Taboola acquires Connexity to help publishers push into ecommerce

The news: Taboola is acquiring ecommerce ad platform Connexity for $800 million, its first buy since going public less than a month ago.

More on this:

• Taboola is an ad platform best known for its “Around the Web” and “Recommended for You” boxes under web articles. It’s typically used by publishers, who are either trying to recirculate their own content to their audiences or get referral revenue by sending traffic to other sites. Taboola boasts 13,000 advertisers and 500 million daily active users across 9,000 digital property partners, per TechCrunch.
• Connexity is an ad network focused on ecommerce retailers. While it covers everything from search ads to influencer marketing, its main draw is helping retailers advertise on publisher sites via affiliate links and sponsored content. It has 40,000 publishers in its network and an audience of 100 million.

What it means: The acquisition will expand Taboola’s client base to include Connexity’s retail clients with benefits on both sides.

• Taboola’s publishers will be able to tap into a growing source of revenue. Ecommerce is one of the few areas publishers are still seeing revenue potential: When US publishers were asked what they expected their largest source of revenue would be in Q1 2021, more than a third (36%) named ecommerce, making it the top-ranked choice, according to a December 2020 survey by Lotame. Some 62% ranked it at least in their top three.
• The hope is the partnership will give publishers more viable alternatives to the walled gardens of Facebook and Google, especially as the latter moves to deprecate third-party cookies by the end of 2023.
• Connexity’s retail clients that want to diversify their channel mix will have even more options. “Amazon has millions of merchants, but merchants mainly have Amazon,” said Taboola CEO Adam Singolda in the acquisition announcement. (For context, we expect Amazon to capture 10.7% of US digital ad spend this year.)
• Similar to the partnership’s benefit to publishers, retailers’ access to Taboola’s wide base of publishers could help ease them away from relying on Amazon or the other members of the tripoly.

The bottom line: Ecommerce advertising is only growing more and more important. We expect the retail industry to account for just under a quarter (24.9%) of all US digital ad spend this year, or $47.59 billion—and its share will only keep growing, so it’s all the more imperative for publishers to tap in now. Meanwhile, Amazon’s share of digital ad revenues will keep growing, too, making it increasingly important for retail advertisers to diversify so as to avoid dependence.

For more on this topic, read our “Publishers and Commerce 2021” report.