Nobody knows how much Israeli money flows to Facebook. As opposed to traditional advertising, which gets channeled through media buyers and ad agencies, most of Facebook's advertising is bought and sold directly, with the advertiser purchasing space directly from the company. Many small and medium-sized businesses manage their own campaigns, without intermediaries or commission agents.
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Google and Facebook derive a combined NIS 500 million in annual revenues from Israeli advertisers, according to the market research firm Ifat Advertising Monitoring. Facebook’s share in these revenues is believed to exceed NIS 100 million, according to industry estimates. That may seem small compared to the two giant companies’ combined global ad take, but Israel represents a particularly attractive, growing - and quirky - market.
Facebook is intent on increasing its ad revenues in Israel, but while some of its marketing is targeted at large, blue chip advertisers, to persuade them to devote a bigger share of their advertising mix to social networks, most of its efforts are directed at smaller businesses -- startup companies and Israeli Internet and gaming companies creating products for the global market.
This trend coincides with Facebook's rapid transition from desktop to mobile devices, the same platform that Israeli gaming companies are focusing on in their application and services development. Naturally, then, most of their advertising uses the same platform.
In the second quarter of 2013, the social network derived 41% of its ad revenues from the mobile sphere. Google still dominates mobile advertising with $4.61 billion in global revenues in 2012, but Facebook is registering strong growth, too, reaching revenues of $470 million in 2012. Its forecast for 2013 is for $2.04 billion in mobile ad take.
Much of the interaction with the Israeli market is conducted through the Facebook unit devoted to gaming advertising, which is responsible for the segment globally. According to Facebook’s client manager in Israel, Elad Brindt Shavit, who together one other client manager is responsible for an area that spans from Ireland to Israel, most of his clients are Israeli startups that develop games for the Facebook platform and promote them through massive advertising.
Israeli users are increasingly accessing their social networks through mobile devices. Some 44% of Israeli Internet surfers use a desktop computer as their main gateway to Facebook, but 27% use an iPhone or iPod and 19% an Android device.
The figures also show that Israelis have been quick to adopt smart phones, with the rate of Israeli mobile Facebook surfing approximating that of Americans. Facebook’s July data indicates that 2.3 million users in Israel were active on the site on a daily basis, including 1.6 million using smartphones – a percentage similar to that in the U.S., where 80 million of a total 115 million daily users accessed the website with a mobile device.
"With mobile you have full attention on the news feed. It is the only screen open in front of you as opposed to surfing on a desktop," explains Brindt-Shavit. But the dimensions on a mobile screen are also too small for banners to appear on the side.
"Even if you have half a million people on the page, you know there aren't half a million people in the world similar to each other," adds Brindt-Shavit. "Each one has his own preferences. That's why we tell marketers that they need to break down the message for different audiences."
"In the last few months, we've made an effort to expose local brands to mobile," says Ophir Cohen, CEO at Universal McCann Search. "Right now we are trying to separate regular Facebook advertising budgets and mobile campaigns. The growth in mobile use is multiplying insanely. Eventually, all the brands will be outfitted with digital assets to meet the mobile consumer." He believes that within a year all Israeli brands will have dedicated mobile activity.
Facebook is now working on broadening the scope of advertising through mobile, mainly by promoting the user's feed content and the possibility of direct access in downloading brand name applications from Facebook. The company's advantage in this field is clear: The "friend brings a friend" model. While search results in Google can answer the user's need, Facebook uses social elements to promote brands through recommendations by friends.
"Facebook gives the user confidence that he isn't alone in the story," explains Cohen. "When you see an ad with a 'like' from one of your friends, your resistance level drops and your willingness to check it out increases."
The limited space for feeds is forcing Facebook to intensify the trend of streaming specific messages to identifiable target audiences. Facebook is now pushing advertisers to tailor advertising to pinpointed audiences. The company has also launched a service whereby some advertisers won't be seen at all by users not included in the campaign's target population.
"Even if you have a page with half-a-million fans, you won't put up a campaign that suits them all," says Brindt Shavit. "Castro has a men's line and a women's line, and there's no reason that the men's line ad should be shown to women."
To help advertisers tailor their ad campaigns, Facebook allows them to synchronize their customer databases with its own database. The synchronization can be based on personal data, such as email addresses appearing in both databases.
Facebook also cooperates with other websites by planting its code in them to obtain more information on users. "It's important that we see where the surfer continues and what actions he performs after exiting Facebook," says Brindt Shavit. "If he downloads an app, we want to know if he makes any use of it."
Speculation in recent months that Facebook's power is fading has prodded the company to present data showing usage increased in Israel in July, compared with May.
While In May, 42.4 million photos were uploaded to Facebook, 48.3 million were uploaded in July. The number of postings edged up from 12.4 million in May to 12.5 million in July, but there was a sharp increase in the number of "likes" – from 764.4 million in May to 865.4 million in July. Video clips posted, however, fell from 384,800 in May to 292,800 in July.