Local Websites Mount Campaign to Take Ads From Internet Giants

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The Google logo is seen on a door at the company's office in Tel Aviv January 26, 2011
The Google logo is seen on a door at the company's office in Tel Aviv January 26, 2011Credit: \ BAZ RATNER/ REUTERS

After years of ceding advertising revenues to the internet giants, Google and Facebook, Israel’s biggest websites are mounting a campaign to fight back and have chosen the government — once the country’s biggest advertisers — as its first target.

In letters to Finance Minister Moshe Kahlon, Culture and Sports Minister Miri Regev and Boaz Stambler, the incoming head of the Government Advertising Agency, the websites bemoaned what they termed “blatant discrimination against Israeli websites.”

“A critical portion of the Israeli government’s digital ad spending goes to foreign sites with foreign ownership. That means annual spending in the tens of millions of shekels by the government agency goes to global companies, mainly Google and Facebook,” said one Israeli website executive who asked not to be identified.

The letter was signed by the heads of most of Israel’s biggest news and content sites, including Ynet CEO Avi Ben-Tal, Walla CEO Ilan Yeshua and Amos Schocken, the publisher of Haaretz-TheMarker. It was organized by the Forum of Major Websites in Israel.

The forum plans to recruit more members and expand its campaign to business advertisers and to unspecified legal measures.

Around the world, especially in Europe, web publishers have organized in recent years to counter the growing share of online ad spending being taken by the giants of the internet. In some markets, publishers have joined together in ad sales to create a user base that can rival Google and Facebook and in other they have sought legislative remedies.

In Israel, however, website haven’t been able to cooperate due to antitrust issues. But during the 2016 legislative fight over internet access, web publishers lobbied jointly to advance their interests. They believe they can get approval for their fight against Google and Facebook.

Their case for getting more ad spending from the government is that they reach as big an audience in Israel as the global internet companies. In addition, Google and Facebook don’t pay Israeli taxes, enabling them to charge less for ads than Israeli companies. They also contend that the two companies are in effect monopolies.

“The Israeli economy is losing out. Unlike Google and Facebook, which don’t contribute to the Israeli economy, Israeli websites pay taxes, directly employ thousands of Israelis and are the basis of an entire industry that supports tens of thousands of Israeli families,” the letter said.

In fact, Facebook announced recently it would begin to pay taxes in countries like Israel where it operates.

How big a share of Israel’s digital ad spending goes to Google and Facebook is a matter of dispute. The conventional estimate is that overall the two giants capture about 75% of government spending.

The GAA has different figures: Overall, Google and Facebook take 54% of all spending and for government ad spending they get just 34%. The GAA says it spends 50 million shekels ($14.3 million), 66% of its digital ad budget, locally.

In any case, the GAA’s initial response is that the Forum’s arguments are irrelevant and that it won’t bend. “The GAA is a professional body that seeks the most effective advertising for its clients, government ministries, and the majority of its claims aren’t connected to the issue of effectiveness.”

Google, Facebook and the finance and culture ministries declined to respond.

In related news, Israeli websites like the popular classified-ads site Yad2 face a new challenge from Facebook. The social-media giant said Tuesday its Marketplace peer-to-peer selling platform, available in 51 countries, will be launched in Israel within weeks, in Hebrew and Arabic. Users will be able to access the service from an icon in the app.

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