Israel is known around the world as the "start-up nation". The journalists Dan Senor and Saul Singer’s book of the same name created a stampede of interest in how a small country has built such outsized global economic and business influence, particularly within its high-tech and advertising industries.
While the concept has stuck, it no longer aptly describes the growth and maturity of Israel’s digital sector. Today, there are many well-established advertising, digital media and marketing companies – including market leaders such as Outbrain, Taboola and Kaltura – that are exporting new innovations around the world.
There are four important trends within the Israeli digital ad sector that point to future growth opportunities for the global advertising market.
First: video and mobile have taken centre stage. Display and web performance used to dominate the Israeli digital ad sector. That’s all starting to change. Israeli ad-tech companies are becoming recognised leaders in video and mobile advertising by building their own media buying and programmatic technology. Investment in performance web activity continues while money and resources are being poured into video and mobile user-acquisition activities.
Second: "Download Valley" is out; programmatic is in. In years past, the download business was a primary growth engine for many Israeli companies – so much so that parts of the Israeli high-tech sector earned the nickname "Download Valley". But new regulations have upended this sector. Now, the Israeli ad-tech industry is moving upstream by making significant advancements in programmatic and real-time bidding.
Resources are flowing from Israeli media companies into Southeast Asia, China and Korea
Third: consolidation is ramping up, including mergers and acquisitions. The Israeli online ad industry is going through a transformational shift as programmatic, RTB and other advanced media capabilities begin to take over from more traditional digital ad strategies. This shift is causing unprecedented consolidation as Israeli companies that couldn’t go public or raise enough money from investors are searching for potential buyers.
Last: a shift in focus to the Asia-Pacific region. Resources are flowing from Israeli media companies into Southeast Asia, China and South Korea. This shift in focus follows the enormous growth in mobile advertising that the region has experienced in recent years as more people use mobile devices for games, entertainment and e-commerce.
Despite its relatively small size, Israel continues to play an outsized role in the innovation and growth of digital advertising internationally. A shift towards video and mobile, rapid consolidation and investment in Asia-Pacific all align with the similar opportunities and challenges that face digital advertising companies around the world.
Ofer Druker is the chief executive of Matomy Media Group