The company's publisher partners use Outbrain's technology in
two ways. Some pay Outbrain on a per-click basis to place links to
their articles next to articles on other sites. On the other side,
you have publishers who get a cut of that revenue by allowing links
to other publishers' stories to reside on their sites.
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But up until now, Outbrain also had customers who paid to drive
traffic to websites that peddle some type of product or service.
And over time, the company realized that some of those sites were
deceitful either in the headlines they were displaying or in the
businesses they were marketing. CEO Yaron Galai is now putting an
end to that by enforcing a new set of guidelines to rid the
recommendation network of such customers. As a result, Outbrain is
expecting to lose between 15% to 25% of its current revenue.
"At the end of the day we compete with anyone else that 's
monetizing a publisher page," Mr. Galai said. "Everyone else is
based on squeezing as many cents out of the lemon. Our business is
squeezing more trust out of the audience [so they continue to click
on Outbrain links]."
Outbrain won't name specific sites that were kicked out of the
network. Instead, it pointed to its new guidelines, which include
prohibiting content that has "inaccurate or misleading headlines;"
"promotes businesses that appear to be generally deceptive or
misleading; or "encourages high-risk investments or money-making
schemes with the intention of profiting off user participation in
such practices."
Some may commend Outbrain for taking measures that will have
such a negative impact on revenue, at least in the short term.
Others might ask why a 6-year-old company is just now taking such
steps.
"There's a bunch of content that looks like real content, is
pretty sophisticated, looks legit, and when you dig into it, it's
more deceiving than it seems," he said. "The only reason we did it
now is only now we realized what some of these content players and
marketers are actually doing."
Mr. Galai is going to have to answer to his board of directors,
who had to approve the move, if it doesn't work out in the long
run. In a board meeting, two out of four Outbrain investor board
members "were absolutely against" the decision initially, he said,
but in the end they all agreed to back the move because he and his
co-founder pushed for it hard.
"Our board meetings are usually a Kumbaya of everyone being cool
with everything," he said. "This was pretty rare; there was a big,
big, big debate. It's material. It means there's a good likelihood
we miss our numbers, and revenue share going to publishers gets hit
as well."
Mr. Galai said Outbrain made another decision about a year ago
that also cut revenue at the time by about 20%. At that time, the
company tweaked its algorithm to better match recommended links
with the editorial tone of individual publishers, he said.
"Before that , the links that worked well were mostly
sensationalist ones," he said.
It's still not uncommon to come across sensationalist
Outbrain-distributed headlines (see: "Outrageous Photos Of Kim
Kardashian See-Through Skirt"), but Mr. Galai says Outbrain has
been working to have those types of headlines only show up on sites
whose audience has an affinity for those types of posts or if the
specific reader has previously clicked on similar Outbrain
links.
