Projected to reach over $7.92 billion by 2019, mobile internet advertising in Latin America is on the rise, consistently ranking in the top spots by share of spend in eMarketer’s Global Media Intelligence Analyses and Mobile Advertising Watch. In fact, according to eMarketer’s March 2016 forecast for ad spending around the world, digital ad spending in Latin America is already set to reach new heights.
While advertising investment in Latin America still focuses primarily on TV — 40% of all ad revenue goes to just a handful of large broadcast companies — that’s not where the audience is. According to AdExchanger, nine out of 10 people with an internet connection in Latin America also own a smartphone, and people who own a smartphone spend more than 37 hours a week connected to the internet and only a little more than seven hours a week watching TV. The implications for mobile advertising are significant and many believe that there is much to be learned from what is happening in Latin America in this sphere.
Gastón Taratuta, CEO and founder of IMS, which serves as an ad partner to Twitter, Apple, Spotify and LinkedIn, among others, said in a statement: “We’re moving toward a world in which celebrities on social networks can have a larger base than the most popular and highly viewed telenovelas. It’s a wake-up call.” This fundamental shift in media power makes mobile particularly attractive to potential advertisers because that is where the users are.
Marco Veremis, CEO and Co-Founder of Upstream, a mobile commerce accelerator which works primarily in developing markets, says: “Consumers in Latin America are looking to be able to access new types of digital services.” The firm recently released the findings of its 2016 Developing Markets Mobile Commerce Report, conducted by YouGov. This contained insights into the Brazilian market and showed that relevance, in terms of localised content, is a key requirement for digital services to prove successful.
“Lifestyle related services are currently in high demand and services featuring local celebrities are gaining traction in Latin America, where 53% claim that they want services to have a strong local feel,” says Veremis.
Dr Ximena Hartsock, a Chilean entrepreneur and founder of Phone2Action, adds that Latin America is experiencing a mobile adoption boom that is stimulated by access to a variety of affordable devices and data plans. Because smartphone adoption is on the rise, mobile advertising is on the rise as well. Hartsock says that the leading markets for mobile ads are Brazil, Colombia and Mexico.
“Brazil with 64 million people using mobile phones leads the way and accounts for 33% of the total share in Latin America, but Chile, while it has a much smaller population, has reached 92% of subscriber penetration, which paired with great economic power makes it a very attractive market,” she says.
John Mauricio Lara Idarraga, General Director of Cheil Worldwide Colombia, explains that a smartphone is no longer a luxury product in Latin America but a must-have. He adds that mobile commerce is also growing in Latin America with 78% of users who have made purchases online through their smartphone. “This represents a huge opportunity for growth of online advertising in the region.”
Hartsock adds that, as is the case in the US, there is no direct correlation between mobile traffic and monetisation and there are differences from country to country. Hartsock cites the example of sports, which get very high mobile traffic but lower monetisation than entertainment. “The reason could be that people are in a different ‘mood’ and more willing to take action when they are watching something that elevates ‘desire’ versus when they are getting scores of a soccer game,” she says.
She warns that in Latin America a one size fits all approach to advertising will not work and companies hoping to leverage the mobile market must pay attention to the cultural differences and preferences in each country. “Facebook is used across the board in Latin America and companies should experiment with targeted advertising in this platform. But Facebook in Latin America attracts a younger generation than in the US which opens opportunities for companies targeting that audience,” she says, adding that Latinos love music and concerts.
“Spotify and YouTube are top apps but concerts like Lollapalooza have shown the potential of tapping into Latin America’s love for music and social. Lollapalooza is not only a music concert but is a showcase of brands.”
For Hartsock there is tremendous opportunity in messaging platforms like WhatsApp which became big in Latin America as a messaging option in light of the lack of affordable data plans. “While in the US we rely heavily on text messaging, in many countries in Latin America messaging is done from mobile apps like WhatsApp or Facebook messaging. My company Phone2action uses WhatsApp for social share in Latin America and we have seen high engagement numbers, almost as large as Facebook,” she says.
For digital services to achieve cut-through, though, it is critical to ensure that the appropriate payment method is offered, providing Latin American consumers the ability to pay for them. Veremis notes that credit card penetration is still low, making traditional app store payment models ineffective. “Direct operator billing enables brands to offer payment options to otherwise unreachable consumers. Mobile operators in emerging markets have an enormous potential, and by leveraging their unique assets, digital content providers can tap into an enticing market opportunity,” he says.
There is much to be learned from Latin America’s growing mobile market, however. Hartsock says that the mobile market in Latin America is unique because it is not homogeneous in terms of subscriber penetration. Brazil is attractive because of its size and the fact that it has not reached full market penetration (57%) and therefore has lots of room to grow. In fact, Brazil will contribute to 30% of subscriber’s growth in 2020.
“But looking at penetration alone is not enough because countries on the opposite sides of the spectrum in terms of wealth have reached the highest levels of penetration, Hartsock says. Chile one of the wealthiest countries in Latin America has reached 92% of penetration while Nicaragua, which also has a high penetration of almost 80%, is one of the poorest.
Hartsock says that companies interested in Latin America must invest in improving their consumer experience on mobile because the future of commerce in Latin America is on mobile. “While the market is heterogeneous in terms of economic power, culture, infrastructure, and mobile subscriber penetration one thing that all Latin America has in common is the love for apps especially social media ones.
“The mobile phone explosion is already happening in big cities like Santiago, Sao Paulo and Medellin so the world should be closely watching,” she concludes.
Jon Collins’ in-depth look at tech and society
Phil Muncaster reports on China and beyond
Kathryn Cave looks at the big trends in tech