Sramana Mitra: Also, what you have going in your favour is that the market is starting to understand that on the Internet, content is the brand. I think that understanding is going to drive further and further into the industry in general.
Yaron Galai: I don’t view Facebook as being in the business of social networks because I don’t remember when I last paid my social networking fees, so I do view Facebook and Twitter as content discovery. The social folks side is a category that’s in the more specific content recommendation. It’s a category that’s becoming meaningful. I think the companies in the space were certainly over a billion dollars in revenue between them this year. Outbrain is the category leader and the leader on most of the parameters that matter.
Sramana Mitra: I’ve talked to a lot of publishers who have terrible monetization. I’m sure most of them are your clients. There are sites with 200 billion users and have terrible monetization. I think they’re all going through their own existential crisis. Facebook is a big threat for all of that. They’re all discussing what to do with instant articles. Facebook wants them to publish all of their content directly to Facebook, then Facebook will do all the propagation.
There’s a bunch of this continuity happening in the publishing world right now. It’s a little tricky. For instance, if you take a publisher like Inc. It’s a good publisher. It’s a great brand but they’re having a massive existential problem. I think the publishing world is in an existential crisis. To the extent that you can mitigate that crisis, you’ll be well received. The danger is that your publishers may all disappear.
Yaron Galai: I agree with some of the notions that publishers are under tremendous stress these days on monetization, distribution, and discovery happening through Facebook. I’m very bullish on that. I can’t see any slowdown in terms of consumption of content. I think people are consuming more content than ever. We’re certainly seeing it in our data. There’s no slowdown on that. The movement is with which companies do people discover that content and get there. Those are things that are in a massive evolution and in any massive evolution, there will be winners and losers. I don’t see these people saying, “I’ll now just consume less videos or less articles.”
Sramana Mitra: I don’t see that happening at all. I think there is plenty of content being consumed. From your perspective, the entity in your equation that is under threat are the publishers and it’s their inventory that you are selling. If they go through that level of existential issue, that is the risk of all this. I think what you’re doing is great for them. The question is, is it enough for them to survive. That’s the real issue here.
Yaron Galai: I’ll give you a couple of points about that. One good example is Google’s take on mobile. I should say, by the way, about 55% of our revenue is mobile. We’re mostly mobile revenue. Google’s version on instant articles is called Google AMP. The link that they show on mobile searches on articles are mostly pointing to Google AMP pages.
From day one, they said, “We want the publishers to be able to embed their best services and monetization into Google AMP.” Outbrain was a launch party with Google. We worked with them on the first version of Google AMP. From day one, Google and publishers embedded us in those versions. As it relates to Facebook, it’s a threat. I think the smarter publishers are going to figure out how to work with Facebook and say, “We’d love to put our content on Facebook. Here’s what you need to pay us, or here’s the things we need to put on those instant articles in order for these to be sustainable for us.”
Not all companies will survive that kind of value, but the smarter ones will. The reason why I’m very optimistic about publishing and not necessarily every publisher is, people don’t seem to be slowing down in the amount of content they’re consuming. As long as that happens, I think the smarter companies in the space will be in good shape.
There is one more thing that I’d like to mention. We recently announced with Facebook a technology, which we’ve built over the past couple of years. It gets content recommendations into messaging platforms in the form of a chat bot. We announced that together with Facebook and CNN. Desktop articles are probably moving into Facebook Instant Articles but new ways of how people discover content are emerging. Outbrain, as the innovator of the space, is always the first to be in these places.
Sramana Mitra: Very good interview. It was a very interesting conversation. Thank you for your time.