Outbrain and Times $100M Deal Great for the Native Ad Industry?

Time Inc., the ultra-premium online publisher for little known brands such as Time Magazine, People and Sports Illustrated, announced November 18th that they are going to exclusively monetize their content discovery business to Outbrain.  The deal, reported to be worth $100M in ad revenues for Time Inc. over several years, has been met by most with positivity, by some with confusion, and by a few with concerns.

The way it came about and ultimately works is simple.  Time has been testing various monetization partners for the content discovery widgets (example below) including Taboola and Outbrain, and given Outbrain\’s breadth of demand partners, and apparent strong suite of targeting and reporting tools, Time decided to go deep with Outbrain.  Outbrain sells promotion of their content to other publishers and advertisers, typically on a CPC basis, and Time receives a revenue share from each click.  Apparently, Time will also receive traffic from Outbrain\’s publisher partners, though there aren\’t any details on that front in the press release.

Time Inc. Chairman and CEO, Joe Ripp said: “Our success has always been based on unique relationships with audiences. This provides marketers with an ideal environment to deliver their messaging… \” and went on to say that \”Outbrain’s focus on audience experience and surfacing optimized content recommendations was a key to launching this partnership.\”

So what types of demand partners use these widgets?

There are basically three types of demand partners;

1. Advertisers who wish to promote an information landing page, video, or social media post. This is authentic advertising using Content to drive engagement after the user clicks on the post
2. Real publishers looking to build audience. These are publishers who are looking to grow their user base where content discovery can serve as a targeted alternate to Google to generate premium audience.
3. Marketers who take users to a fictitious website with the aim of selling other products, or \”arbitraging\” other demand sources from Yahoo or Google.  Meaning they generate traffic to site that is crawling with Ad Sense and Diet offers. This is the largest demand group.. and the most annoying to consumers.

Some may ask – \”Doesn\’t\’ this mean that Time is promoting other publishers who in turn compete for ad spending dollars?\”

It\’s a grey area and the answer is both yes, and no.  The Digital Ad industry has always supported collusive relationships in order to generate revenue.  Ad Networks sell to other Ad Networks, Publishers buy traffic from other Publishers to fill demand, etc.  In this scenario however, much of the demand comes from savvy content advertisers who are peddling their diet and skin care products under the mask of interesting content posts.  Think of the cartoon ad with the \”This Mother\’s Little Diet Secret\” animation.. but now in a more authentic looking content form.

So is this good or bad for Consumers and the Native Ad Industry overall?

People in the know describe content discovery widgets as a new, text-laden form or banner advertising.  Content Discovery widgets are certainly a native form of ad as they maintain the form of the site, and when done properly, should maintain form on the site that the user lands on.   When used properly, and by the right people, they can be highly effective engagement tools for both publishers and advertisers.  We believe the key will be to ensure that quality content posts are monitored by Time to ensure that consumers don\’t end up in some kind of pop-up maze.

Native purists (and we also believe) that that effective native advertising should focus on the distribution of relevant advertiser or publisher content directly on the originating publisher site. Similar to the Forbes content post here for Mitel, the consumer is delivered a set of tips on managing email and the content is clearly being sponsored by the Advertiser.

When you do the paper napkin math, at $100M in revenues, and assuming an average CPC generated at $0.50 USD, the partnership will serve up roughly 200 million clicks over a few years.  Let\’s hope a majority of those clicks are sent to real advertisers and publishers.  Our guess is that the majority of the traffic will benefit the slick purveyors of quick fix skin creams and get thin fast schemes.

View the full announcement here.