Digital publisher BuzzFeed boasts a Pulitzer Prize. Taboola, purveyor of “clickbait” links below online stories, definitely does not. Yet both are listing their respective shares, via Spac mergers, in the hope that digital media upstarts have found a way to coexist with Google and Facebook. Instead of trying to beat these titans, the pair believe that they can take a piece of the rapidly growing online advertising pie and justify their billion-dollar valuations.

BuzzFeed was once held up as the potential future of journalism because of its combination of hard-hitting journalism, including reports on China’s oppression of Uyghur Muslims, and viral content such as exploding watermelon videos. But heavy losses followed splashy venture capital financing rounds.

Job cuts and a post-pandemic rebound in digital marketing have helped it score a $1.5bn listing valuation. It is expecting more than $100m of ebitda in 2022. Revenue is growing at a 20 per cent clip. BuzzFeed believes that it has found resilience between its wide stable of digital brands and revenue diversified between adverts, brand content creation and ecommerce.

Taboola is a more straightforward business. Every time someone clicks on “You will not believe what this child star looks like now” links, the company earns revenue that it shares with the online news providers, such as NBC News or Business Insider, that placed the links below their stories. It says that marketers want an option in the “open web”, outside of the ecosystems built by tech giants.

On core revenue, excluding traffic acquisition costs, Taboola’s operating margin is 29 per cent. It is listing at a $2bn enterprise value. This is 14 times its 2022 ebitda estimate, essentially the same valuation as BuzzFeed.

Spac deals allow companies to present the rosiest sides of themselves. Optimism in digital ad revenue could reverse at any moment. But if Google and Facebook are worth $2tn collectively, there must surely be room in the sector for two companies worth a tenth of one per cent of that.

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