Taboola buys Commerce Sciences to tweak sites with “Amazon-style” personalization

Taboola, the startup that works with hundreds of online publishers to run carousels of recommended content and ads from their own and other publishers’ sites to grow engagement and revenues, has made another acquisition to grow the services it offers to its customers beyond the bottom of the page. Taboola has acquired Commerce Sciences, which had built a platform for smaller e-commerce companies to add “Amazon-style” personalization to their websites.
As part of the deal, Commerce Sciences will be shutting down its existing business serving those e-commerce companies as Taboola ports the technology into its wider business building free personalisation and recommendation tools for online publishers.
Specifically, the tech will be used to create a way for publishers to better segment their site visitors based on things like time of day, device type, location, traffic referral source and more; to A-B test different content on them; and to ultimately serve between five and 10 or more different mixes of content and ads to different audiences. People who like video will see more videos, for example; those who hate commenting will no longer see a comment option at the bottom of a story.
“Now, every publisher can become an Amazon!” Adam Singolda, the CEO and founder of Taboola, told me in an interview.
Taboola, he added, might restart the e-commerce business down the line, but that this is not the aim for now. And in any case, it seems that Commerce Sciences hadn’t built up a significant business around its tech (perhaps one reason why it decided to sell). “They had clients, but it wasn’t a huge revenue stream,” Singolda said.
Commerce Sciences had raised just over $6 million from investors that included Genesis Partners, Google chairman Eric Schmidt’s Innovation Endeavors, KGC Capital, and others. And while the value of the deal is not being disclosed, it sounds from one source that it was not much more than this. The company had around 13 employees, all of them based out of Tel Aviv, and it sounds like all of them will be coming over to Taboola in Israel.
“We founded Commerce Sciences with the vision of revolutionizing the online experience by enabling websites to engage with each visitor in a truly personalized manner, resulting in a drastic improvement of the on-site experience and greater monetization,” said Aviv Revach, Founder & CEO of Commerce Sciences, in a statement. “There is a natural synergy with Taboola, where we look forward to offering publishers 1-to-1 experiences at tremendous scale.”
The addition of Commerce Science’s tech to Taboola’s business takes the latter company to a new level. Up to now, Taboola has been making money by taking a cut on the ads that ran in those recommendation carousels at the bottom of the page. (The percentage varies, but Singolda told me that “most of the money generated was handed back to publishers.”) That business currently serves over 360 billion editorial and video recommendations to over 1 billion unique visitors every month.
While that will continue, now Taboola will get an additional revenue stream by taking a cut on ads and other revenue-generating features that run on the rest of the page.
It has become relatively commonplace for e-commerce sites to run live A-B tests and ultimately serve different audiences different products based on what those different groups are more likely to buy, but publishers have largely stayed way from trying out a similar approach.
Singolda estimates that less than 10 percent of all publisher-based media sites have tried to look at their audiences and tweak content to fit them better. While there are a number of businesses out there that work on A-B testing for apps and sites (Mixpanel and Optimizely being two), he says that there is really only one big competitor in this area targeting publishers, Adobe Target.
Could that rarity prove to be a barrier to this service’s acceptance among a group that prides itself on having editorial know-how and an awareness of its readers? Singolda defended the concept.
“The publishers are always in control,” he said. “There will never be a variant of a site running that they didn’t create on their own. There is a tool and they can create experiences, and nothing is automatic. We will make suggestions.”
He does admit, though, that there is a “glass ceiling” that Taboola may have to figure out how to break, especially in cases where Taboola’s recommendations might suggest that companies eliminate ads altogether for some readers in exchange for keeping them longer, or getting them to sign up to paid subscriptions.
“I think we have the break glass ceiling in terms of deterministic design,” he said. “We need to evolve into exploring and deciding what metrics we care about and the lifetime value of a reader, versus impressions. Those who can be open minded to test on traffic, say 5% of traffic, may find that it works.
“I don’t think everyone will jump on board but if I compare the commerce and retail industries with media, I think media can grow by leveraging some of the commerce industry’s techniques and technology. Otherwise our only hope is that Facebook sends us more traffic, and i don’t think that’s good enough.”
Taboola itself has raised around $160 million with a valuation of around $1 billion from a wide range of investors that include publishers like Advance (Conde Nast) and our owner Aol, as well as larger internet companies like Baidu, and traditional VCs like Pitango.
Singolda says that it’s not in the market to raise more unless it decides to make a big acquisition. It’s already profitable, has over $100 million in the bank and is on target to make $1 billion in revenues this coming year, having made $500 million in the previous 12 months.
The next big step will likely be an IPO, and perhaps before that, a significant merger: there’s been a longtime rumor that Taboola has been trying to merge with Outbrain, its biggest competitor in the space of recommendation widgets. That deal is still on the cards, although the terms are still being ironed out.
This is Taboola’s third acquisition. Most recently, it acquired ConvertMedia for around $100 million to expand its business in video recommendations, which will now be incorporated into the new web page dashboard.