Baidu buys 'multi-million dollar' stake in content discovery platform Taboola

PUBLISHED : Monday, 18 May, 2015, 5:01pm
UPDATED : Tuesday, 19 May, 2015, 8:46am

China's largest online search engine has announced a "multi-million dollar" investment in content discovery engine Taboola.

The investment by Baidu comes on the heels of a US$117 million Series E funding round announced by Taboola in February.

Taboola allows website owners to install a widget on their pages with automatically generated links to related and sponsored content from around the web. Website owners receive a portion of the revenue generated when users click on sponsored links.

Founded in Israel in 2007, Taboola claims more than 550 million users across multiple countries including the US, UK, Germany, and Japan.

Baidu senior director Peter Fang said the search giant was "very excited about the potential of the discovery market worldwide".

Taboola generated more than US$200 million in revenue in 2014.

"We believe that discovery has massive growth potential in both existing and untapped markets around the world," said Adam Singolda, founder and chief executive of Taboola.

Since its founding, Singolda's company has been in fierce competition with New York-based company Outbrain, which offers a similar product.

However, both companies have been criticised for serving low-quality or "spammy" links, with media publication Digiday writing in 2013 that "content marketing has a quality problem" and risked alienating users and customers.

Venture capitalist Marc Andreesen wrote last February that publishers "should be shot" for using related content links which he said degraded both the user and advertiser experience.

Outbrain and Taboola have since instituted greater quality controls in the wake of criticism, with the latter firm introducing Taboola Choice, which allows users to dismiss content they deem irrelevant or annoying.

In 2014, Taboola acquired programmatic advertising company Perfect Market, allowing it to recommend products and services in a manner similar to Google AdWords or Baidu's Wangmeng.

Baidu dominates China's online search-related advertising market, with revenue predicted to rise 34 per cent to US$7.1 billion this year, up from US$5.3 billion in 2014.

While it has a strong lead on desktop thanks to its success in the search market, Baidu has faced increased competition in mobile advertising, with Alibaba overtaking it in April for the first time.