Brazil

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Contemporary advertising took root in Brazil in the 1920s with the introduction of U.S. business methods and organization. The process began in 1926 when General Motors Corp. opened an advertising department in São Paulo that was instrumental in training a group of Brazilian advertising professionals. In 1929, GM closed its Brazil department when its agency. J. Walter Thompson Co., opened a São Paulo office under a worldwide agreement between the automobile manufacturer and the advertising agency, making JWT the first U.S. advertising agency to establish full operations in Brazil.

JWT's Brazilian subsidiary, staffed by veterans of GM's advertising department, proved integral to the development of modern advertising in Brazil. The experience of working at JWT defined a generation of Brazilian advertising professionals who learned their craft through JWT's celebrated trainee system. The agency's São Paulo office was largely responsible for expanding the use of photography in print advertising during this period, replacing the line drawings that earlier dominated the medium.

While JWT served GM in Brazil, Ford imported its own advertising agency, N.W. Ayer & Son, which opened an office in São Paulo in 1931. Ayer carried out the most impressive market research of the period, an investigation for the National Department of Coffee that reached 12,000 consumers and 3,000 retailers in 19 states. It was the first study to gauge personal preference and consumer habits on a national level.

McCann-Erickson followed Ayer and JWT to Brazil, opening an office in 1935 to serve Standard Oil. McCann was the first U.S. subsidiary headed by a Brazilian, Armando de Moraes Sarmento.

Outdoor advertising was perhaps the most visible manifestation of the increasing volume and sophistication of advertising in Brazil, as billboards—many of them featuring automobiles and automobile-related goods—proliferated throughout larger cities. Radio advertising also expanded dramatically, with U.S. advertisers sponsoring news reports, music broadcasts and radio dramas.

Growth in the 1930s

The 1930s were also important years in the development of Brazilian agencies. In 1933, Cicero Leuenroth founded Standard, which enjoyed notable success. It won the Colgate-Palmolive Co. and Shell Oil Co. accounts, and established the country's first in-house recording studio for radio advertising. In 1938, Inter-Americana was founded by Brazilian admen, including Armando D'Almeida, who had previously led his own eponymous agency representing the Foreign Advertising & Service Bureau in Brazil. By the end of the decade, an estimated 56 agencies were operating in São Paulo and Rio de Janeiro.

Other local institutions founded in the 1930s included the Brazilian Advertising Association and the Sao Paulo Advertising Association. In July 1938, the first Brazilian Advertising Conference was held in Rio de Janeiro. The decade also witnessed the introduction of the first Brazilian trade magazine, Propaganda. In 1941, Publicidade was founded; it would later become PN, the most important Brazilian trade publication of the postwar era.

With the advent of World War II, advertising in Brazil assumed new dimensions. The U.S. Office of the Coordinator of Inter-American Affairs, headed by Nelson Rockefeller, hired JWT to study Brazilian attitudes toward the U.S., Nazi Germany and the war in Europe. JWT also produced print ads and radio spots designed to foster hemispheric unity for the war effort. U.S. advertisers and Brazilian agencies (such as Inter-Americana) sponsored campaigns to encourage goodwill toward the U.S. and promote a pan-American ideal.

In the immediate postwar era, JWT and McCann dueled for supremacy in the Brazilian market; Ayer had closed its Brazilian offices in 1942. McCann achieved an early victory when it won the Coca-Cola account in Brazil in 1948; this was particularly significant given that Brazil consumes more Coca-Cola than any other country in the world, with the exception of the U.S. That move led the Atlanta-based soft-drink marketer drop D'Arcy in favor of McCann for its worldwide accounts.

The training of Brazilian advertising professionals was formalized in 1951 with the founding of the Museum of Art of São Paulo's School of Advertising. One example of the pre-eminence of U.S. agencies in training Brazilians prior to the founding of any such institutions was the government's award of the Order of the Southern Cross—the highest honor Brazil can bestow upon a foreigner—to JWT Brazil President Robert F. Merrick for "his contribution to the development of the advertising business, technically and ethically; to the creation of a highly qualified group of Brazilian professionals; and, through this, to the economic development of the country."

The advertising industry was also important in the growth and professionalization of the Brazilian media. New magazines such as Manchete (founded in 1950) featured color advertising for a variety of products, which provided the publications with much-needed revenue. In radio, ad revenue helped build on the successes of the 1930s and '40s as the number of stations and owners of sets continued to expand. (Private ownership, public ownership and the official encouragement of investment coexisted during the expansion of Brazilian radio.)

In the new medium of TV, introduced to mass audiences in the early '50s by TV Tupi in Sao Paulo, advertisers adopted a system of sponsorship under which they imported U.S. programs or commissioned local productions (this system continued until the rise of Brazilian TV giant TV Globo in the late 1960s), while U.S.-based agencies imported the technology to produce TV advertising locally. Although in 1960 TV accounted for only 6% of advertising revenue, the stage had been set for tremendous growth. By the 1980s TV received more than 60% of all advertising expenditures in Brazil.

While moving into TV during the 1950s, Brazilian advertising also expanded outward from São Paulo and Rio de Janeiro. Local offices and independent agencies were opened in provincial capitals such as Belo Horizonte, Recife, Pôrto Alegre and Salvador. At the close of the decade, agencies expanded to Brasilia, the then-new federal capital.

Local challengers

In the 1960s, U.S. agencies faced their first significant local challenges. Mauro Salles Publicidade, founded in 1966, was perhaps the most important Brazilian challenger, particularly after its merger in 1967 with Inter-Americana. DPZ, founded by Roberto Duailibi, Francesc Petit, José Zaragoza and Ronald Persichetti the following year, was another important domestic agency. These and other Brazilian agencies proved to be tough competitors for private-sector advertising revenue, while the growing ad budgets of state and national governments went to locally owned agencies. As a result, U.S. agency subsidiaries began the practice of promoting Brazilian executives to top positions (previously held by Americans), even in the U.S. parent companies, in order to "nationalize" themselves.

By the end of the decade, nationalist sentiment and the rise of Brazilian agencies had reached the point where even the largest U.S. shops felt threatened. (JWT was at one time considering a merger in which it would hand over day-to-day control of its Brazilian operations to Mauro Salles.) These concerns, however, did not stop other U.S. agencies from investing in Brazilian shops. Ogilvy & Mather and Leo Burnett Co., for example, acquired minority interests in Brazilian shops Standard and CIN, respectively, during the late 1960s.

During the 1970s, which have been called Brazil's golden age of advertising, Brazilian agencies grew more quickly than their U.S. competitors. In 1971, industry insiders cited ad expenditures of $430 million as evidence of this expansion. By 1975, advertising in Brazil constituted more than 1% of the country's GNP. At the institutional level, observers gained a hint of what was to come in the 1990s as Standard, Brazil's most successful and long-lived domestic agency, became in 1972 a wholly owned subsidiary of Ogilvy & Mather. The 1970s were also marked by the rapid expansion of TV advertising, now broadcast in color. Campaigns for a variety of domestic and imported products reached millions of Brazilians through this relatively new medium over the course of the decade.

By the 1980s Brazilian advertising professionals were widely recognized as some of the world's most creative and able. Between 1981 and 1989, Brazilians received 16 awards at the International Advertising Festival in Cannes, France, including two Gold Lions, two Silver Lions and one Bronze Lion. In 1987 at the Ibero-American advertising festival (FIAP) in Punta del Este, Uruguay, Brazil fielded more than 300 entries and with Spain took almost 70% of the awards.

Recognition of the talents and abilities of Brazil's domestic advertising agents did not go unnoticed by trade organizations and, most importantly, advertisers. In 1981, Mauro Salles was elected president of the International Advertising Association, representing 1,100 delegates from 50 countries, thereby becoming the first Latin American to hold this prestigious position. By the end of the decade, domestic advertising agencies finally reached preeminence in the country as four agencies in which Brazilian nationals held majority ownership led the market.

Since the 1980s, Brazilian advertising has expanded into new media and formalized existing forms of marketing and merchandising. The Brazilian agency Norton distinguished itself in the early 1990s as the first Latin American agency to expand into cyberspace and secure Internet accounts. Product placement on Brazilian evening soap operas continues to be integral to the marketing of consumer products. During the last 15 years of the 20th century, this form of merchandising benefited from the establishment of formal guidelines for product placement in TV programs, replacing an older, informal system prone to abuse.

The move toward mergers and centralization that characterized much of the 1980s throughout the advertising world began to affect Brazil in the 1990s, as multinational companies began to acquire substantial interests in Brazilian agencies. In June 1994, D'Arcy Masius Benton & Bowles purchased a 40% interest in Salles/Inter-Americana de Publicidade. The resulting merger produced Salles/D'Arcy Publicidade, then Brazil's No. 2 agency. In 1996, Ogilvy & Mather acquired Denison Bates Advertising of Sao Paulo, making Standard O&M the largest agency in Brazil. That same year the French agency Publicis purchased a 60% share in Norton, which was renamed Publicis Norton. In 1997, DDB Needham Worldwide acquired a majority interest in São Paulo's DM9 Publicidade, creating the new DM9 DDB Publicidade.

Finally, Mercosur, the regional free-trade pact among Brazil, Argentina, Uruguay and Paraguay, opened an even larger potential market for Brazilian agencies and advertisers. The potential earnings for advertising agencies under Mercosur have been estimated at $4 billion per year, three-quarters of which are accounted for by Brazil.

McCann-Erickson Publicidade was the No. 1 agency in Brazil in 2001, with gross income of $131.6 million on billings of $877.6 million, up 0.2% over 1999. JWT was second, with gross income of $92.9 million on billings of $408.1 million, up 18.3%. Advertising Age estimated that total gross income from advertising in Brazil in 2001 reached $814.3 million, down 9.5% from 2000.

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