Outbrain Inc. (OB): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to size up the new Teads-that's Outbrain after the $900 million acquisition of Teads in February 2025-and see if this new omnichannel giant can actually dominate the open internet advertising space. Honestly, the early Q1 2025 results, showing $286.4 million in revenue, confirm the scale is there, with over 10,000 publishers now in the fold. But here's the catch: 70% of that customer spend is riding on just ~500 large advertisers, which definitely keeps supplier power in check while giving buyers leverage. The framework below cuts through the noise to show exactly where the pressure is coming from as they chase those $40 million in expected 2025 cost synergies.

Outbrain Inc. (OB) - Porter's Five Forces: Bargaining power of suppliers

Premium publishers hold significant leverage because the highest-quality, scarce inventory-the premium sites you want to be on-can command better terms. This is especially true for the top-tier media owners whose traffic is essential for advertiser ROI.

Supplier switching costs are relatively low, which keeps the pressure on the combined entity, now operating as Teads. Competitors, like Revcontent, have been able to aggressively court publishers. For instance, Revcontent reported raising CPMs (cost per mille, or cost per thousand impressions) for its publisher partners by nearly 120% after cutting its network size by 60% to focus on premium inventory, indicating publishers can find alternative monetization partners with attractive offers.

While the scale of the combined operation is large, which generally dilutes individual supplier power, the sheer number of partners means the largest ones still have outsized importance. The company, as of the first quarter of 2025, stated it is directly partnered with more than 10,000 publishers globally.

Here's a quick look at the scale of the platform as of early 2025:

The dependency on a few large media partners for consistent, high-volume traffic generation remains a key risk factor. If a major publisher decides to leave for a competitor or bring monetization in-house, the impact on the platform's overall traffic and revenue can be material, despite the large overall network size.

The bargaining power of suppliers is influenced by several factors:

• Premium inventory scarcity drives negotiation leverage.
• Low friction to switch to competitors like Taboola.
• The need to maintain relationships with top-tier sites.
• The historical competitive bidding between rivals for exclusive deals.

Outbrain Inc. (OB) - Porter's Five Forces: Bargaining power of customers

You're analyzing the customer side of the business for the newly combined entity, now operating as Teads following the February 2025 acquisition of Teads by Outbrain Inc. Honestly, the power held by the largest buyers in the ad-tech space is a significant factor you need to watch closely. The customer base isn't evenly spread out; it's heavily concentrated at the top end.

Here's the quick math on that concentration, based on Q1 2025 data: roughly 70% of the total customer spend comes from a relatively small cohort of about 500 major advertisers. These aren't small players; these top clients each spend, on average, over $2 million annually on the platform. That level of spend gives them definite leverage when negotiating rates, terms, and service levels. If even a few of these giants decide to shift budget, it makes a noticeable dent in the top line.

This concentration dynamic is critical to understand:

• Number of large advertisers driving majority spend: ~500
• Minimum annual spend for inclusion in this group: $500,000
• Percentage of total customer spend from this group: 70%
• Average annual spend per top advertiser: over $2 million

To be fair, in the broader ad-tech ecosystem, advertisers generally face low switching costs when moving between platforms or shifting budget toward the major walled gardens like Google or Meta. This ease of movement puts constant pressure on Teads to prove its value proposition beyond just inventory access. If the platform becomes just another line item, those top customers will definitely shop around.

The strategic response to this buyer power is the merger itself. The combination of legacy Outbrain and Teads was explicitly designed to create a more comprehensive, full-funnel solution that locks in those high-value customers. The goal is to transition from being a single-point solution to an essential, end-to-end partner. This new platform aims to deliver concrete outcomes across the entire marketing funnel-from initial awareness through consideration and right down to final conversions.

This integrated offering, often termed a 'brandformance' strategy, combines Teads' high-margin video and branding capabilities with Outbrain's established performance solutions. The idea is simple: by offering a single partner that can manage the entire customer journey across mobile, web, and Connected TV (CTV), the platform increases the complexity and cost for a major advertiser to leave. The more deeply embedded the platform becomes in a client's full marketing mix, the higher the effective switching cost becomes, which should, in theory, temper that bargaining power.

Finance: draft 13-week cash view by Friday.

Outbrain Inc. (OB) - Porter's Five Forces: Competitive rivalry

The competitive landscape for the entity now operating as Teads (post-Outbrain Inc. and Teads merger) is defined by battles on multiple fronts, from the giants of the digital advertising world to its direct, head-to-head rival in the open web space. You see this pressure reflected in the strategic financial moves made to survive and scale.

The February 2025 Teads acquisition was definitely a necessary defensive play to achieve the scale required to push back against the duopoly. Here are the transaction specifics:

This consolidation immediately created one of the largest independent platforms on the open internet. The combined entity is now positioned to compete on scale, which is crucial when facing the walled gardens. Here's a look at the scale achieved as of early 2025, based on preliminary 2024 combined figures and Q1 2025 results:

• Combined advertising spend (FY24 preliminary): approximately $1.7 billion
• Monthly consumer reach: 2.2 billion consumers
• Publisher partnerships: more than 10,000 premium media environments
• Advertiser relationships: 20,000 advertisers globally
• Expected annual synergies by 2026: between $65 million and $75 million

The direct, defintely fierce rivalry with Taboola remains a core concern. Both companies operate on a similar Cost-Per-Click (CPC) model, forcing price competition. A recent test comparison highlights how close the performance metrics are, meaning marginal differences in execution or platform focus can swing spend:

High fixed costs associated with proprietary AI and technology mean that both Teads (the new entity) and Taboola must compete aggressively on price and performance to keep their tech platforms utilized at maximum capacity. If you don't drive volume, those high R&D and infrastructure costs eat into margins quickly. The market itself is massive, which fuels this intense competition for share. For context, the global native advertising market size was estimated at approximately $122.09 billion in 2025, with North America accounting for about 45% of that global share.

Competition from the major walled gardens-Google, Meta, and Amazon-is intense because they control the primary consumer attention points and possess superior first-party data sets. While Teads/Outbrain focuses on the open web, the sheer scale of the walled gardens sets the benchmark for performance and targeting. For instance, in the US, native formats already represented almost 60% of total display spend last year (2024), a category where the walled gardens have significant presence, especially in social feeds.

Outbrain Inc. (OB) - Porter's Five Forces: Threat of substitutes

You're analyzing Outbrain Inc., now operating under the Teads brand following the February 2025 acquisition, and the substitutes vying for advertiser dollars are formidable. The threat here isn't just from similar native ad platforms; it's from the entire digital media ecosystem.

Social media platforms like Meta and TikTok represent a massive, high-engagement substitute for brand and performance ad spend. For context, Meta Platforms reported Q3 2025 advertising revenue of $50.8 billion, marking a 26% year-over-year increase. This growth was fueled by a 14% year-over-year rise in ad impressions and a 10% increase in the average price per ad. TikTok, though not publicly traded, is estimated to have generated $8.25 billion in ad revenue in Q2 2025, showing a substantial 40% year-over-year growth. Overall, social media is attracting a plurality of new ad dollars, commanding 40.6% market share of global ad spend in 2025.

Search engine marketing (SEM) remains a high-intent, low-switching-cost substitute, especially for performance advertisers. Paid search advertising holds the largest single segment share within digital advertising, making up nearly 40% of global ad spend. Projections show paid search spending is still set to increase by 6.7% in 2025. This segment directly competes for the performance budget that Outbrain/Teads targets, as search inherently captures users at the moment of intent.

The company's strategic pivot into Connected TV (CTV) is a direct response to the dominance of video substitutes elsewhere. Outbrain/Teads saw CTV revenues grow by more than 100% year-over-year in Q1 2025 on a pro forma basis, though it still only represented approximately 5% of total ad spend. Management is targeting $100 million in CTV revenue by the end of 2025, which would represent a 40% growth rate for that segment. Still, 58% of marketers plan to increase CTV spend in H2 2025, outpacing social video spend increase plans at 55%.

A constant, structural threat comes from direct publisher-to-advertiser deals, which bypass intermediary platforms entirely. This is manifesting strongly in the programmatic space. In the U.S. programmatic display market for 2025, over 91% of spending is directed toward Private Marketplaces (PMPs) and Programmatic Direct deals. Advertisers favor these curated environments for brand safety and premium inventory access, with PMPs expected to capture nearly $2 for every $1 spent on the open exchange in 2025.

Here is a snapshot of the competitive spend landscape that defines the substitute threat:

The pressure from these substitutes is clear:

• Meta Platforms saw ad impressions rise 14% year-over-year in Q3 2025.
• Paid search is the largest digital ad segment at nearly 40% of global spend.
• Programmatic Direct deals command higher CPMs for publishers.
• Outbrain/Teads' CTV spend is only about 5% of total ad spend as of Q1 2025.

Finance: review the Q3 2025 budget allocation against the 40.6% social media market share for new dollars.

Outbrain Inc. (OB) - Porter's Five Forces: Threat of new entrants

You're looking at the barrier to entry in the content recommendation space, and honestly, it's steep. New players don't just need a good algorithm; they need massive capital to even get in the game, let alone compete with the scale Teads (formerly Outbrain) achieved after its recent major move.

High capital requirements for proprietary AI and global infrastructure create a significant barrier. The sheer cost of building a platform that can process billions of engagement signals, as Teads' proprietary prediction technology does, is immense. This is underscored by the recent transaction to combine with Teads, which had a total value of approximately $900 million, comprised of $625 million in cash and stock, completed on February 3, 2025. That's the kind of upfront investment that weeds out most potential entrants right away.

The established network effects with over 10,000 publishers and 20,000 advertisers are difficult to replicate. This scale is what drives the value proposition for both sides of the marketplace. A new entrant would need to simultaneously convince thousands of premium publishers to switch inventory and attract tens of thousands of advertisers to commit spend, which takes years and significant resources.

Regulatory hurdles, like data privacy laws, favor scaled incumbents with compliance resources. With new state laws in the US and ongoing enforcement of GDPR and the DMA in Europe, the compliance burden is heavy. Noncompliance with these forthcoming regulations can result in substantial fines, potentially reaching up to 10% of a company's total worldwide turnover for initial infringements and up to 20% in cases of repeated infringements. A company with a Trailing Twelve Month (TTM) revenue of $1.18B as of September 30, 2025, like Teads, has the legal and operational budget to navigate this complexity, something smaller startups definitely struggle with.

New entrants face difficulty securing premium, exclusive inventory from top-tier publishers. Teads, post-merger, boasts direct access to 10,000 media environments worldwide. They partner with premium names like Sky News, Men's Health, CNN, and The Washington Post. That level of curated, quality media inventory is locked up by incumbents who have built long-term relationships.

Here's a quick look at the scale of the existing moat:

The hurdles for a new entrant include:

• Matching the $625 million cash component of the recent acquisition.
• Building trust with premium publishers like CNN and The Washington Post.
• Developing AI sophisticated enough to match the combined entity's capabilities.
• Absorbing the high fixed costs of global compliance across multiple jurisdictions.

If you are a new entrant, you are definitely starting from behind.