Taboola.Com's Must Buy Strategy For Performance Based Ad, End-To-End Control Of Content, Ad Units And Product Innovation Impresses Analyst - Taboola.com (NASDAQ:TBLA)

Needham analyst Laura Martin reiterates Taboola.Com Ltd TBLA with a Buy and a $5 price target.
TBLA's strategy of trying to become a "must-buy" for performance-based advertisers in the Open Internet, just as The Trade Desk, Inc TTD has become an Open Internet "must-buy" for ad agency brands, won the analyst's attention.
Typically, performance advertisers bid based on CPC (cost per click) rather than CPM (cost per thousand) and do not use ad agencies.
TBLA believes that the Walled Gardens of Alphabet Inc GOOGL Google and Meta Platforms Inc META were successful in the mobile era primarily because they offered a 1-stop shop for digital advertisers for Search and Social, respectively.
These two companies became "must buy" for digital advertisers, and many advertisers did not diversify away from these two properties on mobile devices, TBLA believes.
Martin appreciates TBLA's end-to-end control of both content and ad units.
Unlike TTD, which can only bid on standardized ad units, TBLA controls its content and ads through its captive DSP and SSP.
This end-to-end control allows TBLA much more flexibility to create and serve customized ad units for the screen and each consumer.
Historically, TBLA has created and served vertical ads, oversized ads, e-commerce lists, and other rare ad units on the Open Internet, attaining more flexibility to meet advertisers' needs than TTD or other Open Internet competitors that don't control 100% of both the content feed and the ad units.
Martin also highlighted TBLA's pace of product innovation.
Both the small and large product innovations at TBLA, many of which drove upside to revenue growth, impressed the analyst.
Martin estimates that TBLA introduces about one considerable product innovation a year.
Each new product attracts new advertisers and drives revenue upside.
TBLA usually innovates products based on client requests, which lowers the risk of wasted R&D spending.
The Yahoo integration is the next (big) step. Since the analyst expects TBLA costs to rise in FY23 as it integrates its huge 30-year YHOO deal, which should nearly double TBLA's size by December 31, 2024, Martin worries that ROICs will fall in FY23 and then rise in 2024.
Price Action: TBLA shares traded lower by 2.80% at $2.61 on the last check Wednesday.

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