Time Inc. Locks in Outbrain's Headline Recommendations in $100 Million Deal

Content Recommendation Widgets Push Traffic Around the Web

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An Outbrain box that appeared beneath an article on Time.com.
An Outbrain box that appeared beneath an article on Time.com.

Time Inc., the nation's largest magazine publisher, has struck a deal making Outbrain the exclusive external provider of recommended stories for Time Inc.'s websites, including Time.com and People.com. Until now, Time Inc. had worked with a mix of the companies whose ubiquitous content-recommendation widgets help push traffic around the web. The pact is worth more than $100 million to Time Inc.

As a "content recommendation" or "content discovery" company, Outbrain puts links beneath articles published across a variety of websites, including CNN.com, Slate and ESPN. Media companies and marketers pay Outbrain to place those links on publishers' sites in order to drive traffic to their content. Outbrain shares this revenue with the publishers where the links appear.

"We selected Outbrain not only because the revenues were higher than others but because its engine drives better recommendations than others," Andy Blau, senior VP and group GM of ad sales at Time Inc., said of the company's deal, which it plans to announce Tuesday.

In exchange for exclusivity with Outbrain, Time Inc. will receive more than $100 million in revenue-sharing over the course of the deal, according to Mr. Blau, who declined to disclose the length of the agreement. A person familiar with the arrangement said the deal will last three years.

The agreement took effect Nov. 15.

In addition to driving readers to sites elsewhere on the web, media companies like Time Inc. also lean on Outbrain and its competitors to drive traffic to articles on their sites or within their own network of sites. Time Inc., for instance, might use Outbrain units to drive traffic from People.com to a story on Time.com. That can help the company's sites fulfill traffic guarantees to advertisers, Mr. Blau said.

Editors at Time Inc. will also have access to Outbrain tools to help determine where to place stories on their websites to drive the most traffic.

Time Inc. owns a number of iconic brands including Time, People, Sports Illustrated, Fortune and InStyle. Its revenue is under pressure as readers shift their attention from print to digital. Advertisers have moved their budgets to reflect this shift.

Time Inc. posted revenue of $821 million in the third quarter, a slight increase over the previous year's $818 million for the quarter. But its ad sales and circulation fell during that period, with the increase in revenue largely owing to corporate transactions including the sale of a magazine company in Mexico.

The deal with Outbrain spans Time Inc.'s entire global network of websites. Time Inc. attracted 65.5 million unique visitors on desktop computers worldwide in September, according to analytics firm ComScore, which does not track mobile visitors at the global level. That gives Time Inc. 3.7% reach of the total global internet audience on desktop, a ComScore spokesman said.

Recommended stories from Outbrain will also appear on the mobile sites of Time Inc. Unique visitors across desktop and mobile devices to all of Time Inc.'s U.S. properties was 88.3 million in October, according to ComScore.

"This is one of the largest deals in Outbrain's history," said Tom Foran, Outbrain's chief revenue officer.

The content-recommendation space has grown crowded lately, with companies like Outbrain and its chief rival Taboola experiencing a surge of new competition. In September, for instance, Yahoo barged into the market with its own product, Yahoo Recommends.

Companies like Outbrain and Taboola have faced criticism for placing articles that are uninteresting, misleading or downright offensive. A headline accompanying an article about Syria's civil war, for instance, might tease a story on "Hot Hockey Wives." This issue often confounds editors even though the links bring additional revenue.

But Outbrain has purged some companies from its customer base. And Mr. Foran said the company aims to personalize its recommended stories to each reader based on data it collects. "Low quality is in the eye of the beholder -- what's low quality to you might be high quality to someone else," he said.

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