Online Ad Tech Calls Israel a Home, and for Good Reason

Israel may seem like a topsy-turvy environment to operate a business, but technology firms have started up and housed research and development facilities there for years. And it’s no different for the online ad tech sector. Companies serving U.S. advertisers and publishers, such as AlmondNet, CheckM8, Eyeblaster, Quigo — and even Google — have ties to the young country, where daily challenges make for deep common bonds and a strong work ethic.

“The entire country is a start-up,” said Amir Ashkenazi, co-founder of Shopping.com, a firm started in Israel and acquired by eBay in 2005 for $620 million. Ashkenazi is now CEO and co-founder
of San Mateo, CA-based video ad firm Adap.tv, a new outfit that counts Israel-based user-generated video site Metacafe as its first content partner.

Ashkenazi calls Israel’s VC community “significant and active,” making it a go-to country for seed funding and other investments. Venture Capital firm Gemini Israel Funds invests in Adap.tv.

Longtime Web ad player Eyeblaster scored $30 million from a small number of private Israel-based investors in March, cash the company may use to develop new ad products for games, iTV and mobile. Eyeblaster has offices around the world, but its R&D headquarters are in Ra’anana, Israel.

According to Israel Venture Capital Research Center, 121 Israeli high-tech firms raised $406 million from venture investors in Israel and overseas in Q1 2007, up from $360 million in Q1 ’06. A variety of online ad technology outfits have ties to Israel, including behavioral targeting firm AlmondNet, in-game ad company Double Fusion, e-mail firm IncrediMail, online marketing tech firm Dotomi, performance-based marketing company Quigo, and Media Boost, maker of an AdWords campaign optimization tool. Google also has R&D facilities in Israel.

Eyeblaster was pushing rich media advertising long before it became common among advertisers to incorporate interactive components into their ads. Now the company is asserting itself as an independent alternative in the recently-heated ad management space and just launched an updated version of its campaign management software suite.

Many say that propensity for rapid adaptation is inherent in Israel and its people. The country’s residents “have a quality of challenging the circumstances and not taking them for granted,” said Eyeblaster President and CEO Gal Trifon. In the face of constant opposition to Israel’s very existence, “The country expects more of you when you’re here,” continued Trifon.

Others affirm the Israeli peoples’ unique ability to persevere. “It’s always had to make the most with the least,” said Dana Ghavami, CEO of ad management tech firm CheckM8. “They’re surrounded by unfriendly neighbors.”

Perhaps no other common experience fosters strong bonds among Israelis quite like the nation’s requisite military service. Israeli ad tech entrepreneurs say the military prepares citizens to make the most of relationships and circumstances. “If you have a corner, you have to smooth it out,” said Ghavami.

Life in the Israeli Defense Forces also has a big influence on the society’s approach to work. “It’s a work culture,” said Ghavami. “The mentality there isn’t to rest when you can; it’s just to work when you can. It’s an ethic that I haven’t really seen elsewhere,” he added. According to Ghavami, the lights are on day and night at CheckM8. CheckM8 has about 30 staffers in Ra’anana, in addition to offices in New York, Stockholm, the UK, and Spain.

The technology focus of the military filters through to Israel’s business world, as it does here in the U.S and elsewhere. From security and communications technologies to biotech and agricultural advancements, Israel’s people excel in “brain power in mathematics and engineering,” said Yoav Shaham, CEO of in-text ad company Kontera.

“If I’m looking to hire engineers, I would look for them in Israel,” said Shaham, adding, “U.S. people are much more educated about marketing and business.” Indeed, Kontera’s algorithmic engineers and R&D team are based in its Herzliya, Israel office, while its business staffers work out of its San Francisco location.

Shaham insists the work culture in Israel is much closer to that of the U.S. than, say, India or China is to the U.S.; however, Israelis do receive some benefits that are less standard here. For instance, most Israeli employees have company cars, while health coverage isn’t a necessary perquisite since it’s provided by the government.

And while work buddies are often separate from personal friends here in the states, that isn’t always the way in Israel. “The perception of the job environment beyond just the office is very unique,” said Eyeblaster’s Trifon. The company’s employees often get together outside work to hit the beach, go on family trips, meet for drinks, or play some hoops at the basketball court across the street. “They just organize themselves,” said Trifon.

With the online ad industry booming, it’s not surprising entrepreneurs based in a tech hub like Israel would gravitate towards the sector. The industry enables young companies to quickly prove their worth to investors, said Shaham. “It was more natural for me…to get into a business where we can prove industry models kind of fast,” he said.

CheckM8’s Ghavami agreed: “It’s really the innovation and ingenuity that applies itself towards where’s the biggest market opportunity.”