Israel's Social Protest Led Government Business to Lay Low, Slashing Ads

Businesses reduced ad spending by 13% after cost-of-living demonstrations swept Israel in 2011.

The social-justice protests of summer 2011 left the Israeli business sector shell-shocked, not knowing what to make of the hundreds of thousands of people joining rallies and erecting tent cities with calls for bringing down the high cost of living.

The business sector’s immediate response, beyond lowering prices in the months that followed, was to lay low: In 2011 advertising spending fell 4.6%, which industry figures and experts attributed at the time to the protests that broke out five years ago this month.

A new series of studies, however, found the decline in advertising wasn’t across the board and it was certain government bodies that chose to keep the lowest profile, not the private sector.

The research, conducted by Hebrew University political science Prof. Sharon Gilad and her doctoral student Saar Alon-Barkat, together with mathematician Prof. Alexander Braverman, examined the responses of 100 organizations, split evenly between public bodies, such as government ministries, and 50 businesses.

The study found that ministries, local authorities and other bodies that receive at least 80% of their funding from the state increased their spending on advertising after the protests by an average of 26%.

Semi-independent bodies, such as the Israel Roads Company or the Tel Aviv municipal tourism organization, also responded by increasing their appeals to the public, but only by 5% on average. The researchers brought as an example a big increase in advertising sponsored by the Housing Ministry, whose brief was at the heart of the protests, concerning approvals for new residential construction or grants for buying homes, immediately after the protests began.

The data showed that while business sector ad spending, in particular such companies as the big banks, credit card companies and food manufacturers, had climbed in the first half of 2011, in the second half of the year, at the height of the protests and immediately afterwards, ad spending fell by 13%.

Most of this drop was by companies whose products and services had been targeted by the protests, mainly housing, food and finance.

But the biggest drop of all was independent government institutions, such as the Antitrust Authority and the Bank of Israel, which actually reduced ad spending 63% on average in the wake of the protests.

Gilad and her team concluded that bodies headed by politicians wanted the public to know they were acting on their behalf and stepped up spending. However, they were surprised that independent government bodies acted the same way. In fact they chose the same strategy as business and opted to keep a low public profile.

The study highlighted anecdotal evidence from the media at the time, which noted that the private sector, in particular the financial services and food industries, not only cut back on advertising but forbade their executives from speaking to the media or appearing at public conferences.

However, the influence of the protests was short-lived and already in the first half of 2012, business ad spending recovered. Public sector ad spending took much longer to recover, and median ad spending in the first half of 2012 was only 27% to 40% higher than during the same time in 2010 and 2011.