Sramana: At what point did you find your product market fit and business model?
Adam Singolda: In December of 2011. At that point, we felt we had the best engine in the world to predict what content people like to consume next. Most companies have 20 or 30 algorithms they will apply to do some sort of targeting, but none of them did a good job of video prediction. We had to do something unique and we developed EngageRank and Aggregated CPR. Those two attributes allowed us to blend together upwards of 1000 signals and select 3 or 4 things for recommendation. We knew that process generated high click-through rates.
The big breakthrough was figuring out the business model. The one thing we had not tried at that point was content from other sites. We knew that other players such as YouTube allowed publishers to promote their own videos on a CPC basis. Google did the same thing with search. We launched our content marketplace in December of 2011. Our early clients were a few publishers who were willing to pay per user that came to their site.
That made us realize that we could not be just a video company anymore. We had to be able to accept all types of content. From that point on, Taboola was a marketplace for paid content. In the months after, we started to generate real revenue.
Sramana: This model requires you to have publishers who have content to show. Did you already have those relationships?
Adam Singolda: Yes. Our relationships are a big reason why we were able to raise money. We had Bloomberg, BusinessWeek, and several other major publishers. We had enough publishers that had our product that we were able to get partnerships that showed us advertising from other sites. We had plenty of publishers who were willing to be test publishers. Today I realize that it is a very difficult journey to build a big business where you charge the publishers. We spent years trying to do that. At the end of the day you want to be in a business where a big name means you have a big revenue opportunity.
Sramana: Who were the customers of your content marketing? What kind of publishers were offering you money to promote their content?
Adam Singolda: The very first batch of publishers that we used included folks like CafeMom. Our initial publishers were innovative publishers who were always trying new things.
Sramana: What kind of budgets did these small publishers have?
Adam Singolda: The initial budgets during the first few months were in the thousands. They were just trial periods. About six months into our new business model, we found another differentiator. We realized that distributing content around the web is not an awareness initiative necessarily. The opportunity with content is to educate and engage. We discovered that because people are very deliberate in their decisions when it comes to consuming content that we can use that decision point to drive sales, commerce, and retail.
We had a few very innovative clients come to us who sold a subscription service. They wrote 10 articles that were testimonials of their services. They challenged us to get the right people to consume their content in hopes that those people would sign up for their services. They compared our results with their other advertising methods that included display, social, and search. We realized that if you get the right person to read the correct content that the person would become a client. We are in a position to send someone to YouTube to see the product, then off to CNet to see a review of the product after which they are sent to a microsite that is familiar with the product where they can purchase it.