The rumors are true: Outbrain is buying Teads.
On Thursday, the content recommendation platform announced it will acquire Teads, the SSP and video monetization company owned by European telco Altice. The acquisition ends advanced talks, first reported on in July by Business Insider, between the two companies.
Altice, which bought Teads in 2017 for $307 million, is getting the roughly $1 billion deal price it was reportedly hoping to snag for Teads. Altice had been looking to offload its ad tech to offset its own heavy multibillion-dollar debt load.
Outbrain will cough up $725 million cash up front, with a deferred cash payment of $25 million, and issue 35 million shares of stock to Altice valued at around $169 million.
When the deal closes, Outbrain CEO David Kostman will serve as chief executive of the newly combined company. Teads co-CEOs Bertrand Quesada and Jeremy Arditi will serve as co-presidents.
The goal for Outbrain is to become an “end-to-end, full-funnel platform for the open internet,” Kostman told AdExchanger. Kostman also said Outbrain considers this transaction as more of a merger between two large companies rather than a straight-up acquisition of one by the other.
The case for Outbrain and Teads
Altice is not the first telco that spent millions – or in some cases billions – in an attempt to realize ill-fated ad tech ambitions.
Verizon, AT&T and others made big bets in the past on ad tech only to later exit stage left. In 2022, Singaporean telco Singtel sold Amobee to Tremor for $239 million, which was nearly $100 million less than the original deal price in 2012.
When Altice first bought Teads, the plan had been to use its first-party subscriber data to generate incremental revenue from their combined assets.
Fast forward today, and the plan for Outbrain and Teads is quite different.
AdExchanger Daily
Get our editors’ roundup delivered to your inbox every weekday.
Daily Roundup
Outbrain, with shares down 76% since its IPO in 2021, stands to gain a lot from Teads. The SSP gives Outbrain access to TV and video publishers, which Outbrain can use to branch out beyond the much-maligned chumbox category and into the more lucrative CTV space. According to Outbrain, the combined platform will reach more than 2 billion consumers per month.
Outbrain has been wanting to expand into upper-funnel advertising, and the growth of Teads’ CTV business was attractive to Outbrain, Kostman said.
Outbrain’s new horizons
Content recommendation platforms like Outbrain and Taboola are undergoing intense scrutiny for funneling traffic – and sometimes even invalid traffic – to made-for-advertising publishers by incentivizing clicks on less desirable site placements with lower CPMs.
With the ad tech world on an industry-wide crusade against MFA in a quest to stem the flow of wasted ad dollars, it doesn’t come as a surprise that web content recommendation companies would want to distance themselves from any potential association with MFA. Owning Teads could help Outbrain expand its beyond click-based ad revenue model.
Access to CTV and long-form publishers, which comes with the golden glow of a “premium” label, is good for wooing advertisers into spending bigger budgets.
Proximity to premium publishers also creates a bigger opportunity for Outbrain to monetize traffic through more expensive supply and, in turn, attract higher-paying advertisers. Plus, unlike click-based advertising, TV and video serves as a reach vehicle that can boost brand affinity and customer value over time.
Which is why Teads’ video and CTV business makes a good complement for Outbrain’s performance-based marketing tactics, Arditi told AdExchanger.
Combined, Outbrain and Teads have more than 2,000 employees.
Outbrain, which had a market cap of $231 million as of March, needed financial backers to make this deal happen and obtained commitments from Goldman Sachs, Jefferies and Mizuho Bank in the form of a $100 million revolving credit facility. Some of that money will go toward funding the cash part of the deal, including related fees and expenses.
