Post Chavez, Venezuela's Election Ad Spending Will Start Soon

Marketers Cut Back Campaigns During 7-Day Mourning Period

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Some advertisers in Venezuela are halting or delaying ad campaigns during the official seven-day mourning period following the death of Hugo Chavez. After that ends, ad spending is expected to ramp back up again at least in part as campaigning begins for the presidential election that is supposed to be held within 30 days of Mr. Chavez's death on March 5 (although that date may slip).

Hugo Chavez and Nicolas Maduro
Hugo Chavez and Nicolas Maduro Credit: Bloomberg News

With massive government spending behind him, Mr. Chavez's chosen successor Nicolas Maduro, who has already stepped into the role of acting president, is the front runner to win the presidency.

In the last presidential election, held in October 2012, Mr. Chavez's use of almost endless government resources to fund his re-election campaign was believed to be a major reason for his 11-point victory over opposition leader Henrique Capriles.

Now Mr. Maduro will face off against the opposition candidate, likely to be Mr. Capriles. Massive government campaign advertising, along with the almost religious emotional link to Mr. Chavez felt by many working class Venezuelans, is expected to clinch the presidency for Mr. Maduro.

"There will be a significant investment by the government for Maduro to capitalize on the idealized image of Chavez," said Jorge Gonzalez, general manager of local agency Eliaschev Publicidad. "It is expected for Maduro to send the 'Chavez lives through me' message. The opposition has many drawbacks due to lack of resources and too little time to build something that can take on Chavez-Maduro, be it Capriles or a different candidate."

Gustavo A. Ghersi, CEO of independent agency Grupo Ghersy, agreed. "We think the chavista process may strengthen, with a Chavez elevated to a 'world martyr of the revolution' level," he said.

The government will still outspend the opposition, but the opposition forces may be able to count on some new resources.

"There will be, again, a big difference in investment, but not as much as last year, as many private interests in and out of Venezuela will support the opposition," Mr. Ghersi said.

In general, major changes for Venezuela's ad industry aren't anticipated in the short term.

"The issues that affect the advertising industry are most likely to continue: limited access to dollars for imports, which affects product supplies and therefore ad spending; price regulations that impact profitability and, thus, ad budgets; and the legal uncertainty that mostly affects private property [at risk of nationalization]," Mr. Ghersi said.

And a victorious Mr. Maduro is likely to continue down the chavista path, although the business community hopes foreign exchange restrictions will eventually be eased somewhat.

"Unless the regulations, especially currency controls, are resolved, it is likely commercial and ad activities will slow down—and in some ways that has begun already," Mr. Gonzalez said.

Juan Rafalli, the lawyer for Venezuela's National Advertisers Association, noted that the ad industry's problems are more economic than political.

Marketers are not going to advertise if their products aren't in stock," Mr. Rafalli said. "It is said that there is going to be a package of social measures [in part to help the government win the election], which would include a minimum wage increase. So again you'll see a government throwing money in the streets, which could lead to an increase in consumption. But the inventory problem is really critical...There are no packaging materials."

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