Yahoo pits its recommendation widget against Taboola, Outbrain

But Yahoo says its content-recommendation formula is significantly different. Whereas links found in those widgets are advertisements that publishers buy to amplify the reach of their content, Yahoo’s are built to help the host publisher recirculate its own content. This means that publishers using Outbrain and Taboola often benefit from sending readers away, not keeping them around (although they can use the widgets to recirculate their own content as well).

“We’re not running an ad market full of publishers looking to drive clicks,” said Yahoo homepage and verticals svp Mike Kearns. “The absolute goal for us is to drive greater business value for our partners, though time spent, engagement or whatever their goals are.”

While the effort is still in its early days, Yahoo has already attracted big-name publishers like Hearst, Vox Media and CBSInteractive, which are already using Yahoo Recommends on their sites. Jim Bankoff, CEO of Vox Media, said that while there are a lot of content recommendation companies on the market Vox Media went with Yahoo Recommends because it was just the better product. “Other solutions we’ve experimented with have had relevance and quality issues, which is not the case with Yahoo,” he said.

All of this interest in content recommendation is ironic given that, for a long time, publishers didn’t attach much value to the space beneath their articles. Most of the focus, instead, was on the content above the fold, which advertisers have long considered to be more valuable. Still, companies like Outbrain and Taboola have stepped in, offering publishers a new revenue stream at a time where revenue is increasingly hard to come by.

To be sure, Yahoo isn’t doing this for charity. While Yahoo’s widgets offer some clear benefits to publishers, they’re also helping to boost Yahoo’s bottom line as well. Each Yahoo Recommends widget also includes a link to Yahoo’s own native ads, which are labeled as “sponsored content.” So the more publishers run Yahoo’s widgets, the more eyeballs Yahoo will theoretically get on its native ads (and the more data Yahoo gets about which recommendations work best).

Yahoo also plans to share ad revenue with partner publishers.

The move comes at a key time for Yahoo, which has watched its core display ad business rapidly erode. Revenue from the unit declined 8 percent in the second quarter alone. Yahoo’s biggest problem is that while it’s selling more ads, it’s making less and less money from them. Yahoo Recommends could help turn that around.

But it isn’t going to be easy for Yahoo to compete with the content-recommendation incumbents, which are already on big publishers like CNN.com and ESPN.com The scale is hard to compete with as well. Outbrain says it serves 180 billion recommendations and reaches 550 million people a month. Taboola, which serves 1.5 billion recommendations a day, says it has 400 million monthly unique visitors.

Yahoo’s new competitors, however, don’t seem to be fazed, at least so far. “Competition is a good thing; it means that this is a market with a lot of potential,” said Ira Silberstein, svp of publisher relations at Taboola. “It will help educate marketers about the opportunities afforded to them and bring out the best in all of us.”

As for scale, Kerns stressed that Yahoo has a few advantages, including the strength of its personalization technology and focus on driving traffic to publishers. “We’re trying to understand at the highest level about content,” he said. “And how it performs.”