Do you have a friend you value because that person is good with book or movie recommendations? Outbrain wants to be that friend to the whole internet by suggesting related content when people read a story. The company has huge reach and deep pockets but still faces a big problem: competitors are coming and, even though vast numbers of people on the internet have used Outbrain, almost no one has heard of it.
paidContent caught up with CEO Yaron Galai in Outbrain’s office near New York’s Union Square this month to hear about his plans to stay on top. In the (likely) event you’re not sure what Outbrain does, here’s a screenshot from Time that shows how and why people and publishers use it:
The business model is pretty simple. Outbrain helps publishers keep readers on their websites by giving them a tool to surface related content that they’ve published in the past. The company’s “From Around the Web” tool also provides a way for publishers to buy and sell traffic — in the example above, if someone clicks on one of the related stories links, Time might get a referral fee from the outside publication (of which Outbrain would take a cut). Small publishers can use the service for free to surface their own content but once they reach a certain volume of traffic, they’re obliged to add paid links. Outbrain claims its tools are installed on more than 90,000 blogs and websites, including big names like CNN, the New York Post and Slate.
So far, Outbrain has done pretty well. The company is backed by $64 million in venture funding and claims its recommendations are clicked on billions of times a year.
But now competitors are arriving, including comment site Disqus , which has relationships with millions of websites, and Wordnik, a dictionary site that says its semantic knowledge lets it offer better recommendations. The would-be rivals could undercut Outbrain by copying its service and offering it for a lower price or even for free. Meanwhile, Outbrain must also contend with the enormous referral power of little companies with names like Google(s goog), Facebook(s fb) and LinkedIn(s lnkd).
Yaron, however, has had to defend his turf before (most famously while closing a funding deal as an officer in a combat zone). In doing so, he’s made some very bold decision such as firing legions of his own customers for furnishing spammy content. The decision may eliminate up to 25 percent of the company’s revenue but Yaron thinks it will pay off as a long-term strategy. “A lot of the clones will show good results for the short term [but will soon fade],” he says.
Yaron believes Outbrain has deeper relationships with major publishers and advertisers like GE that make higher-quality ad content– and that that will allow Outbrain to become the go-to place for industry leaderes to do business with each other. To boost the effort, Outbrain is also starting to brand the recommendation with its logo in the hopes readers begin to notice it.
Yaron compares Outbrain’s situation to the early days of search advertising when dozens of competitors scrambled for a piece of the action until Google AdWords finally blew them all out of the water. It’s an impressive vision — but, at this point, it will be at least a year before we know if it can come true.
(Image by ollyy via Shutterstock)