In Brazil, Facebook, Twitter Battle For Ad Dollars As Social Land Grab Heats Up

A Nation Obsessed With Social Networks

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Brazil's social-media obsessed population has already supplied Facebook and Twitter with legions of new users, but now those companies are mobilizing to extract profit from sky-high engagement.

Twitter opened a Sao Paulo office in January, and Facebook— which has 66 million users in a nation of 200 million people, according to SocialBakers—is accelerating its hiring of account managers to serve the local market.

But though it's an obvious place for both companies to be, since the 2014 World Cup and the 2016 Summer Olympics will both happen there, the short-term revenue opportunity is small considering the size of the still-young Brazilian digital-ad market.

Alexandre Hohagen, Facebook's Latin America sales chief
Alexandre Hohagen, Facebook's Latin America sales chief

Zenith Optimedia projects that digital ad spending in Brazil will be $1.2 billion this year, and the social networks are competing with Google and portals such as UOL, Globo and Terra for a slice of the pie. And while Facebook in the U.S. is known to be vying for TV dollars, it faces a still more herculean task in Brazil, where TV is predicted to account for 69.4% of ad spending this year and holding steady, compared with 38.4% and falling in the U.S.

"I always say we have two Super Bowls per week in Brazil," said Fabio Saad, online-media director of DDB Brasil, referring to the soccer matches and soap operas that captivate the nation. He noted that most Facebook spending has been carved out from digital and CRM budgets.

But Facebook's Latin America sales chief, Alexandre Hohagen—a Google vet who in 2011 opened the Sao Paulo office, which has about 50 staffers—says Facebook's reach is persuading marketers to shift money there from traditional media.

"This is a big country, so there's a lot of opportunity to migrate revenue from one medium to another," he said.

While Facebook has recently been making the case in the States that Twitter isn't TV's only second screen, it may have an easier time doing so in Brazil, where 38% of Facebook users surveyed in an August study co-authored by ComScore reported checking the site while watching TV "all of the time" or "most of the time."

Mr. Hohagen's team has been able to turn the connection between Facebook and TV into a revenue opportunity. For example, last fall Unilever increased its monthly ad spending 10% to run an intensive two-day campaign for its Seda shampoo brand timed to coincide with the finale of the soap opera "Avenida Brasil." Creative was connected to the show, with text like, "Today is the last appearance of our dear Isis in the show. :( We will miss her."

And Facebook's log-out ad—its nearest equivalent to a home-page takeover—has had "massive adoption" in Brazil, according to Mr. Hohagen, who said it sold out in Brazil in December.

It was he who suggested the product to Facebook's Silicon Valley engineers in 2011, and their first reaction was that "no one logs out," he said. He then pointed out the propensity of Brazilians to log out from public computers at cyber cafes and universities.

"If you go to an emerging market, the number of people logging out is huge," he said.

Meanwhile, Twitter is essentially a newcomer to Brazil and has had limited advertiser adoption, because agencies had previously needed to route their buys through the U.S. and pay a premium in taxes on top of them. Its Brazilian user numbers are also hard to gauge, since ComScore's most recent report of 9.2 million monthly uniques doesn't include mobile.

Twitter's Brazil manager, Guilherme Ribenboim, said his team will focus strategically on the underdeveloped mobile market, since Twitter's retention of mobile users is better than on desktop. (Smartphone penetration in Brazil will be just 23.3% this year, according to Zenith Optimedia.) It will also look to enter into strategic partnerships with local mobile carriers.

"They're a very important part of the ecosystem to get users to access data and, consequently, Twitter," he said.

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