Taboola and Outbrain, the "clickbait" companies that share advertising revenue with publishers, were said to end their merger plans amid a dispute about the deal valuation. The broken deal is another sign of how the economic consequences of the coronavirus pandemic have disrupted the digital ad market.
Thousands of websites carry Taboola and Outbrain's content feeds, which include a mix of native advertising and editorial content. The feeds are designed to grab attention with eye-catching headlines about celebrities or offbeat imagery that practically invites clicks.
When the merger was announced, Taboola CEO Adam Singolda said the new company would have about 2,000 employees and $2 billion in yearly revenue. He also said the combined company would give advertisers another alternative to the "duopoly" of Google and Facebook that dominate the digital ad market.
The pandemic hasn't spared those companies. Google repored the first decline in ad revenue in its 26-year history, while Facebook's sales growth slowed somewhat in the second quarter. A key test will be holiday shopping season that's typically the best quarter for advertising.
The broken deal between Taboola and Outbrain is positive for publishers that want more choice in content recommendation companies that provide ancillary revenue for their digital properties.
It's also possible the companies will return to the bargaining table, having avoided the objections to antitrust authorities in the U.S. However, U.K. and Israeli regulators had yet to approve the deal.