Twelve Israeli technology companies joined Wall Street trading in 2021 through a merger with SPAC companies, and the vast majority deleted a significant portion of the value at which they began trading. Innovid Is one of them, although the decline in value amounted to 38%, compared to declines of 50% -85% in most other companies, when since the low last month its share has risen by 64%. Innovid is currently trading at $ 810 million, compared to a $ 1.3 billion merger completed at the end of November last year.
Innovid Has developed an independent platform for submitting and measuring digital advertisements on smart TVs (Connected TV). It was established in 2007 by Zvika Netter The CEO, Zak (Tzachi) Zagdon, Director of International Operations and Tal Khaluzin, the CTO. From Scotland.
“We are turning to the CTV field – any content consumed via an Internet connection, not cable, satellite or antenna,” says Netter, who lives in New York, in an interview with Globes. “Within the field, we’re engaged in advertising. U.S. advertisers spend $ 200 billion a year on television advertising, of which 18% of the budget is advertising through Internet infrastructure. Viewers move very quickly from one method to another and this is a completely different infrastructure of broadcast management and measurement. ”
“This is the biggest disruption since the invention of television. What sets the industry apart is that it is very centralized, because television advertising is very expensive, so the 200 largest advertisers represent 75% of all advertisers.”
In Innovid itself, commercials that are equivalent to 330 years of video are processed daily. He says: “On television, as on the Internet, the person who manages the infrastructure is the advertiser. He gives a tape to the channel and says ‘Advertise on Big Brother.’ “Pampers diapers, Innovid uploads the creative to our servers, adapts the advertisements to every possible screen in the world, and broadcasts it – and then measures: location, how long it was viewed, what content it watched, at what time.”
“We are not a typical company that made SPAC”
However Netter emphasizes that one thing Innovid does not do: media. “Most of the companies in the adtech industry, probably the Israelis, who buy and sell media, benefit from the arbitrage. We are a 100% software company. We provide infrastructure for transmission and measurement. This is a red line.”
Why?
“We believe it is important to make ‘separation of powers’ in the television industry, between those who buy and sell media and those who say what happened and how many ratings there were. We work with everyone.”
In retrospect, was it right to become a public company?
“Yes. The point of separation between media and technology is important in every industry – social, e-commerce and the like – but years after someone understood what was going on, big-tech companies took over everything (referring to the huge technology companies like Google, Amazon and others, NIS). F) .The whole antitrust issue in the US is built around this issue.
“We say that television is such a big field that big-tech will not take over. The history of ad-tech companies is that either they collapse or they are acquired by big-tech companies – in other words big-tech destroys them or they acquire them. We We wanted on the one hand to realize our potential and on the other hand to allow an exit for our veteran investors, so we became public. Second thing is the issue of transparency. “.
Why did you choose to merge into SPAC rather than IPO?
“A combination of certainty and speed, when certainty is more important. It winked at us because we wanted to acquire a company, and with SPAC you know for sure that there will be a deal once there is already PIPE properly (guaranteed private offering, accompanying merger, NIS). In June we closed a successful PIPE “And we immediately started working on the purchase. We would not have purchased so early after the merger if it had not happened at the same time.”
Your value has dropped by almost 40% of the merger.
“We are not a typical company that made SPAC. There were a lot of ‘counter-spirits’ because a lot of companies came to the market, not all of them at the right quality level. Innovative is profitable, growing nicely. Show me one technology company that has not lost 30% of value. “For ordinary technology companies. It’s not that we have a ‘fine’ for merging with SPAC, in my opinion. There are funds today that are looking for those who have snatched too much – who have done SPAC but are a good company.”
“The public market is a means and an end”
What is it like to run a public company, after years as a private company?
“On a personal level there are more positive things and there are less. To me the public market is a means to an end, not an end in itself. Look at what we did: we looked at 3 companies and chose to buy one, we did not breathe, was in the middle of Omicron. Trading on Wall Street was not a dream. “To build a global company that broadcasts most of the television commercials in the world, to be an alternative to the big companies – that’s the goal. Everything else is a means.”
What should the acquisition of TVSquared contribute to you?
“It’s important to emphasize that TVSquared is not our competitor. There are no synergies in the deal, no employee goes home. We are on CTV and it measures commercials on regular linear TV, it’s like the old world. Because the transition from the old world will take 5-10 years, customers asked to be given Also a solution for linear, so they know how to divide the money in the advertising channels. It was clear that we would have to buy a company and no solution was built for years. It was received with great sympathy in the market, the combination is very unique. “In the whole issue of rating ratings, hundreds of billions of dollars are changing hands over the transition to the Internet.”
Are there more purchases on the episode?
“There is nothing specific. In the long run this is the strategy, because of the type of our customers who are very large. The amount of money we get from them is relatively low and much more can be done, so it makes sense to purchase and expand after investing a lot in these customers. He’s 97%, and that’s against Google. ”
“Believes we will jump back when the domain returns”
At the same time as reporting the acquisition, Innovid released updated forecasts, and it turned out that the forecasts it provided when it was merged with SPAC were too optimistic. Instead of revenue of $ 94.8 million in 2021, revenue was $ 90.3 million, and EBITDA was $ 5.4 million instead of $ 7.2 million.
Netter explains that “this happened because our customers are the largest advertisers, including car companies. Because of the supply chain difficulties all over the world there are no cars. In the fourth quarter which is usually the strongest, most big car companies just stopped the commercials. And the entertainment, and a perfect storm was created. No company wants to miss its first quarter as a public, unfortunately that’s what happened, and we made adjustments to the forecasts. Everyone asks, ‘Okay, so what happens now?’ “And I quote what other companies are saying – it’s not specific to us – I believe we will jump back when the sector returns. We believe we will not miss the updated forecasts under any circumstances, regardless of Korona, Ukraine or supply chain.”
Are you implying that the predictions you gave are conservative? Is there room for an upside?
“We believe in the high confidence we will meet.”
You mentioned Google, how does Innovid compete with it?
“Google is a monster, we’re competing with some of it, following an amazing acquisition of DoubleClick a few years ago for $ 3 billion. It’s become a kind of monopoly; it’s scaring the power they have. In the end, the press is hurt by it: A seller, and she herself is a competitor. She knows prices, who advertises where. This is the argument of the competition authorities in the world – Google itself is a media player, and it can use the information for media pricing.
“In the part of pricing TV commercials we beat Google, because it’s a new field. It’s a very big pride. The market now understands where the fault is here, they can no longer do tricks and lower prices, can not make field purchases or aggressive moves. They have no advantage. “It’s unfair. We bet right that big tech would not be able to take over television. It’s such a big industry with media companies, infrastructure and the like, that they couldn’t get in.”
Today, Innovid is recruiting employees, in Israel and abroad. “5 years ago we were 80 people, today we are 600,” says Netter. We did not give up, the company almost closed 3 times, we did not succeed overnight. “On the recruitment, he says:” It’s like in the stories of ‘Great Country’. Israel is the most competitive market for talent in the world. We play the same game as everyone else, with the salaries and the espresso machine, but there is a very strong organizational culture here and a very strong group of people. ”
What does Israeli high-tech look like to you today?
“I’ve been in the US for 12 years, but I know the industry, and it’s an interesting situation. Talk about it a lot. There are big strategic moves, the amount of money coming in from funds like Tiger and Insight. I guess some things will cool down a bit, but it will take time. There is innovation and there are a lot of opportunities, but there was also a kind of madness that I am glad we did not participate in. ”
bubble?
“I do not want to say bubble, but there have been extreme phenomena. I think it is good for everyone that the market is normalizing a bit. It is healthy for entrepreneurs, programmers, high-tech and the economy. If you are in a ‘great country’ it is probably an extreme situation.”
ID. | Innovid
Field of Activity: A platform for advertising on smart TVs.
history: Founded in 2007 by CEO Zvika Netter, Zack (Tzachi) Zagdon, Director of International Operations, and CTO Tal Haluzin. Its name consists of the words innovation + video.
data: Employs about 600 employees (headquartered in New York and Ramat Gan). Traded at a value of $ 810 million. Revenue 2021: $ 90.3 million.
Net loss: $ 11.5 million, EBITDA-based profitability: $ 5.4 million.
Something else: Recently acquired a company in the field of linear television advertising.
ID. | Zvika Netter
personal: 49 years old, married +3, lives in New York.
professional: CEO and co-founder of Innovid. In the past, he founded and managed a number of start-up companies, serving in the MMRM.
Something else: One of the founders of Garage Geeks in Israel (a non-profit innovation incubator), he was previously included in Time Magazine’s list of “high-tech entrepreneurs who will change your life.”