Two clickbait giants decide to merge to compete with Facebook, Google

On many websites, readers who scroll to the very end of an article are likely to encounter rows of small advertisements belonging to a weird subgenre of digital marketing known as chumbox ads.

Named for the angler’s practice of using bits of dead fish to lure other fish, these ads comprise arresting images and baffling text. They have one goal: to make readers click. And when they do, readers may find themselves on an unfamiliar website with an odd name, faced with a photo gallery of regrettable tattoos or a listicle on 22 celebrities with ugly spouses.

Below a review of “Joker” on Slate the other day, there were dozens of chumbox ads.

“Construction Gone Very Wrong, You Will Cry Laughing” blared one, from a site called Travelfuntu, under a photo of an empty swimming pool.

“Lonely Lion Would Not Stop Crying, Until These Puppies Came Along” said another, from a page called Healevate. The image that went with those words showed a pair of dachshunds next to a big cat.

Those with high standards for their online behavior would never admit clicking on this kind of thing. But enough people are curious enough about something like “The 50 Most Evil Looking Buildings on Earth,” which was the text line for a recent ad on Business Insider, that the digital offerings that fall under “sponsored content,” “suggested reading” or “around the web” have become a multibillion-dollar business.

This week, in a long-expected coupling of clickbait giants, the two largest chumbox providers decided to merge. Taboola and Outbrain, both based in New York, have agreed to unite under the Taboola name, with Outbrain investors receiving shares equating to 30 percent of the combined company, plus $250 million in cash. Together, the companies said they bring in more than $2 billion annually in gross revenue.

Outbrain and Taboola make money on each click, paid to them by the websites where readers land. They then give a portion of that revenue to the publishers hosting the ads. In addition to Slate and Business Insider, CNN uses these ads. So does Fox.

Taboola and Outbrain, both founded more than a decade ago, say their services reach more than 2.6 billion people a month through publishers like CNBC, USA Today, Huffington Post, The Washington Post, BBC, The Guardian and others.

“This is clearly working, somehow,” said Eric Hadley, the former marketing chief at Outbrain, who is now a marketing executive at iHeartMedia. “You may laugh at these ads, but people click on them.”

Adam Singolda, who runs Taboola and will take charge of the combined company, characterized the deal in a statement as a way to “create a more robust competitor to Facebook and Google” while “strengthening journalism.”

Outbrain describes itself as providing “high-quality, reliable content from premium publishers and marketers.” Both companies have advertising guidelines, some of which prohibit allusions to sexual activity, headlines written entirely in capital letters and before-and-after photos.

But the ads that Taboola and Outbrain attach to news stories are unlikely to win awards. In 2015, the now-defunct website The Awl compiled what it called “A Complete Taxonomy of Internet Chum,” describing the different types that readers may encounter in their online travels. The categories included “Miracle Cure Thing,” “Celeb Thing,” “Oozing Food” and “Disgusting Invertebrates or Globular Masses Presented as Weird Food.”

Content ads have long been popular with many publishers: 82 percent of the top 50 news sites were using them, with the vast majority of ads provided by Outbrain or Taboola, according to a 2016 report from the nonprofit Change Advertising. But fewer than half of links connect to legitimate advertisers, with many routing readers instead to anonymously registered domains, data-gobbling quizzes and landing pages for more ads.

Digital news providers are fighting for revenue as Google and Facebook claim more than 60 percent of online advertising revenue. By 2021, 27 percent of internet users are expected to use ad-blocking technology, up from 24.9 percent last year, according to the research firm eMarketer.

But to some news publishers, already fending off fake-news accusations and struggling to retain readers, chumbox ads have turned from annoying to toxic. The New Yorker stopped posting them in 2016.

“The pursuit of revenue, especially in some of the darker days for journalism, meant that publishers would take the money from content-recommendation services, and they might be reluctant to give it up now,” said Brian Wieser, who analyzes media for GroupM. “But the downside is that these ads can potentially diminish the brand of the publisher, especially when they’re run alongside serious journalism.”