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McClatchy-Tribune  06/12/2014 12:01 AM ET
Facebook Israel chief: Start-ups drive our ad revenue [Globes, Tel Aviv, Israel :: ]

June 12--Three months after Facebook Inc. (Nasdaq: FB) established its Israeli office, Israel country manager Adi Soffer-Teeni talks about the activity planned and how the social network will deepen its ties with the Israeli market. Anyone who thinks that companies like Tnuva Food Industries Ltd., Strauss Group Ltd. (TASE:STRS), or Castro Model Ltd. (TASE: CAST) are the reason why Mark Zuckerberg's people decided to open the first marketing representative in Israel are very mistaken. Israeli small and mid-sized enterprises are always a good thing, but for Facebook, the big money is to be found in start-ups. Companies like Playtika Ltd., GetTaxi Ltd., Plarium Ltd., and Wix.com Ltd. (Nasdaq: WIX) are the drivers of the Israeli advertising market on Facebook and create the gravity that drove it to open an office in the Holy Land. These start-ups pour huge amounts of money into advertising and marketing on Facebook with the goal of reaching a wide global audience and building an international brand, in contrast to local businesses that work in the domestic market.

"This segment may turn Israel into a much more special market for Facebook than other countries. Global Internet players from Israel have grown impressively in recent years. These aren't classic companies that advertise on Facebook, like Coca-Cola, Samsung, or Nestle," said Soffer-Teeni in her first press conference today.

Soffer-Teeni does not ignore the domestic market, of course, stressing the importance of small and mid-sized enterprises. "The digital market here is very interesting," she says, but she highlights the importance of Israeli start-ups for Facebook. "Our task here is to establish a team that knows how to meet the needs of this market, which will know how to help installations and understands Facebook's ability to support the growth of international companies that emerge from Israel and bring them more and more customers. The Facebook platform can really help. It may be a cliché, but our goal is to turn the customer into a partner. Without understanding the customer, the business, its goals, and where it wants to go, our ability to help it won't be good enough."

Facebook's Israeli office is based on Onavo Ltd., a start-up it acquired in October 2013 for $150 million, and turned into the company's first development center in Israel. "Currently, there are four full-time employees based in Dublin, some of whom will move to the Israeli office. By the end of the year, we'll hire six more employees, and we subsequently plan to hire scores more," says Soffer-Teeni.

Currently, Israeli companies that work directly with Facebook sales reps must work with the company's offices in Dublin and Barcelona. Despite the opening of the Israeli office, the division between the countries will apparently continue, and the representative office will be split among three centers. "There is mix of the physical presence in the field and the proximity to the company's headquarters," says Soffer-Teeni. She says that the various Facebook teams will stay at Onavo's offices in Ramat Gan for the time being, before moving to new premises in Tel Aviv.

As for the future size of the Israeli office, she says, "We won't become as big as Google Israel. Our method of operations is relatively lean and the company makes sure not to grow the operation too much. We're seeking employees with talent and an entrepreneurial spirit. We'll offer competitive terms to recruit them to Facebook."

As for the possibility that advertising on Facebook will come at the expense of other digital companies, Soffer-Teeni says, "I hope that the advertising pie will grow. For me, Facebook is a advertising tool that complements television, and will achieve much better performance together. That said, television is an expensive medium to advertise on, and even big companies cannot afford to be there all the time."

As for the issue of multinationals not paying taxes on advertising income in Israel, she says, "We work with the tax authorities according to the law."

 

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