In December 2015, an unusual event took place in the advertising and media industry: the launch of the new advertising network Artimedia, which was to be the new Israeli start-up that would address Israeli content sites in their war against international technology giants Google and Facebook.
At the launch meeting, an almost surreal look was seen, with senior content webmasters Avi Ben Tal, then from Ynet, Ilan Yeshua from Walla and Uri Rosen from Mako, sitting on one stage, announcing that they would cooperate in selling their video content. The three had hitherto been bitter business rivals, fighting each other for their share of the advertising budget share. But there is nothing like a common enemy to create new partnerships, and the bridge that was supposed to allow this was Artimedia owners, who came to the local market equipped with a lot of money from the Korean company Artivision and big aspirations to conquer the world through the site coalition model. Israel was supposed to be the development lab, with the intention of copying the model to international markets where the big money is.
Six years from now, after an investment of more than NIS 80 million, with shaky relationships in the background and threats to the courts, Artimedia announces the closure of its video activities and its intention to focus on developing TV products, and it is hard not to wonder how the great promise of a common war collapsed.
The first mistake: pretentiousness
For starters, Artimedia made the first basic marketing mistake, offering customers a product it didn’t really have. Instead of claiming “we advertise on Israeli content that no other player has, we are a complementary product to television, and in a small country like Israel you do not always have to reach very segmented audiences,” the new company claimed to offer a technology that is technologically identical to Google’s products. At least in the early stages, there was a significant gap between the actual promise and execution, so some of the sophisticated customers lost confidence in the product, and returned after a limited experience to transfer most of the budget to Google.
Oddly enough, the thing that allowed the coalition to rise was also what ultimately constituted a catalyst for its downfall – the commitment to a minimum payment that Artimedia took on millions of shekels a year later turned out to be an obstacle. The payment was Artimedia’s only possible way to harness the sites, but the agreements were not identical or transparent. Walla for example, which was the first site to enter the coalition, is also considered the site that received, because of the primacy, the best deal. The very commitment of Artimedia to a minimum payment made it a position holder on the value chain because prepayment meant that Artimedia purchased the video inventory of the sites, and therefore ostensibly had an interest in getting rid of the expensive inventory regardless of necessarily the demand and supply of each site. The position and lack of transparency created suspicion among the content sites for the motives and results that Artimedia provided, the trust gradually faltered, and later this led to Ynet’s first significant retirement, where they preferred to return to direct marketing while relying on Google’s tools.
Artimedia had to harness the media companies to it as well and therefore paid them commissions (or in the laundered nicknames – management fees). As in any field where there is a lack of transparency about who earns what, this has created a wave of rumors about foreign interests. For example, for a long time some believed that the McCann Group was a shareholder in the company. This is probably not true, but it does indicate the suspicious mindset that has accompanied Artimedia’s activities in recent years.
Over time, it became clear that despite the common front with Google and Facebook, the interests of all content sites are not necessarily the same. Mako, for example, is a website, but also part of a group that relies on creating video content, and most of it is broadcast on television. Today, when the screens have not yet merged, television advertising is marketed separately from digital advertising, but the trend is clear – in the future the screens will coalesce and advertising will be marketed uniformly and digitally. Keshet Group cannot afford to have the keys to its profitability held in foreign hands, and therefore terminated its engagement with Artimedia and returned control to it. However, this severely damaged the network’s video inventory, the effectiveness of its advertising and the bargaining power of other sites still left in place – mainly Walla, where they sought to improve positions and bounce Artimedia’s annual commitment.
The forceful tone was also destructive
And was also the human factor that played a dramatic role. The line led by the company’s chairman Ofer Miller was all the way forceful and belligerent. With Google, but also with the company’s partnership in the content field. The bombastic statements with Google led to Google investing more efforts in crumbling the alliance (probably not because of the money in the Israeli advertising market But for fear of accidentally building a model here that could be copied out.) But more destructive was the tone vis-à-vis the local partnerships, led by Keshet.
Keshet is far from being righteous in dealing with artimedia; There was an agreement between the parties that when Keshet enters the OTT field, Artimedia will submit the publication. Looking at business, one can understand why Rainbow understood that it could not allow this. Artimedia could instead be right, act wisely, and instead burn the club and threaten for months Keshet seniors in lawsuits (which has already become a practice for Miller), try to swallow the frog, and reach an agreement that would allow continued activity for a transition period – Maybe give up the minimum payment – and subsist on being a data and submission platform similar to that of the competitors in IDX who now enjoy all Artimedia renegades.
Almost since the establishment of Artimedia, it has been said in the market that the coalition is the right idea, in the wrong hands. Google and Facebook are powerful monsters, and the only advantage that content creators have over them is the differentiation of local content. In return the advertisers are willing to pay a certain premium, assuming it does not significantly complicate the advertising work. But in a situation where everyone is against everyone again, agreements have to be closed and advertisements have to be submitted in a number of systems, and with money that is mostly small, the work becomes cumbersome. In such a situation it is likely that advertisers will prefer to put the money on safe, i.e. on the international platforms.
From Artimedia’s announcement, as sent to customers this week, it appears that the company wants to reinvent itself in the TV market, because technologically it is possible to submit advertising in the systems of yes, hot, partner and cellcom. The money – if any – is of course with Hot and Yes, but by law they are not allowed to submit advertising. Although other issues in the communications market are currently being addressed within the Folkman Committee, the chances of the government remaining honest enough to make the necessary legislative changes are almost non-existent. Ostensibly, all companies are in the process of moving to digital broadcasting, where there are no regulatory restrictions on advertising, but that is the small part of the activity and revenue from there, if they come, will take time. And no less important is the decision of the platforms how many and where they want to challenge the subscription fee model by submitting advertising on the content.
Either way, at this point the future of Artimedia is in the fog. And one can only hope that the solutions that the content sites will adopt, “talk” to each other and enable the protection of common interests, even if the coalition no longer exists.
“Artimedia has been a major source of revenue estimated at hundreds of millions for the local content industry”
Five years after entering the advertising market with the aim of being a means of war for Israeli content sites in Google and Facebook, Artimedia will cease its activities in the field of digital video advertising on local sites at the end of the year.
The decision to cease operations in the field comes after the Keshet Group informed Artimedia a few weeks ago of its intention to terminate its engagement with it, and after negotiations with Walla on the continuation of the engagement reached a deadlock.
This week, Gal Turgeman, who has managed Artimedia since its inception in Israel, announced the expected move for employees and customers. In a letter received by Globes, Turgeman wrote to customers: “I would like to inform you that after five and a half years of activity in the Israeli market, we have decided to end our activity in Israel in the field of digital video advertising on local sites.”
Gal Turgeman / Photo: Tamar Mitzpi
Turgeman detailed the impact he felt had on the establishment of Artimedia on advertisers and the content industry. “Artimedia was, thanks to its shareholders who did not hesitate to invest tens of millions in the domestic market, a major source of revenue estimated at hundreds of millions for the local content industry which suffered severely from competition from international platforms. The establishment of Artimedia required vigorous efforts to allow us All the local content sites to operate as one piece and provide you with a competitive, technological and commercial alternative to Google and Facebook. “
In his letter, Turgeman explains the decision to leave the field of video advertising: “Keshet’s recent announcement of its return to direct sales is contrary to our business outlook and is a step backwards for both advertisers and content sites. In recent weeks we have learned about more content sites returning to direct sales. In light of this, we have decided that we have no interest in continuing operations with the content sites in the current format. “
The move ostensibly empties the company’s current operations of content, but Turgeman clarifies that Artimedia does not close but changes focus: And to various television content platforms tailored to that. “