Israeli Ad Spending Remains Stuck for Yet Another Year

Despite growing consumer spending, advertisers failed to increase budgets and spending on TV and newspaper ads fell.

“Yes, now.” An advertisement promoting vacations in Israel while the fighting continues.
“Yes, now.” An advertisement promoting vacations in Israel while the fighting continues. Ofer Vaknin

Israel’s economy grew 3.8% last year and consumer spending surged 6.1%, but the country’s advertisers remained stingy with their spending, which ended unchanged at 3.88 billion shekels ($1.01 billion), the Israel Marketing Association said Monday.

The absence of growth last year isn’t unusual. Over the past decade, Israeli advertising has grown in nominal terms just 5% a decline after inflation even though the economy and consumer spending have expanded almost without interruption.

The Israeli trend also contradicts the global trend. According to the research company Magna, global ad spending climbed 5.7% last year, with spending in the United States ahead 7%.

Over the years, industry and media sources have offered a variety of explanations for the stagnant market for advertising. Among them is the presence of monopolies, or at least a lack of competition in many markets, especially those for consumer goods.

But last year saw intense competition in retail, with the launch of private label brands and a surge of buying online, mainly from foreign companies that have given local merchants a run for their money.

Another reason for the stagnant spending, say industry sources, is the dominance of television in ad spending. Its 37% share of total ad spending last year was bigger than spending on newspaper, radio, cinema and outdoor advertising combined. TV is favored by advertisers because it reaches so many people and has a high impact at a relatively low cost.

But even in 2016, ad spending on TV declined 2% decline to 1.42 billion shekels. This year the TV market faces a period of chaos, with the two Channel 2 franchisees, Reshet and Keshet, parting ways and broadcasting a full seven-day-a-week schedule. New broadcasters may enter as well.

The biggest loser last year, however, was newspapers, where total spending dropped 12% to just 708 million shekels. A decade ago, ad spending on print publications was 1.6 billion shekels, according to the IMA, which conducted the survey with the media research house Ifat. Newspapers took in 18% of all ad spending, which put them way ahead of their peers in the United States, which reaped only 13.9% of their market.

One problem with the system for measuring ad spending is digital. The IMA/Ifat figures may fail to capture all spending online, especially in social media sites like YouTube and Facebook.

“Unlike radio and outdoor advertising, digital is no longer ‘media’ but a virtual environment in which personal and business interactions occur with consumerism and entertainment,” the two groups said in a statement. “As long as our lives rely more on the digital environment, it will continue to grow and strengthen at the expense of other media.”