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Brazil is expected to overtake Britain as the fifth-largest advertising market by spending this year. Here ads for beer. (Photo: Gervasio Baptista/Agencia Brasil)
Wednesday, August 14, 2013
Perspectives

Latin American Advertising: Good Outlook

Latin American ad spending will grow 12% to $43 billion this year. 


BY LATIN AMERICA ADVISOR

Inter-American Dialogue


Latin America is the world's fastest-growing advertising market, with ad spending in the region during the first quarter up nearly 12 percent as compared to last year, according to quarterly figures reported by Nielsen's Global AdView Pulse. What factors are driving the growth of the advertising market in the region? Will these trends in the industry continue? How innovative is advertising and marketing in Latin America and the Caribbean compared to other places in the world?


Ricardo Reisen de Pinho, senior researcher at Harvard Business School's Latin America Research Center: 
The advertising market in Latin America, notably in Brazil, has been led by a group of multi-talented professionals with different backgrounds and experiences who started to subvert the traditional model of advertising, addressing consumers in a more colloquial manner and using creativity to mix modern advertising techniques and art. This more relaxed, engaging and humorous way to approach the market immediately created a connection with larger groups of consumers. However, it is important to take into account that behind the term 'Latin America' there is a complex kaleidoscope of different cultures and perceptions, socioeconomic realities and regional disparities, where idealized standard ads do not work in the way that someone located thousands of miles away imagined. A local presence with a local understanding is therefore a key factor for success. The whole region has experienced sustainable growth rates in the last 10 years and, in countries such as Brazil, massive social programs sponsored by the government also helped create new consumers by inserting almost 30 million Brazilians into the middle class. Accordingly, the world's sixth-largest economy also became the world's second-largest in cosmetics, the third-largest in mobile phones, the fifth-largest in automobiles and the eighth-largest in education. The majority of its population is still quite young, avid for new experiences, more digital and connected with social networks. They are aspirational, as well as inspirational, and willing to leapfrog steps. Marketing will need to keep up with their pace.



Damasia Merbilhàa, regional brand director for Latin America at TBWA\Worldwide: Latin America is an emerging region and, as such, a market with big growth potential. One can identify many specific factors behind the ad spending growth of the past years: the digital boom and its rising ad dollars contribution, the development of stronger local and pan-regional clients, the growth of the Brazilian market strengthened by the World Cup and Olympics events to be hosted there and even the global economic crisis that, in comparison, affected other regions more than Latin America. Yet, all these factors took true strength when combined with the 'room to growth potential' factor this region has. In the past decade, more than 50 million people joined the middle class in Latin America, which, for a population of 600 million people, is a considerable number. It means there are 50 percent more people in the middle class than in 2003. This burgeoning middle class represents new market potential for advertising and sales. Brands--local, regional and global--are increasingly aware of this potential, and this is one of the strongest reasons behind the ad spending growth. While there may be economic and political bumps along the road--not uncommon in Latin America--regional growth looks to continue, and with it, the expansion and evolution of the ad industry in this region. By nature, emerging markets tend to have strong innate innovation skills. These are people who are used to doing and finding creative ways to solve problems. Worldwide leading innovation is normally related to markets with more resources and technological strength. But give Latin America time and it will also lead innovation.


Gustavo Razzetti, executive vice president and managing director of Lápiz, the multicultural agency of Leo Burnett:
Latin America is an emerging market. Its population is growing, the region is leading technology adoption and broadband penetration is increasing. Put all these together and you have the winning formula. In addition to that, Latin America is leading in terms of social networking penetration and time spent online. This will definitely continue to drive advertising growth in areas such as online video, social media networks and mobile. They say that innovation comes either from young people or old people. The first don't know the rules and don't fear breaking them, the latter can make unexpected connections to think about doing things differently. Latin America has a young population. It is not surprising, then, that Latin Americans are more open to innovating and breaking the rules. The region has become an engine for innovative ideas around the world, building a strong creative reputation and winning awards. Latino ideas and talent are exported to U.S. and European markets. Latino advertising has built an identity and reputation of its own. When marketers think about Latin America, they also need to consider the other emerging market, the one in their own backyard--the U.S. Latino market. It presents similar characteristics and opportunities. It's young, leading technology adoption and willing to change the rules. The same thing applies to the agency business. Latino agencies in the United States are breaking the mold and becoming an engine of innovation and creativity that goes well beyond their market. Proof of that is this year's success at Cannes, where U.S. Latino agencies had a record year, winning eight Lions awards.



Leika Kawasaki, analyst for digital media strategies at Strategy Analytics:
 Latin America will generate 12 percent growth year-on-year, surpassing $43 billion in total ad spending, equal to a 9 percent share of the global total ad market. The Latin American advertising market is still in the expansion stage, and it has a lot of room for growth when compared to more mature markets such as North America and Western Europe. By 2018, total ad spending in the region will more than double from 2010 spending levels. In fact, Brazil is expected to overtake Britain as the fifth-largest advertising market by spending this year. Advertising spending in Brazil and in the region as a whole is expected to rise substantially over the next five years, boosted by the 2014 World Cup and 2016 Olympics. Latin America's traditional advertising is expected to increase by 10 percent this year as we anticipate continuing growth in TV, print and out-of-home advertising. However, most of the region's growth will be boosted by online ad spending which is expected to increase by 28.7 percent this year, accounting for 11 percent of total ad spending. There are many factors contributing to expansion of the online advertising market in Latin America. Broadband household penetration in the region is growing, in turn driving audience growth and the viability of mass market services underpinned by advertising. Further, Latin America is one of the leaders in terms of social networking penetration and time spent online-we expect that the Latin American advertising market will continue to grow, driven by strong online video and social networking advertising spending.


Republished with permission from the 
Inter-American Dialogue's daily Latin America Advisor

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