we're intentionally trying to figure out, again, another way of driving that incremental page view. It hasn't launched yet, but we're actively in process.
Yes. We have the direct hard-coded placements expanding while we're also tapping into those existing auctions. That is great to see.
I think that's a testament to just how well the personalization and the algo works to both maximize because it's a balancing act, right? It's a balancing act between monetization, but also the engagement. We want to keep users on site, consuming more content, and extending those session depths. Felix, you want to touch on you touched on it a little bit earlier, but just the importance of the Taboola News partnership and the audience platform.
Sure. Every time we go to a renewal where Taboola editorial is a voice in the room, and they like Taboola because it provides them the data to craft articles that are relevant to our users. Secondly, these Taboola News initiatives allow us to distribute out our data across a wide number of users. Regardless of what you think about our government's efforts with NOAA, there is need for weather data.
Helping us distribute out the weather data and making it useful for a large number of users is important to us. That is something that, when I think Grant mentioned as friends to publisher, that is certainly something that helps.
Great. Any other closing remarks? I mean, this is really exciting for us. We view ourselves as really an extension of the publishers that we work with, both from a product perspective, a business perspective, and certainly a holistic partner is our goal. Thank you again, Grant. I know you want to say one more thing.
I always want to say one more thing. I missed an opportunity earlier to say this thing. Tim and Felix have touched on it. This symbiosis is not always understood as it relates to being a friend to publishing.
The fact that Taboola is actually helping us grow our audiences and increase the engagement within our own sites is able to predictively tell us what that is going to be worth based on their known value of these pages is hugely important. It lets us take these leaps as it relates to products that they're rolling out. We're bidding a new product that was rolled out earlier this year. We're going to be testing this on some of our sites. We're able to do that with a high degree of confidence because we know that because of their view across however many it is, 75 bazillion publishers and all of the experience that they've had, that it's probably going to work. That confidence that we have in each other to be able to deliver that makes this whole thing easier.
Amazing.
That's what I wanted to say.
Thank you. I was worth it. Thank you guys so much.
Thank you.
Thank you.
Thanks a lot.
Thank you so much.
Thank you.
Thank you, Jessica. Thank you for your help.
Thanks, Evangeline.
Thank you, Tim, Grant, and Felix. That was fantastic. We really appreciate your participation here. We are now going into our 10-minute break. If we can all be back here at 11:15, that would be wonderful. Thanks again. Excuse me, everyone. If we can now return to our seats. Thank you very much.
Hi, everyone. I'm Hannah Luckie, and I head our advertiser product marketing team. This is Eyal Pincu, the VP of advertiser product. We are going to talk you through our product strategy just now.
We're going to start with our core foundation and our core differentiator in the open web market and how we've used that to win in native. Then we're going to talk about how we're going to double down on that competitive advantage and expand beyond native to be a comprehensive performance platform, which allows us to access more advertisers and a wider share of wallet within those advertisers. OK, starting with our foundation. Our foundation really is our performance engine. That's at the core of everything we do. It's our unique differentiator, and it gives us an advantage over other open web companies. Eyal is going to talk you through it in quite a lot of detail, but I'm going to give you a glance right now. Why we're different and why our engine is different is for three reasons.
The first, and we just heard this panel with publishers, is our deep integration with publishers, not only with their businesses, but we have a deep technical integration. We power both their ads and, in some cases, also their organic content. This, in turn, gives us access to a wealth of first-party data that's unique to us. We see how the user behaves on the page in a way that other open web vendors just don't. We then use this data to train our AI, our machine learning algorithms to make better performance outcomes for advertisers by deciding in a smarter way which ad to serve which user. That allows us to drive these outcomes for advertisers, which are much more similar to social than they are to other ad tech vendors, sometimes better than social.
Yeah, thank you, Hannah.
Adam and Tom talked about the ad tech path to supply and that ecosystem, and it's complex. It's more than just complex. It's a jungle. You have multiple hops on the way. You have mediators. You need to go through multiple auctions. Almost no one has exclusivity on those placements. That really limits the extent of data that you can collect and the quality of the data that you can collect and eventually impacts their competitiveness. We do not rely on third-party supply sources. As you all know, we have direct long-term relationships with our publishers, with code on page, and often with placement exclusivity. This is what gives us deep user insights, which just our competitors don't have access to. This is our first-party data advantage. A regular ad tech vendor is really very limited in his visibility to the page.
He is completely reliant on what he's getting out of the programmatic auction, on the signal and the integration he has there. If we're looking at the actual ad placement data, he's reliant on winning the auction, which is approximately 5%-20% of the time, the average winning rate on ahead of bidding. They're very, very reliant, and the data is limited. We, on the other hand, have 100% visibility. We're code on page. We collect whatever we want and wherever we think is relevant. Let's deep dive a bit and look at the comparison between typical ad tech and Realize. The first two are pretty standard. The device, location, and context you get out of the bid auction, conversion you get from the pixel that's on the advertiser side.
When you go and move to the ad placement, an average ad tech vendor will see that data, those clicks, impressions, attention only if they won the auction. We can collect them whenever we want, whenever we think it's relevant. When you go to the user readership and the on-site engagement, that's really unique to us because that's what we do. We power the organic recommendation on the page. We know what the user is interested in, where he's clicking, how much is he browsing. We know it on that page level. We know it on the publisher level. We know to connect it to our entire network. What we're doing now is basically extending that advantage into non-native placements that are higher up the page.
We're basically taking pages where we're here, and there's multiple auctions and opportunities in other places on the page. We're taking the data that we have, and where we think it's relevant, where we think we have an advantage, we're bidding into them. Now, don't worry. I'm not going to go into the details here, but I want to give you a glimpse of how our AI works. This data that I'm referencing, the first-party user data, the context data, the advertiser data, that all goes to our proprietary algorithms. In the algorithms, we have LLMs that their objective is to create significant embedding. We have neural networks which take those embeddings and create matches between the sparse signals. These algorithms eventually create CTR and CVR predictions, click-through rate and conversion rate predictions. These predictions are how we evaluate the opportunity on the page.
Once we have the data from the page, we feed it back to the algorithms. We use that to calibrate them and to further optimize it. Now, this is just like this is one algorithm that we have, one flow that we have. On top of that, we have a lot of other AI, for example, our bidding strategy, maximize conversion, works on top of this entire thing. The trick is that we're doing this at massive, massive scale, and we're doing it globally. OK, 6 million daily active users, 2 billion daily ad impressions, 50 billion daily recommendations.
Thanks, Eyal. That was the science bit. Why does it all matter? It matters because it drives better performance outcomes for advertisers. Performance is what we're selling, right? We look at advertisers who've been working for us for a long time.
You'll note that this is a variety of verticals. We have auto. We have telco. We have Verisure, which is a home security company and a finance advertiser. What we're able to do is drive social-like levels of performance for these advertisers. You can see with Peugeot, we beat their cost per lead benchmark. We were 14% lower CPA than other campaigns. For Vodafone, we outperformed their other channels. We were 16% lower CPA than their campaign target. With Verisure, we exceeded their lead-to-booking ratio by 85%. That's about quality of leads. We're not just sending scale through. We're sending quality that converts. With eToro, we're A, showing that registrations to converted paying users, that's high. That's good quality and at an efficient cost. This is the basis.
This is what allows us to be a performance expert and to feel so confident as we move forward and expand that advantage outside of just native. Now I'm going to talk to you a little bit about how we're going to do this and the products that we've launched so that we can play this bigger role in an advertiser's marketing mix and allow us to take a larger share of wallet. This is the Realize toolkit. It's actually not exhaustive, but it's the suite of products that we offer to advertisers. You can see we have our performance AI products, audience targeting, ad experience. That's all of our creative brand security and campaign management. Everything that's blue was new when we launched Realize.
I hope that gives you a sense of the scale and the scope of this new release and how significant it is in terms of our ability to drive additional value for our advertisers. I'm going to talk you through a few of these features that we think are going to be most significant in driving additional revenue for us and value for our advertisers. The first one, and perhaps the easiest to understand, is the new formats that we're moving into. We're very selective in terms of the formats and the channels that we want to work with. We're looking at channels that drive performance. Above all else, that's what we're looking for. What advertisers are now able to do is they can use their existing display and their existing social assets. That's using this vertical video that you have on social media.
They can now easily run them on Realize. They're running them in these high-visibility placements, high up the page, high share of voice that advertisers love. They're running them through our direct premium inventory, which we had at scale in every single market to launch. All of this is using this unique data advantage that Al has just talked about. We feel so confident, and Adam talked about this, in our ability to perform here, that we're selling this on a performance pricing basis. We're not selling it, which is normally in the industry, which is on a cost per 1,000 views. We're selling this on a cost per click. So confident are we to perform. Not only that with creative, about allowing them to do it, we've made it so easy for them to do it.
Actually, for advertisers, the amount of fiddly work they need to do to manage all their creative is quite cumbersome and quite expensive. What we've done is we've launched this Social Importer tool, which allows them to just almost drag and drop from Meta, their ad library, any creative on there, put it into Realize and start running it. Super easy. Click of a button. Beyond just creative, there's way more than that, a new audience targeting tool. For performance advertisers, one of the biggest challenges that they have is how do they identify users that are showing high intent, that are likely to be in market for their product? This isn't a brand advertising when they might want to reach a man in his 40s. It's like, I want to reach someone who's going to buy my product, right? How do you do that?
It's really hard. With predictive audiences, this is a pure performance targeting solution. It allows advertisers to find incremental high-intent audiences at scale. It works. We had this in beta for about four months before we launched it and really tested it with a lot of advertisers. We saw that they had a 23% increase in conversion rate and a 13% improvement in CPA. That's significant because what this does is it brings advertisers incremental audiences. It's now part of our best practice to advertisers that in addition to the campaigns they have running or they want to start with with Realize, they now add another campaign, net new revenue to us, targeting these audiences.
This is a game changer for us in terms of being able to take these advantages that we're building in terms of driving down costs and being able to leverage them to say to advertisers, spend more money with us, right? It removes the guesswork for advertisers, this product, by allowing them to easily forecast what incremental performance outcome they can drive with additional budgets. Predictability is a key challenge for advertisers, especially in the context of what Tom talked about earlier, price increases on other channels, price volatility. They need to be able to predict the future and know who they can rely on to perform. We see a huge amount of opportunity here. We've already identified a large pool of advertisers who can drive more conversions with little to no increase in cost to them if they increase their budgets.
We're already starting to leverage this tool to bring in immediate increased revenue onto the platform. Last but not least, on the products I want to talk you through, I'm just going to take a sip of water, is Abby. Abby is our in-platform performance expert, AI-powered. You saw her on the video earlier. What she does is she provides personalized insights, guidance, and recommendations to advertisers. She makes it easy for advertisers of all shapes and sizes. Any advertiser in the world can come and use Realize and know what to do. It's not easy to be a performance advertiser. It's complex on every platform. What she can do is give customized guidance, recommendations to advertisers on how to grow their business on Realize with confidence, giving actionable recommendations and troubleshooting. They never get lost on what do I do next.
This, of course, is a huge opportunity for us because it allows us to get more scale, advertisers scaling with us faster, smaller advertisers being able to succeed and driving campaign success at scale. That was kind of like in a very quick nutshell, Realize. I think Eyal is going to talk through our roadmap a bit.
Yeah, yeah. We shipped a lot of new products with Realize. We're not slowing down. We want to keep this momentum. We have a very significant roadmap ahead. I won't go into every item here. You're welcome to. We can chat afterwards in the demos. I'd be happy to answer on anything here. I want to say something about the priorities. First, we're planning to focus on enhancing these four products that Hannah mentioned. They are the biggest potential for growth on our network.
It's display. It's vertical. It's the predictive audiences. It's the performance simulator. We have more job to increase the eligibility of these products and the adoption and add more features there to make them work even better than what they work now. That's one focus area. The other one is Abby, again, as Hannah showed. We're increasing our investments in Abby. We want to make it integrated deeper into our platform. We believe this will unlock new types of advertisers and obviously help them be more successful and spend more on our platform.
Thank you. We couldn't be more excited. I think we've delivered a lot. We're hearing really positive signs from the market. We're excited to sort of delve in and do more go-to-market here.
I forgot to mention that we'll be demoing most of these features that we talked you through at the demo station later. Now what we're going to do is we're going to hand over to Nadav Perry. He's actually going to bring some advertisers on stage to talk about their reaction to this. Thanks, guys.
Thank you.
Thank you. Thank you. Thank you very much. That was just perfectly. Good morning, everybody. Thank you for being here. Before we start, I just want to say it is a real pleasure to sit here with my colleagues, our clients.
These guys, before we even start, they've not only been able to share their needs and their pains, which accumulated into us being able to innovate and present to you what we have today on Realize, but they've also been able to test our product as we launched it and give us feedback so we can continuously iterate. Before I even start, I just want to give you guys a round of applause and a warm welcome. Thank you very much. Instead of me introducing you, I thought maybe you guys can introduce yourselves, a quick word about your company, your role. Here's a challenge. In one word, something that really drives you or excites you about the world of advertising as it pertains to your business.
I'm Julie Hansen. I'm the Chief Revenue Officer of Babbel, the leading language learning app. I'm actually about a 16-year or so Taboola partner, having been a Business Insider COO prior to that. I have been on both sides of the table working with Taboola. Just want to say the buy side is more fun. I'm going to go with an acronym as my favorite thing, ROI.
Hi, good morning. Or afternoon now. I'm not exactly sure. Tim Stevens. I am the Chief Operating Officer of Quin Street. Despite the picture that's behind me, which I think is about 20 years old when my hair was a lot shorter and a lot browner, Quin Street is a pioneer in performance marketing. We were formed in the late 1990s. Our Founder CEO was an old Procter & Gamble marketing professional. Really excited when the internet came into being, means everything is measurable.
What Quin Street does, we match advertisers who are looking for performance marketing for consumers who are in market, near market for their products. We specialize in personal finance, home improvement, and other home services. My one word, which I have to say really fast because it's really two words, is performance marketing.
One word. One word. Justin Chase, great to be here. For the past 20, 22 years, I've built and sold media companies, most recently in 2021 to private equity. I work for Eversana now, running Eversana Media. We work across the healthcare continuum, specifically commercializing clinical assets. If you think about maybe two years ago, the word would probably be omnichannel. After that efficiency, this year, I think it's impact.
If it's maybe three words, because you had two, so I'll build on that, it would be AI-driven impact is what I'm hearing from the C-level across pharmaceutical companies.
Hi, how are you doing? Thanks for having me. Jeff Ratner, I'm president of Media Data Analytics at Quigley-Simpson. Quigley-Simpson is the largest female-owned independent full-service ad agency and a mouthful. We work with great massive brands like JPMorgan Chase and Procter & Gamble, as well as a lot of startups like Guardian and Mixbook that are really focused on ROI and driving performance efficiency. My word is motion. That saying, if you're standing still, you're dying. The reality is this is an industry that is always in motion, most of the time forward, but sometimes we take a step to the side or a step back.
How do we keep pressing forward, be more effective, more efficient, more impactful.
Thank you very much. For the audience, I just love the fact that we have a diversity of verticals represented here. We have education and publishing. We have finance and home improvement. We have the pharma, excuse me, the pharma and healthcare industry. We have a lot of different types of advertisers, but mainly the D2C type. If you do not mind handing me a glass of water.
You need some pharmaceuticals, I think.
That never happens to me. That never happens. This is new. A lot of representation. I want to start with the agencies and the panel. Thank you very much, Tom. Sorry about that. Thank you. Thank you. I want to start from our agency partnerships. Tell us a little bit about how your clients and the clients that you represent in your portfolio, how has advertising strategies evolved for them, especially with the changing digital landscape? You mentioned motion. I think that's an interesting takeaway. Justin, maybe we can start with healthcare.
Yeah, yeah. In 2021, 2022, I was out doing many events not dissimilar to this one. One of the points that I was making or the beliefs that I was espousing was that traditional media channels were waning much faster than industry analysts were accounting for. Finally, at the end of 2021, EMARKETER comes out with a study that says by 2025, less than 25% of Americans will have a linear TV subscription. Fast forward to today, for all intents and purposes, that's really where we are at. The outflow of dollars from linear.
Think about pharma for a second. Pharma is spending between $10 billion, $11 billion, some years $12 billion, if it's a big launch year on media. If half of that, sometimes 60%, is on linear TV and we're not doing linear anymore, the outflow of that has to go somewhere. It's two places. It's CTV and data-driven programmatic. I think right now, pivot, I know you want to pivot, but thinking strategically about how you're going to move towards performance, I think is one phenomenal strategy. I also think the timing is perfect to take advantage of this shift.
Jeff.
Yeah, I was sitting listening to Tom's presentation earlier.
I feel like he must have a bug or a plant or might be on my signal feed or something in all of the things that we talk to our clients in strategy sessions about, which is how do we diversify our spend? Search, great. Facebook, Meta, great. Social works. But CPC, CPMs, the ability to get in front of those audiences keeps rising and rising. It affects our ROAS, our CAC. Every metric that we're measuring against, those platforms have become oversaturated. Biddable marketplaces, especially for some of our clients that are not giants in the category, get dwarfed in their spending. They're getting pushed either further down the page or their CPCs are going up. How do we diversify our spend?
How do we find effective performance opportunities where we can create efficiency, where we can build scale, where we can get our message out and across? There's also a big change in those landscapes. Search is changing. While search volume is up, AI is changing how search works. We've got to find other places to get our clients advertising in front of folks.
Thank you, Jeff. Shifting over to Julie and Tim. As performance marketers, how do you determine ad spend allocation? What are the key factors? Have they changed? I mean, Tom referenced before the study about diminishing returns on social. Has that impacted your decision on how to allocate your advertising budgets? Julie?
Yeah, I mean, Babbel is strictly a performance marketer. I would say that we've been pretty promiscuous over the past decade in terms of the media mix. We spend offline, online.
We'll test kind of anything. We allocate budget according to some combination of it's art and science. So the data that we see, but also our beliefs about a channel's role in the funnel. That is very much changing right now. As we've talked about with the way that TV is changing, I mean, I kind of think of that Ernest Hemingway quote, "How did you go bankrupt?" Gradually and then suddenly. That is how it's been with television. It just stopped working this year because of the audience change. We haven't really mastered OTT yet. Anyway, the biggest challenges in front of us right now, I mean, we've always allocated a lot of our spend to search and to social because, as we've been hearing all morning, they worked. At the moment, it's not working so good.
Social, the way that the algorithms have kind of taken over media buying on social, you no longer buy lookalikes. You buy a goal, a click, an open, a what have you. That is all driven by an algorithm. I was comparing that last night to like a balsamic reduction. The target audience has gotten very sticky and very sweet, but small. It is less and less effective, more and more expensive on the margin.
You cannot talk to them about food before lunch. They will lose their concentration.
That is a huge challenge. I mean, think about the search experience. I mean, I think you said it very politely, like the SERPs are changing. When was the last time you saw a blue link when you did a search?
I'm confident that's going to, like we're in a little golden age, an era of the largess of the venture capital community giving us these amazing search experiences without the pesky advertisements in them. That will change. Right now, it's tough. That was a lon g answer to a short question.
I'm going to hold you to my question. A lot of changing, there's a lot of movement. When you have to decide where to put your money, what are the key kind of metrics or KPIs that help you?
Sylvia Rackack. What's our ROAS in the short term? Then based on the kind of sale that we've been able to acquire, what do we see the long-term return as? Those are the most important KPIs. Again, we make allowances for different media channels based on our view of their function in the funnel. If they're upper funnel, maybe they're allowed a higher CAC.
Okay. So return on ad spend and based on different cost KPIs. Tim, what about you?
Yeah, exactly the same. As a performance marketing company, our clients, our advertisers measure us on the basis of their CAC. We do not allocate budget to any specific channel, any specific program. We allocate them all. We measure every single day. We real-time move our budgets. We don't set them, run them for some period of time, and then change them. We're changing them constantly. We're very fluid. In that regard, with the clients that we service, many in the personal finance space, especially where their product is a digital product, for example, in insurance, so long as we're hitting their cost of customer acquisition, our budget is unlimited.
We'll spend as much as they can take and as long as it performs.
Thank you. Felix in the publisher funnel referenced the fact that publishers are using fewer partners, bigger partners, smarter partners, just because of the complexity of it all. Question to all of you, since your activities are very performance-oriented, what channels or what partners have you seen most effective? You've already mentioned Search and Social. I'd love to hear more, a little bit of what they do and potentially other partners that have done a good job with you to date. Excluding Taboola for now. At any, you know.
I'll kick us off. Quin Street historically has partnered with media publishers.
When content was king and when search in particular resulted in a lot of blue links, I think at our height we had three or four thousand media partnerships and something close to 30,000-40,000 marketplace placements. That is changing quite a bit. A stat that really surprised me as I have come to learn, with the advent of AI, particularly on Google, something like 2/3 of all searches do not result in a click to a website. The answer is given in the AI results. You have got an advertisement on the side. You kind of think about that. Historically, we have relied a lot on that channel. We are shifting quite dramatically into where the consumers are. That is really important to us. We have to be there. We have to be relevant to what they are looking for.
The way we think about it is you have a channel like Search, which is declared intent. That is good until it runs out. We have seen a lot of stats throughout the day today that you will spend the first $10,000. By example, it works great. Eventually, the last $10,000 does not. Where we focus and what we expect to see tremendous growth in is what I call the indirect search or the latent intent, right? Being relevant in digital media where consumers and homeowners are in some kind of journey, near market or in market, making it easy for them to engage to meet their need.
I love the terminology in market, near market, and audience with intent. Thank you, Tim. Any others?
I guess I would say that we talked about Search and Social already, that those are still big categories for us.
We use TV, OTT, podcasts, radio. We really lean into digital advertising formats. If we talk about newsletter, I would highlight that for us, one of the most effective formats are newsletters. Digital email newsletters are sneaky good. More at diversifying our social mix, something we're leaning into as well. Not 3,000, though. I feel much better about our complicated MTA model when I hear your 3,000. If there's something new, we'll test it.
I'd say, Tim, head on. Relevance is still critical. We take a look at a user journey or a decision path, whether it's for credit cards, for Chase. We do the UnitedCard. We look at the booking journey and the travel journey and how do we intercept that. We do home services for Neighborly.
You might have a long decision-making process before you decide to paint your house or build a deck or whatever it's going to be. How do we be there in that moment of need when people are searching, but also be there during that whole decision journey? Contextual relevance is critical. It's a little harder to measure the value of those things. Putting the right tools in place, you can attribute those exposures along that journey to the end goal.
Everyone here knows there's not a channel that doesn't escape a pharmaceutical ad. I think one of the things, though, that we're always taking into consideration is script lift. That is the metric that the CEO at X pharmaceutical company is always most interested in. I think programmatic most naturally lends itself to that. I mentioned data-driven programmatic earlier.
That's really the channel that allows us to apply not just data, but advanced segmentation, et cetera, to get to a place where we can start to calibrate audience quality with respect to script lift. The more we can do that and make that connection, the greater the benefit is, obviously, for us, for the client, and certainly the C-suite. Another reason why, from a performance standpoint, we like that model as much as we do. It's interesting because pharma, for a very long time, was not a they were not bullish on performance-based advertisers. That has changed as we have forged partnerships with Taboola because we're able to kind of, for lack of a better term, put our money where our mouth is and do what I call de-risk media.
When I come to a pharmaceutical CEO and talk to him about we can de-risk media, increase audience quality, get to a place where our ROAS looks far better than it did a year or two or three ago, the lean in there is pretty significant.
Yeah. Thank you because you both bring up the topic of measurement and attribution and the capability to enable the sufficient management of performance. For this next question, thank you for sharing what you've done that has been working for your business outside and beyond Taboola. For this next question, I got to just remind you we're in the Nasdaq. Whatever you say may or may not completely change the price of our stock now, immediately. No pressure.
Having said that, hearing about the Realize launch and getting to know the features firsthand and the capabilities, what are you most excited about? How do you see the new Taboola and Realize fit into your digital marketing play overall? If you can share a little bit with us.
For me, this changes everything. The ability to put a laser focus on, instead of awareness, intent and action. You have a great visual in your collateral where you kind of visualize that. In pharma, we spend a tremendous amount of money on what are called patient propensity models. It just means the likelihood that a patient is going to go see a doctor and ultimately get on script for a particular treatment or clinical asset.
If we can map through the intent-based targeting that Taboola offers now through Realize, which is incredible, a greater audience quality and ultimately a greater likelihood that this patient will do exactly what I just said without spending as much as we have historically on patient propensity models. Oh, by the way, it's all couched in a performance-based model. To answer the earlier question, this changes everything for us. I mean, from a pharma standpoint, this is an enormous advancement that I'm really very excited about.
Thank you.
Yeah. I mean, look, we evaluate hundreds of partners. We look at a lot of things. As we look at it, we dig into a couple of things. What is their access to inventory? Safe, brand-safe, transparent, accountable inventory. Taboola and Realize has that. We start looking at the technology. How does that technology make better optimization decisions?
How does it affect essentially the effectiveness of our advertising? Obviously, what we've seen here, Taboola is doing that with Realize. You look at data, either the data they bring to the party, the data that we can work with them on, or how they accumulate data over the course of a campaign and that these products have been strived. We start looking at things operationally. How does it affect how efficiently my team could put ads in market? You look at the interface. You look at the quality of the sales team, which I don't think has been touched on. There's a great team here at Taboola. You look at the interface. How can my team operate effectively?
Starting to play with Abby and putting more AI tools in front of my traders so they can be more effective and efficient in the day. We've been testing Realize since the beginning of the year for our Mixbook client. We've seen a +35% increase in ROAS on that because it is the combination of the technology and how they use it and how the tools work effectively and efficiently to drive goals. We're thrilled.
I thought we were special. We also have seen a 35% increase. We beat our targets by 35%, which is a big deal in performance marketing. If you get a 5% beat, you're excited. 35% is very thrilling. That is in the six weeks we've been testing so far, which obviously is early days. That is the most exciting thing. Scale on the open web, very exciting.
If we're so reliant on these two large partners, and as I said, it's getting harder and harder, scale on the open web is very exciting. Actually, as it happens, while I was marveling at your patient propensity model, we tend to think of Babbel as being for everyone. But of course, that's not really true. You don't really learn a language if you're not only 20% of Americans ever learn a language in school. So probably we're looking at an educated audience and affluent. And that lines up pretty nicely with news. We might be one of the few advertisers in the world who actually like news as an advertising platform. Sorry, news friends. I came from that business. That is great. More opportunities in news environments, reaching an educated, affluent audience, that's very exciting to us. I know Taboola goes well beyond news.
For us in particular, that's super exciting. Frankly, that click to export your ads from social, that's huge.
Social importer. Yeah.
Social importer. As we were talking about, the game on social has become about creative. You're not in charge of the media buying. You're just in charge of the goal. The platform gives you the algorithm that finds your audience for you. The only way to compete on social, really, is with creative. We put an enormous amount of resources into feeding the beast, as we call it. Now we can click, and those successful ads go into Realize? Thrilling.
The clients that we have, the industries that they service, they spend well in excess of $60 billion a year on marketing. Quin Street's a billion-dollar business. We're on our journey from one--I got to take this from Adam.
I think it's not you don't double. Now you have to triple. So I'll say one to three. The number that I use internally is we're on our journey from one to five. Taboola and Realize represent scale for us. What stands in the way between us growing from a billion to five billion is performance access to consumers and homeowners who are in and near market. And that's what Realize represents to us.
All right. Thank you. I'm running out of time. I'm going to ask the final question. It's a bit more futuristic. Okay? Looking forward five years ahead, how do you think performance advertising looks like? How do you think your businesses interact with performance advertising five years from now? Any advice you can have for us?
I think it's a whole lot of AI. You already have it in your platform.
I think we're going to find that we're using way more AI to make our decisions, to run our daily work than we are now. Everybody, every platform has their own AI. Some way to kind of consolidate that might be nice. I think it's about the media atomization. I mean, look at what happened in our elections last year. Not getting political on you. With the way that media has changed in the past year and the way that platforms are proliferating and audiences are atomizing, that's going to be our future. It makes it harder and harder to buy media, honestly.
More media atomization.
Atomization. Yeah. Exactly. Scale, therefore, is all the more helpful.
Thank you, Julie.
I agree with Julie. To your earlier point about creation on social, you're really only competing, as you said, on creative and also budget.
I think the future of media, as well as marketing, is in these, to take a hedge fund term, self-sufficient marketing pods that are developing creative, plugged directly into the end user via a consumer interface of a particular platform. Instead of these large agencies--and this is if you're launching a new drug, say, and you have a $50 million-$150 million budget, that's different. For any other brand further down the maturity cycle, you need to be so much more agile. That's one of the things that artificial intelligence helps you do, is to make decisions with a greater degree of aptitude and agility. You have a creative, you have a strategist, you have a media person. They're just cranking out content. AI is doing a large amount of the decisioning. That's very much the direction I think that we're moving in.
Partners that will allow us to work with a greater degree of flexibility, that have the scale, that have the technology, that have things like intent-based targeting, and again, all couched in a performance model, very, very advantageous to the future direction.
Yeah. I'd build on that. Performance marketing and ROAS. I think you're going to see and hear a lot more about that as we move into the future. I use the home improvement industry as an example. The state of the art for a long time has been door knockers. People who walk from door to door and say, "Hey, I just replaced your windows or the windows for your neighbor. Are you in the market?" That was the state of the art. That's a $45 billion a year marketing spend industry for professional home improvement. That industry is changing rapidly.
When I start hearing companies and professionals in an industry like that talk about performance marketing and talk about return on ad spend, that's where it's going.
I'm still trying to get my arms around Julie's salad dressing analogy from the beginning. What I think I got there, part of the problem, though, with performance in this over-optimization is we make our targets smaller because we're trying to get efficiency. We're finding the people that are already leaned in. I think we've got to get better at that balance. We call ourselves the brand and demand agency. How do we also build awareness? I might not be in the sweet spot for a language learning lesson. God, maybe I wish I learned Chinese or Spanish or something.
How do you find people that are on the edge, that are thinking about paying their house, they're thinking about, I think if you, quite frankly, think about even the pharma industry, half those commercials are supposed to be so folks think, "Oh, I didn't know that these bumps on my arm were eczema. I should probably go get that checked out." Right? I think sometimes the over-focus on performance leaves us out of discovery, folks that are trying to discover our brands. Getting those algorithms right and thinking about, "Okay, we're going to focus on that sweet spot, but we're also going to try and get out of those rings a little bit." I think the smarter the algorithms and the smarter the people and the smarter the AI behind those algorithms will be able to create more growth out of performance than just efficiency.
Can I make one last comment? I agree with your point on the narrowing of the audience. This is a conversation we have internally all the time. I would say, does it matter, though, if audience quality is exponentially higher? One of the things that has been talked about several times throughout the day is that performance is a shift in mindset. It's a very different way of thinking operationally, strategically. If we continue to operate with the remnants of old thinking, I don't know. It's just a question.
The problem is if you look at, and we look at a lot of our clients, often their growth plateaus. I'm super efficient. I'm super efficient. The quality audience is there. My business growth has plateaued. How do I accelerate? Where are my next?
One of the first things I always ask a client is, not where your clients are now, where are your next clients, your next customers, your next folks? Where are they coming from? When you kind of put your thinking cap on, how do you—I draw lots of bull's eyes on whiteboards and things like that. What is getting out of that center ring? What are those next rings? How do we start training algorithms to start searching for folks in those next rings?
Th ank you. I love a little heated debate at the end of the panel. We have to finish because, again, these guys need to be fed. We have more content to show. I'm just going to quickly summarize. I learned a lot. I mean, we talked about audience with intent.
How do we find them at scale and push them down the consideration funnel, which is just the point you landed on? We talked a lot about performance and ROAS. We talked about the impact of AI. We talked about the atomization of media and how to find those media partners that can offer you the scale that you need, but also the performance. Let me just finish by saying thank you. We'll continue to rely on you and your teams to improve our product. I want to really thank you for coming and joining this forum. Thank you very much. Thanks for listening.
Okay. Hello, everyone. Adam spoke to you about vision. Tom spoke to you about the market. Eyala and Hannah spoke to you about how excited they are with Realize.
We heard our clients that believe in the direction we're heading, excited about initial results. I'm here to talk to you about the execution, how we get this offering to market. Okay. One, we've come a long way. We're now 2,000 people, 650 or so in tech, more than 700 in sales. We have these people operating in 35 offices across the globe, using 10 data centers, operating in more than 100 markets, and generating close to $1 million of revenue per employee. We've grown to this size because we executed both on the technology and the go-to-market very effectively up until now. As we look to accelerate the growth into the performance marketing world, now we need to bring together all the pieces together into an execution machine, a customer-centric executing machine. We need integrated execution.
When we look at this, we need to bring all parts of the company together. We need our R&D and product team, the tech team, to be close to the customer. We align them with client segments. And they're close to the customer so they can innovate faster. We are getting more input from clients by having them be part of design partnership programs, as you've seen, through a product marketing effort. We're taking our sales team to activate to go-to-market with all the support they need, the marketing, the tech support, finance, HR, all supporting them. All of this so we can drive the quick rhythm that we need to bring this to market. If we look at our go-to-market strategy, we've really moved and specialized. We've moved from a flat, geo-based organization into an organization that is very client-oriented and local.
If we look at this, we have a growth organization. A growth organization is an organization that goes after the small, medium businesses, both on the advertisers and after the smaller publishers. It is 150+ people strong. It is located in hubs to drive efficiency. We have an enterprise organization. It is 375 people strong. It goes after the larger advertisers and the premium publishers, some of which you have seen here. That organization is very much in-country, white-glove service, handling these customers in all these office locations that I mentioned. We also have a set of folks that are focused on strategic partners. These are the Microsoft, Apple, Yahoo on the one hand. These are the holding companies, the agencies on the other hand. This also includes our tech partnerships where we are focused on. That is a special team focusing on that.
We have Taboola News, which is an organization that tries to bring new canvases to the play with working with the likes of Xiaomi, Samsung, the different OEMs to drive that part of the business. If we look at this organization, we look at where we spent most of our growth effort in the sales organization at the end of 2024. It's growing the ad spend part of this because this is where we see we have the most opportunity. Now, jumping into 2025, we're taking another step of specialization. We're going after verticals. We've organized the advertising team by vertical, which means that now our people can be subject matter experts and can tailor offerings to the specific needs of our clients. That means we want them to be more productive through that.
We expect to see initial results from this towards the end of the year of this verticalization. In addition to reorganizing the sales team, we're also focusing on what we call ideal customer profiles. What we've seen is that an ideal customer profile for us is usually advertisers that go after direct-to-consumer and have a longer journey of the sales cycle. We're focusing on these. We've defined them. What we've seen through research we did about all the business in the second half of the year is that we see better retention and better NDR, net dollar retention, by working with this. What we're doing is we're shifting our sales team to focus more and more on these organizations, on these ideal customer profiles. The entire company is around that.
That means the technology and the services, everyone around that is focused on this. These are initial signs. It's early on. It will take time to deliver. These are focus areas, again, that we're driving through this execution. Early indicators from the product, I'll start with the product side, give us confidence. We've heard Jeff. We heard Julie now from Babbel. Thank you for participating in the panel. We see early adopters. It's been 30 days since we launched this product. Very, very early. I want to emphasize that. We're seeing initial results. Those initial results make us happy. We're happy with the results. We're seeing, if you can see the results here with Babbel, 26% better CPA, 93% better click-through rate on this display supply that they've been using. Again, before you bake this into any financial models, it's been 30 days.
It's early. There's a long way to go. We're happy with the initial results. What we also learned as we specialized is that not all supply is created equal for advertisers. What we've really learned is that when we go after supply, first of all, we're not supply constrained. We're much more thoughtful on what supply we go after. We see that we need four things to focus on when we go after new supply opportunities. It's data. It's scale. It's appeal. It's cost. Data, when we go after new supply now, we want data. We want intent-rich data from that supply. We also want scale. Advertisers need to reach a wide audience. It needs to be at scale. There's also the appeal. We heard it here. They want to be on premium brands, on safe brands. That is important.
At the end of the day, it needs to be profitable. The cost needs to be important. We are now selectively looking for supply to grow our supply, not at a fast pace because we are not supply constrained. Those are the parameters that are important to us. When we put all of this together, here is what you should expect and win for Realize. This is where all the integrated execution comes into play. You see that from a product perspective, we have a full roadmap. The product team mentioned that earlier. We brought this to market 30 days ago. What we are doing now is driving more and more functionality and enhancing the existing functionality. As I said, and I keep on saying, it is still early.
We believe that by the end of the year, we will have completed the functionality needed for the vision that we've described. From a go-to-market, we're starting to scale our go-to-market using industry events to bring more and more interest to this offering. We're going to appear in events like OMR, CES, DMEXCO, and others. In terms of supply that I mentioned, that unique supply that we need, we're actually leveraging a business development team integrated with our data team that really selectively go after specific supply opportunities that have the four criteria that I mentioned. Now, how do we measure success? At the end of the day, we want growth in revenue for Taboola, which has to do with how many advertisers we have and what's the average spend for advertiser. We want to look at earlier indicators.
Those indicators include what we bring in as new business. This is the number of new advertisers and how much they spend in new business. It includes retention of existing advertisers and net dollar retention for those advertisers. We have defined scaled advertisers, which we report on, which are advertisers above $100,000, which Steve will mention. We measure that. From a supply perspective, the number of strategic supply partners that we bring in. All of that while we continuously look at yield, which is represented by the RPM. These are the KPIs that we are going to be fanatically looking at, obsessed with in 2025. In summary, talking about execution, execution will be key for us to drive our vision. We believe we are absolutely ready to do so. We have a new offering.
We're excited to be a performance platform that helps advertisers beyond Search and Social. We're expecting our sales team to not only work harder but work smarter. We've specialized. We're also sending them to go after the right customer profiles, those ideal customer profiles. Our supply is unique. It's data-rich. Supply will add a strategic value. We have an integrated execution plan. We have KPIs that we can measure against. We're all ready to execute on this plan. With that, I'll pass it to Steve, who will talk more about our execution plan from a financial perspective. Thank you.
Great. Thanks again, everybody, for being here. We obviously value your participation. Thanks, Eldad. You've heard a lot today about Realize. You've heard about the vision for it. You've heard about how it expands our TAM.
You've heard from our customers and our partners about how it impacts them and how it's valuable for them. You've heard about the product roadmap from here. Eldad just talked about how we go to market. I want to talk about three things. First of all, I'm going to take a step back and talk about our existing business, putting aside Realize for a moment and how it performs. Then I want to talk about how we think Realize will help us grow faster going forward. Finally, I want to talk about the leverage that we get from that faster growth. First, let me talk about our existing business. You've all probably heard us talk about this. We think in terms of being a profitable growth business. What does that mean to us?
It means that we want to grow our ex-TAC, which is the revenue that we keep after we pay our publisher partners. We want to grow it at as fast a rate as possible, obviously. Historically, that for us has meant high teens in terms of growth rates. Second, we want to maintain a certain level of profitability. For us, our goal is always to keep adjusted EBITDA margins, so adjusted EBITDA divided by that ex-TAC, around 30%. You can see we've done a pretty good job of that. In 2023, for those of you who were with us during that time period, you know that we invested ahead of Yahoo coming on board. We took a bit of a margin hit that year. That was intentional. Generally, that's our model. Grow as fast as possible. Teens is our goal.
We also maintain that 30%+ adjusted EBITDA margin. If you look at 2025, we're obviously still meeting that growth or the profitability profile. We're still targeting 30%+ EBITDA margins. Our growth is slower, and that's obviously something that we've acknowledged. What I want to talk to you now about is how we get that growth back up with Realize. Before I get there, one thing I do want to point out is that we also generate really good cash flow from our existing business. Our existing business, we should generate $205 million+ of EBITDA this year. We expect that to convert to free cash flow at the higher end. I've said at the higher end of our usual target of 50%-60% free cash flow conversion. Generally, we expect to continue to generate very good free cash flow.
What that's meant for us is we've been able to buy back shares very aggressively. I think we believe in our growth story. We believe in our growth trajectory and our ability to grow as a business. We're putting our money where our mouth is. You can see that since our earnings release and in the first quarter of this year, we've been buying back shares at about 5x our historical rate. That's something that we're just showing that we believe in ourselves in this. By the way, we expect to continue to be aggressive. We have about $200 million of capacity left in our share buyback. We expect to continue to maintain an aggressive buyback program. I'll also just mention that our balance sheet will support this. We have over $100 million of net cash on our balance sheet currently.
As I mentioned, we expect to generate significant free cash flow again this year. We should be able to continue to maintain that. We also just refinanced our debt. For those of you who haven't seen, we just refinanced our debt. We took on a $270 million revolver that we drew upon to pay down our long-term fixed-term debt. That should save us $3 million-$5 million a year in interest, but also gives us good financial flexibility to, again, continue our share buyback and to continue to support our shares. Existing business, it's strong. It's generating cash. We're not happy with the growth rate. I want to talk a little bit about how we expect that Realize will help us get our growth rate up. I will say it's not in the guidance yet.
The guidance I showed there, we do not have any Realize in that guidance. Because as Eldad mentioned, we are 30 days in at this point. I like to see it in the numbers before we put it in the guidance. We have not guided to it yet. We do expect it to impact growth. I want to talk to you about how. Specifically, to talk to you about how, I want to talk to you in terms of the two new metrics that we released in our Q4 earnings. You saw that we released two new metrics, one of which is the number of scaled advertisers we have. The second one of which is the average revenue per scaled advertiser. To us, a scaled advertiser, by the way, means an advertiser that spends over $100,000 a year. Why are these advertisers important?
Because they make up about 85% of our revenue. If we can drive more scaled advertisers, that'll drive the revenue. It's very kind of predictive of our revenue growth. Obviously, we want to grow both. I'm going to talk to you right now about how Realize impacts both of these metrics. I will note, by the way, that frankly, as long as we're growing revenue, I'm happy if one of them is growing faster than the other. In fact, they're in some ways inversely correlated. If we do a great job of bringing on new advertisers, sometimes they start smaller and grow over time. It could bring down the average. Net net, these are the two metrics that matter to grow our revenue over time. How does Realize impact this? Three ways.
I'm going to skip to the next slides and go into each of these in detail. First, you heard about how we have new things to sell our customers now. Historically, if we had an advertiser that said to us, "I'm just not interested in learning native," we really couldn't take their budgets at that point. Now we've got social creatives. We've got display creatives. We've got new product offerings. That'll let us tap into a whole new set of customers that we can't address today. It means more scaled advertisers. Likewise, we can go to our existing advertisers. We can say, "Do you have social campaigns that work? Let us try and run those for you too." We can upsell our existing advertisers on more and drive up the revenue per advertiser.
The second thing that it should help us with is, as Eldad was talking about, we're now verticalizing and focusing on ideal customer profiles. That helps us in two ways. One, ideal customer profile type of customers, type of advertisers tend to stick with us more, which means as we sell more of them on, we end up with more scaled advertisers. They also have much higher NDRs. Eldad showed you that we're early. We're seeing much better NDRs. That leads to higher revenue per advertiser over time. The third thing that Realize does for us, there is a third thing. Anyway, the third thing that I'll just talk to it for now. If you can get it flipping forward. The third thing that Realize does is it opens up new types of supply. Eldad alluded to this earlier.
With Realize, we're going to be bidding on different placements on the page. We also can bring on different types of partners, such as I think Adam alluded to other types of apps and utilities that need advertising, need advertising partners. We can bring on new types of supply as well. What that does is it brings on new data, new supply that's attractive to advertisers. I think Apple is the best example of this. You bring on Apple. You go to someone like Hulu. You say to them, "Would you like to be native on the iPhone?" They say, "Of course." You get new types of advertisers that you otherwise might not have. You can also get your existing advertisers to spend more with you because you've got new unique supply.
It drives up, again, both the number of scaled advertisers and the average revenue per scaled advertiser. All right. Now we're going to play a little bit of PowerPoint karaoke. What slide am I on? OK. Now I know where I am again. OK. There you go. There's the big slide that you missed. You're welcome. Now let's talk about that growth that we expect from Realize. How does it impact our financials? I think the most important thing to realize is that incremental growth has very high leverage for us. Our cost base, frankly, is mostly fixed or at least step function fixed in that it's mostly people. It's the sales teams that Eldad talked about. It's some tech infrastructure. It's mostly relatively fixed cost.
For every $100 of incremental gross revenue that we bring on, we expect somewhere around $27-$53 of that to fall to EBITDA. We do have to pay part of it to our publisher partners. That's the biggest portion of the incremental cost from that incremental revenue. In terms of other incremental operating expenses, they're very small. A lot of that incremental revenue falls directly to adjusted EBITDA. Better yet, I would expect then a very high percentage of that to fall to free cash flow. It should convert to free cash flow at a very high rate, 60%-90%. Incremental growth for us provides high leverage. We think that any incremental growth that we get from Realize should have a very significant impact on our financials. Again, we're not guiding to growth on Realize yet because we're early.
It should have a very positive effect as we see it come to fruition. I mentioned earlier that we're being very aggressive with share buybacks. What will we do with the incremental financial impact of Realize? We expect to continue to buy back shares. That's the simple answer. That's our number one priority. We think it's the best use of our capital currently. I will say, and I always say this when we talk about capital allocation, we will look at acquisitions. They're likely to be smaller, tuck in if we do anything right now, capabilities that we might want, things that contribute to Realize. That would be a second priority and likely to be small. I feel pretty good about where we're at with our debt right now. We just optimized that. We just refinanced it.
That would be by far the third priority in terms of capital allocation. To kind of summarize everything, we have a really strong current business. It's generating cash. It's allowing us to support things like investing in Realize while still buying back shares. We do expect Realize to accelerate our growth. Again, we're not ready yet to say when that happens because I want to see it in the numbers before we'll do it. We do expect that to drive faster growth over time. There is really high leverage from any incremental growth we get just because of the way our business is set up. I think that's the simple summary of mine. With that, I want to invite Adam back up. We're going to open it up to questions for everybody.
Oh, yeah. Did you want to just bring mics out?
Yeah. I was going to, why don't you end up with your summary remarks and then we'll put the stools up.
Yeah. Very brief. What I wanted to say, thank you. Sometimes I have to pinch myself. I was looking from the back. It's that this is all Realize. Thank you, investors, analysts who cover us, folks who not yet cover us who are in the room, Taboolars who flew from all over the world to be here with us, publishers, advertisers. It feels like we're entering a huge market. We feel like we have what it takes to take a share of that. Stephen mentioned that. We have also de-risked our guidance to create opportunities for existing investors and new investors. With that in mind, questions. Let's do this.
I don't think we need chairs. That's OK.
You sure?
No, that's OK.
Such a good fit, Steve. This L.A. life of walking all day long.
OK. And then one more. All right. All right. We are mic'd. All right. Laura, would you like to kick us off on the Q&A?
Sure. I'll ask two. They might both be for Adam. Sorry, Steve.
That's all right.
The big one is when you think you were in performance before CPC and now you're going to go from native to display. I understand that. One of the interesting things in the Realize slide they were talking about is as you get ad units that are more valuable up the page, you're competing with CPM. You decided to keep a pricing of staying with performance metrics. Why? Why not go into the CPM market so you had a full funnel? Sort of CPM is typically top of funnel. Why make the decision to stay in performance when you went to display rather than doing a CPM pricing and then complementing it with your historical business, which was CPC?
It's a good question. One, I think we'll support both. If you want to buy CPM, we'll support that. I think it takes a lot of courage as you enter this new big market to say, by the way, I know you're used to spending a lot of money paying for something you don't really necessarily know someone saw, someone interacted with. With us, as we're new entrants, I think it takes a lot of courage to say only pay us when it works and track the performance on the other side of it. It's very much like a search business. You pay only upon click. For us, I like the fact that we're entering this new market as a new participant in that big ecosystem. We're taking more risk to some degree to say only pay us if we're doing a good job.
I think that sets us apart. It's very hard for other people to compete with that unless they think they're going to be as good as us. For me, I always look for areas where we just have something that is unique to us that gives us competitive advantage and makes it harder for people to react to unless they're better than us. That's why I like it. I like especially as we're new to come in and take more risks, prove that it works, and from there continue to expand.
OK. My second question is I understand that you guys sort of dominate native. That market's gotten a little too small for you. You've taken enough market share. Now you go to, let's call it, performance display. Ultimately, Adam, don't we have to go to video? Isn't the world sort of moving to online video and ultimately to a big screen video? I mean, isn't display and native getting cannibalized by the video ad unit, which is more powerful? Can you talk to that?
Yeah. We love video. We'll do video. We'll do performance video. Even when I look at Instagram or TikTok, I think a lot of the ad units are video ad units. The way advertisers measure the performance of those video units is driven by performance. If you look at a good example, it is the gaming industry. They tend to upload video formats. You scroll down. You're seeing the video format of the game. That video is not meant to drive awareness. It's meant to drive a download to that game or to that app. I think we're going to go in strong into video with vertical videos and different types of video formats. It's clear to me we have to be good at one thing, really, really the best in that, which is performance. That's what I want Taboola to be known for.
I want you to buy search, social, Taboola. Branding, they're great companies. They do TV. I think over time there are opportunities in TVs for us to be part of. I mean, that's not something that near-term, I think for us, we should participate in. I do think we'll do video. I think it's a great experience for consumers. I want to be measured on performance. I want you to work with us forever because it works. It's not that we don't like wine and dine. I like wine. Steve likes wine even more. We want to win the business because it's darn good.
Thank you.
Hi. It's Mark Zgutowicz with Benchmark. Just maybe a high-level question on the disintermediation that we're seeing with AI search. It's obviously affecting your publisher clients. I'm curious how that's sort of flowing through to your business longer term and whether Realize can help sort of offset some of those reduced clicks.
Right.
That's the first question. Thanks.
I can start. There are a few things that we're doing to kind of address that. One is Realize will make the share of wallets bigger on a per publisher basis. If you heard today a publisher speaking about making more money with Taboola through the increase in programmatic revenue, I do think Realize contributes to making those publisher base worth more. We have a lot of publishers, so that is helpful. The second thing is that we do have an audience packaging market. If you're a publisher and today you don't have homepage personalization, that probably means that the average person reads one article. They come in. They read one. They leave. If your article pages are not personalized, it probably means people read that article and leave. I think that is not how it should be.
It's crazy to me that people swipe and spend 50 minutes on social networks because they're so good in engaging me and giving me what I want. When I go to a publisher site, I read one article and I leave. I think publishers have been slower to date in adopting AI technologies because in many ways it's also scary. What does that mean about the homepage? What does that mean about the job of a publisher? We're at a point now that given this revolution called AI, no longer can we delay the adoption of this full steam. I think there's an opportunity to increase the pie in engagement on our publisher base as well. Last but not least, with Taboola News, and I spoke about the evolution of publishers.
There's a whole new slew of companies we're going to work with, such as LINE and others. Remember, the LINE integration, you get a message from your friend. The app says, here's a piece of news you may like. If you click on it, we're sending you to the publisher website. I do hope that over time Taboola can be a good source of traffic. We're spending a lot of time thinking about how can we be a distribution engine to the open web like search was, is, like social was and is. All those things to say that I think we can increase the revenue per publisher. We can support increasing audience for them.
I would add just two things to that. One is we're not supply constrained today. Today, if some traffic goes away, we don't want it to happen. We'll help publishers to avoid that as much as possible. That's not what impacts our revenue. We're demand constrained today. I hope to get to the point where we are supply constrained again. Realize does help with that as well because we talked about bidding on other spots on our publisher pages, but also going to other companies who historically weren't really part of our core target markets, Apple being a good example of that again, where we can get more supply. Because we're now saying we'll be a bidder rather than needing to be on the page 100% of the time exclusive, we'll be a bidder.
That opens us up to a new type of supply as long as we find it valuable from a data perspective and the advantage we get. We have ways to get more supply. We do not actually need it today as much as we need demand. We do have ways to get more supply with Realize as well.
That's helpful. Just a quick follow-up, Steve, specifically on how you'll be reporting Realize. Is there a threshold that you're looking for in terms of reporting more specific revenue contribution from Realize quarter- to- quarter?
We won't break out Realize because all spend now is going through Realize. Realize is our whole new ad platform. Everything is Realize. We will try, obviously, we'll update our financials and our guidance and our forward outlooks as we see traction from it and as we see incremental revenue coming from it. You'll see it more in our general guide. You won't see an X percent of our business is Realize because, frankly, it is all of our business.
Got it. Thanks, Steve.
Actually, before we get on to the next question, I just wanted to let everyone know we've got, for those of you who are on the webcast, we've got approximately 200 people on the webcast today. We just want to let you know if you're on the webcast and watching us, you can ask a question through the portal. Please do so if you'd like to go ahead and be a part of the Q&A process. Anyway, let's continue on.
Steve Roman from Oppenheimer. How do you see Realize competing with other scaled DSPs such as Trade Desk and DV360?
I can start. Why don't we think most DSPs have transitioned to spend most of their energy, time, spend on branding dollars and CTV and that type of supply? If you follow what people have been speaking about for the last few years, that's been a lot of the growth rates. I think we will meet some of those DSPs as it relates to performance. I think we'll meet those on the edges. That's not most of what they do. It is very rare, if at all ever exists, that you'll go to a DSP and speak about CPA, speak about CPC, integrate conversion pixels. That language doesn't exist necessarily in a DSP. It's more about viewability, completion rates, and things of that nature.
I don't think there are some, and Tom has spoken about it, there are some there's going to be intersection where there's display budgets that is not for branding and is for performance. I think while that's not most of their business, we will be very competitive for those because, as you've heard from advertisers, that's what we do best. That's the language we speak. That's our metrics that we measure with them. I think we have a good shot at taking business from this ethic at large, not only DSPs, because when we bid, and we will only bid when we have an unfair advantage, when we know something that we think other people don't know, when DSPs bid on display ads, they do not have a first-party cookie. They're in a sandbox. They're always third-party.
That is why when Safari transitioned to deprecate third-party cookies for us, it was a source of strength. If you recall, when we went public, we spoke about that. For us, in many ways, we almost want the world to be as privacy-safe as possible because we are a first-party company. I think we have an advantage because of our first-party access, because we are training our AI against that. I do not know any other company outside of the platform that can speak about $1.8 billion of conversions using AI, to my knowledge. I think all of that to say that we do think we have an advantage. It is on us to prove that we are doing a good job at it. We intend to win the market. Again, it is on us to show that we can do this.
I think Tom wanted to add something to that.
Hold on one second. Just beyond what Adam said, I think that there are cases where you could run into the same type of buyer. Going back to what I said earlier, if you're looking for a platform where you're going to give your creative assets and your budget, and you expect an algorithm to be driving towards a business outcome like conversions or even revenue, DSPs do not do that. They give you the ability to manage your media, their tools, their software to manage your media. If you want an algorithm driving towards a business outcome the way you have it when you're spending on social, they don't do that, period. It's not what they do. We're doing something very different. There's a type of buyer that wants it.
It's not really a will they go to a DSP or do they can't go to a DSP for that. DSPs don't do that, plain and simple.
That's all I had for today. Thank you.
Hi. I'm here. It's Rokas Strauss from Airtel Research. I have one question. I mean, with respect to all the changes to search, especially like Google's AI overviews that we're seeing, I mean, there's certainly kind of like a shrinking referral traffic on the publisher side. I mean, what's your expectation or expectation of how that alters the TAM? Doesn't that put you kind of like in quite severe competition with the likes of the Trade Desk for inventory, potentially even curtails commerce audiences for performance budgets?
We touched on it a little bit. We have a lot of supply. As of now, if we look at where we are right now, Gemini already is implemented on Google. ChatGPT is out there. Perplexity is out there. The real question, the way I hear your question is, from here moving forward, is there any significant big change that's about to happen? Because in many ways, it's already in the past. Like ChatGPT is a live product. Gemini is available to 3 billion people a day. Perplexity is out there. Let's say those are some of the big ones. Really, the way I hear it is, is there another 10x change in referral traffic from today? I don't know the answer to that question. I think it's fairly adopted to some degree.
There is a lot of chatter about even the ChatGPT, OpenAI financing round, where people thought about that round was fairly expensive. People were not sure that jump is justified based on their adoption to date. I do not know if there is going to be a huge change from today moving forward, maybe incremental change. That is my opinion. Two, we have a lot of supply. I am less concerned about 10% change here, 5% change there, which I think is what we are talking about. Because publishers get, call it, 30%-40% traffic from search, let us say, even if that goes down 20%-30%, that is the difference. Thirdly, I think we will participate. There is an opportunity for us to make the pie bigger using AI ourselves with those publishers and drive traffic from new types of integrations we will have with Taboola News and others.
Thirdly, make more money per publisher. I am fairly optimistic that all of these changes will actually drive a cultural change with our partners to do more with us to combat these fears that people have.
OK, hi. Richard Kramer from Arete. You guys have both mentioned multiple times that you are an ample supply. It's a demand issue. You didn't really mention the sources of demand. Specifically, I haven't really heard anything about agencies and where you're going to get the large pools of demand, especially in the context of revenue guidance for this year, which is materially below. You talked on the conference call about how Yahoo hasn't necessarily hit the volumes that you expected. Where are those sources of incremental demand going to come from by channel? Is it via those agencies? Is it via direct sales? What brings those large gross dollars onto the platform?
Yeah. Steve, do you want to start?
Yeah. I think, first of all, I think Eldad talked a little bit about kind of the go-to-market here. If I was to say where exactly within he talked about kind of a multi-tiered sales approach, where exactly do we see the biggest opportunities? I think we think the biggest opportunity is with enterprise, the biggest advertisers, because frankly, historically, that's not been our bread and butter. I think what Realize does is it really unlocks a lot of that demand because, for instance, some of them just say, you know what? I don't want to learn native. Now they don't have to learn native. Give us your social. Give us your display. We'll still perform for you. We'll be able to drive that. It opens up certain types of large advertisers that historically just didn't want to go there.
This is something we learned and we talked about that we learned kind of over the fourth quarter of last year. There are also certain advertisers who are willing to do native, like the ones we brought over from Yahoo, the big advertisers there. What we're learning is that they still do not want to be in our bottom-of-article feed. They want 100% share of voice. They care so much about that that they're willing to say, even if you can get me performance, bottom-of-article feed, I do not want to be there. We think that Realize also now opens up new placements and placements that will be more friendly to them and that will help them expand their spend. We think the biggest opportunity is with enterprise. Frankly, there are also plenty of those advertisers similar in growth that we think we can bring on.
I think over time, self-serve can become a real channel for us as well with Abby and with some of the AI tools. Most immediately, we're focused on those enterprise advertisers because they have big budgets. We think we're unlocking a lot of what they, a lot of their objections historically.
With agencies, we could probably do more as well. I think if you talk to them, they all have now outcome divisions. They are speaking about outcomes in a whole different way. I think on that new journey they are going through, which is create more value for their clients. You have heard some of it today. Hopefully, we can be partners on them as well.
Andrew Boone, Citizens. Step back. I'd love to talk about the financial kind of contribution from thinking about display inventory over the next couple of years. If you think about maybe a three to five-year framework, how do we think about you guys unlocking the $10 billion that you guys talked about for the TAM and now connect that to the P&L?
I'll do the second part. The first part, it's early. We're 30 days in. We're just not at a point where we're ready yet to kind of talk about the timeline and how fast we see that and everything else. Can we double the company in three years? Adam would definitely say yes. We're not there. We don't know exactly how that'll happen. I think in terms of how it contributes, though, you heard me talk a little bit about the fact that incremental revenue pretty much drops to EBITDA for us. Or I should say incremental ex-TAC, because we obviously share with our publishers regardless. Incremental ex-TAC drops at a pretty high rate to our EBITDA and then converts to free cash flow at a very high rate as well.
Incremental growth is very impactful for our financials and should have a highly leveraged impact. But how fast it happens, I'm just not sure we're ready to talk to yet.
Just as a follow-up on that, though, this has been a multi-analyst question at this point. You guys are not supply constrained. This unlocks new types of supply. Talk to us about, again, the framework of you guys now being able to drive that. Do we think about this then as a yield play? Is that the right way to think about its contribution to financials? Help us understand that.
Yeah, because the biggest unlock for Realize does help us with new types of supply. The biggest unlock of Realize is demand that historically would not spend with us. It's those advertisers who didn't want to do native and won't do native. It's the advertisers who may do native, but they need different placements to want to do native-style advertising or native-format advertising. It's that unlock that, frankly, is the bigger one. In that regard, Andrew, you could think of it as yield. You could think of it as even if we don't add any more supply, we add more demand, and our average revenue per ad spot or our ad rates will go up effectively.
I wanted to ask about the incremental revenue slide that you guys had. It was the incremental ex-TAC gross profit was either 30 or 60 off of the 100. Just talk to us about what the expectation is in terms of take rates that we should have as you guys do move into new inventory types.
Yep. That's where the connection to yield kind of becomes pretty clear. The 30% would be an implication if we brought on new demand, and new gross revenue that went to new supply. It would probably be around, that's our estimate, around 30% take rate. That's kind of a little bit lower than our average for a business, but that's because in some cases, we'll be bidding for that new supply, so it'll be a bit lower than our average. That's if we bring on new demand that goes to new supply. The 60% is if we increase yield, in essence. New demand that we bring on that goes to existing supply, it'll be more like 60%.
That's why we kind of gave a range, because you have to make some assumptions about does the demand that you bring on go to new supply that you have to either bid on or that is new supply that we brought on in other ways, or does it go to existing supply, which is a higher margin for us, in essence. That's why we gave the range.
We have one final question.
OK. All right. Thanks for letting me get in here. This is Barton Crockett with Rosenblatt. I was curious about understanding a little bit better this statement you make about excess supply. I was wondering if you could define a little bit more clearly what is the excess supply. Is that mainly the stuff that's lower on the bottom of the page? How does the higher on the page stuff kind of fit into that? My understanding is that the lower on the page stuff, that's really just kind of supply that's guaranteed to you. The higher on the page stuff, I think you guys might be bidding and getting that because you're offering a more effective bid. I was wondering if you could define that a little bit more clearly.
Let me take a first pass then. The way to think about this is when we say we're supply or we're demand constrained right now, what that means is if I bring on a new big publisher in the U.S. and we put that supply onto our platform, how much does it grow revenue? Historically, we would have said, if that publisher has the potential to do $100,000 a month of revenue, it'll go up $100,000 because we have plenty of demand. We'll grow the demand with the supply. Today, if I bring on that new publisher and it has a $100,000 potential, it may do $100,000, but our overall network may only go up $10,000 or something, some smaller number, because we just don't have enough demand. Some of the demand grows with us, but not enough of it.
That is what we mean when we say we're demand constrained. I think to kind of address your original question, I think the way to think about it is we will know that we're not demand constrained anymore when you can bring on new supply and your demand just expands, your revenue expands based on the supply, rather than today where that does not happen as much. Does that kind of help?
Yeah, I guess that helps to a degree. It seems like one of the constraints on demand is just people aren't interested, as you said, and some people are not interested in the lower on the page stuff. To say that you're bringing on the demand for the higher of the page stuff and you have an excess supply, it's really just 100% dependent on you kind of winning that in the bid at the end of the day.
Yeah, that's incremental. We get to choose. This is not supply we ask for. Traditionally, we would say 100% of traffic we get. Let's say we think that's a user. Steve just read about Pizza Oven. He clicked on that in the native ad. He didn't buy it yet. He came back. We're seeing him on the home page. We're going in. We're saying that now we're bidding for that. We're bidding on it in a competitive way because we think we should win it, because we think he's going to click on it and buy the Pizza Oven. That's supply that we only get when we choose. It's an option to choose to bid on because we think we know something that makes us confident we can win it.
It does sound like you believe that that's an important option because you're hitting kind of a wall on demand for the lower of the page among some customer segments.
True. Yes, we have to go get those budgets, though, in order to grow the overall business. You have to go to, let's say it's Hulu, just to make up a name. You have to go to Hulu and you have to say, OK, we're able to get you more conversions, but we need more budget because today we're basically spending all their budget. If they don't give us more budget, even if we go to win these spots that we have an option of, we don't grow the business.
To what degree is this idea of winning these spots a new business for you? Because when you're doing the lower of the page stuff, my understanding is it's not necessarily a competitive bid for you.
Right. Those are our dedicated placements.
This is new to be able to compete. So it's also partly to be proven as your ability to do that.
No, no. We need to win 5%, 10%. If you saw Tim from Gannett mention that we went from number 28 in the auction to number eight, that means we're capturing a bigger share of that display business for him. It means we push down other people. If we're able to do that across thousands of publishers, some of them are really big. Yahoo is a big publisher. Microsoft is a big publisher. Apple is a big publisher of ours. If we're able to do that again and again and again, we're taking a share from this $55 billion market that we think we can. Yeah, we need to win it. If the experience team had happened 9,000x , we would all be celebrating a lot. That's essentially the someone wants to say something.
Just a small thing. You were focused in your question on high and low, which is a good dimension. There is a dimension there. It is not always the issue of I do not want to buy lower on the page. We are unlocking very different types of formats. If you have those creative assets and you want to utilize them, it is not about high and low. It is just I want to run a certain type of ad. Those do not exist. You are right that they do not exist on the lower parts of the page. The issue is not high and low. It is I want to run a certain type of ad. I want it to have rich media. I want it to be this big. I am giving you that ability. It could still end up in the middle of the page or the bottom of the page.
We do have dedicated placements that are higher up on the page. Not all of them are bidded. You're right that that's the majority of the incremental that we're doing.
I will just add one more thing. It's a bit of a circular reference because having the right creatives for the right spot on the page will also help us compete more effectively for those new spots. If it's a mid-article that can accept a vertical video, you want a vertical video because it's one of the best performing ad formats out there right now. It's a little bit circular in terms of thinking about it.
All right. With that, thank you very much. This is the conclusion of the webcasted portion of the event. Again, thank you for joining us. For everyone else that's here, we have a demo station. We have finally for you some food. We hope that you can join us for that. Thanks again.
By the way, do you want to say where the demo stations are?
It's right next to the food.
Follow the food.
Follow the food. OK. Thank you very much.