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Entrepreneurs: Do not overlook the “marketing technology” developed in this country

During the last fifteen years, one of the most successful technology segments for Israeli technology entrepreneurs has been the advertising technology industry, better known as “adtech” or, more recently, “martech”: marketing technology, It includes additional marketing functionality beyond advertising that is now being addressed by technology companies.

Rapid development and relatively short sales cycles allow some people working outside an apartment to start generating revenue quickly. In addition, because they are in the business-to-business market segment, marketing technology companies can succeed with a relatively small marketing budget.

Making the way

Led by a range of companies in the early and mid-2000s, including Dapper Ltd., Gigya Inc., Kontera Technologies Ltd., Oridian Inc. and Quigo Technologies Inc., these companies paved the way for local industry. Some of these early leaders founded other martech companies, such as the founder of Quigo, Yaron Galai, who founded Outbrain, and the founder of Oridian, Meir ‘Iri’ Zohar, who founded eXelate, which was then sold to Nielsen Holdings.

The result is a network of Israelis from around the world with connections to all marketing specialists, technology platforms and advertising agencies.

The global industry… is it on point?

But despite the success of Israeli technology companies, the global technology industry as a whole has been challenged on two fronts: venture capital and financial markets. Several local actors have criticized the martech industry because of the challenges in generating returns through initial public offerings (IPO). In that sense, they are right. The vast majority of martech companies have not been successful in public markets. The only recent exception is The Trade Desk, a US company.

But should public market performance be the main criterion by which companies are judged?

While public markets have been less than enamored of marketing technology companies, others have been more enthusiastic.

“We invested a little over $ 200 million in the quarter to acquire nine companies to strengthen our skills and capabilities in the high growth strategic areas of our business,” said David Rowland, recently promoted from Chief Financial Officer to Interim Executive Director in the network. of digital agencies of high classification Accenture Interactive, during the announcement of profits of December of the company for the first quarter of 2019 fiscal. “And we continue to expect to invest up to $ 1.5 billion in acquisitions during fiscal year 2019”.

Companies, where are they heading?

Although Accenture Interactive has not acquired any Israeli marketing technology company, companies like Accenture Interactive and IBM IX are a potential exit opportunity for Israeli technology.

In addition to digital agencies, another exit opportunity for Israeli technology startups are the leading digital technology companies that seek to centralize activities for marketers.

Historically, marketers had some channels to manage, but this changed with the growth of social and digital media channels and the contact points and resulting data. As a result, leading technology providers began to create marketing centers to manage and act on data, and to allow marketers to optimize their campaigns across multiple channels as part of their customers’ journey.

Important companies acquring tech

In recent years, companies such as Adobe, Salesforce and Oracle, as well as IBM, Nielsen and SAP have been building and acquiring technology for service marketers, and several Israeli technology companies have benefited from this trend.

Last summer, Salesforce acquired Datorama for $ 800 million dollars, and in 2017, SAP acquired Gigya for $ 350 million dollars. Other notable sales include the acquisition of eXelate Media Ltd. by Nielsen for $ 200 million in 2015, followed by the acquisition of vBrand; the acquisition by Oracle of Crosswise Ltd. in 2016; the acquisition of Insightera Ltd. by Marketo (Marketo was later acquired by Adobe); and Salesforce’s previous acquisitions in Israel: Implisit Insights Ltd. and BlueTail Ltd.

Facebook, Google and other technology platforms have acquired marketing technology companies, Facebook is the leader in the package with five acquisitions: Snaptu Ltd., Face.com, Onavo, Pebbles Interfaces and RedKix Inc.

Critics of investments in martech startups say improvements in ad targeting algorithms have an upper limit

This is probably true, but there are many more marketing areas that can be improved with technology, such as channel management, creativity and data, legal data compliance and privacy regulations. The list is practically infinite. The fact that, according to Gartner, marketing managers are spending more on technology than information directors, says it all.

In 2001, I was product marketing manager at a small customer service chat technology company, called HumanClick, which had raised $ 2 million in venture capital funds before being sold within 18 months to LivePerson for $ 9 million, becoming its center of research and development, as well as a regional center. It was a nice sale, but not on anyone’s biggest sales list.

What is going on today?

Today, given that LivePerson has about 500 employees in Israel (according to LinkedIn) and a strong presence in the technology community, it survived the test of time and would be considered a solid solution.

Although it is important that venture capital players consider the potential for return as a criterion to invest, the size of that investment should not be the only factor. It’s great when it happens, but most companies do not have investments of a billion dollars. Israeli businessmen are good at climbing quickly and economically. It’s time to celebrate those outflows of $ 30 million and $ 50 million, which are significantly more realistic, and to invest wisely in technology companies to enable the next generation of Israeli investments.


Also published on Medium.

Published inStartups

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