A Former Leader in Digital, Argentina Tries to Get Back on Top

A Trade Organization for Online Agencies Might Help

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Patricio Cavalli
Patricio Cavalli

In 1990s Argentina, start-ups blossomed, ad agencies couldn't cope with the flow of work brought to them and cities were decorated everywhere with dot-com ads.

Among the hundreds of ideas that saw the light in those days, many sank in the Nasdaq collapse (Megaagro.com, clickmedica.com, minutricionista.com); others never had a chance (Uncorte.com); and two made history: Patagon.com, the birthchild of Constancio Larguía, sold in the hundreds of millions of dollars; and El Sitio.com, whose IPO in New York raised $100 million.

But after the frenzy was over, the country's digitalization rates began to plummet. The 2001-2002 crisis helped destroy the remains of the digital infrastructure and only in 2004 did the digital industry began to re-emerge from its ashes.

According to the Argentine branch of the Interactive Advertising Bureau, online ad investment in 2008 totaled $71 million. In its survey, IAB projects that online ad spending will grow up to 25% this year -- a wishful-thinking scenario, some say.

There is talk now about the imminent formation of an 4A's-like association of digital agencies, which would try to unite the sector on a number of issues, such as agency pitches, standardized industry costs and, yes, dealing with the press. Slowed down by the international crisis, this "digital club" of agencies would see the light of day in late 2009, people familiar with the matter say.

Marcelo Montefiore, president, IAB Argentina, and director at digital agency Global Mind, believes that "even though the global financial crisis had a negative impact, we believe the sector has a strong chance in the current situation."

Growing at a fast pace but perhaps slowing in 2009 because of the financial crisis is the penetration rate of high-speed household internet connections. According to its article published on March 10, "eMarketer estimates that in 2008 over 31% of households in Argentina had some form of broadband connection. In 2013, that figure will nearly double to 61%."

Nevertheless, digital usage of the web by advertisers is growing at a slow pace. Few advertisers still see the web as an interesting medium, and digital agencies have failed to promote the digital media as a profitable option. Efforts by companies such as Unilever, clearly the digital leader among advertisers, have not been accompanied by a comprehensive approach among business.

I asked Martin Hazan, chief creative director for the Latin American region at MRM, what he thinks about the situation. "Every time I give a lecture," he said, "I ask the audience how many of them have posted a comment in a blog. Lots of raised hands are usually seen. I continue my questioning with other topics such as uploading videos in YouTube, taking part in Facebook groups, sharing photos on Flickr, opening MySpace accounts and micro-blogging with Twitter. With the exception of the last one, all of them receive an enthusiastic support. But when I ask how many of them have invested part of their advertising budget in social media or even in digital media, enthusiasm starts to fade away."

This, despite the fact that Argentina is one of the most awarded countries when it comes to TV spots, ranking only behind the U.S. and the U.K. the past two years

"I used to say that, due to our technological delay, the Latin America online market is very lucky because we can see the movie in advance: What is happening here today is what happened in USA, Europe and Asia Pacific three years ago. But if we don't start moving quickly, our gap will get wider and wider. This means that advertisers should start immediately to work hard in order to make up the wasted time and adapt their policies to consumers' new behavior."

With most of its creative talent applied to TV and print, Argentina still has to prove its capacity to translate its ideas into digital or, better yet, to create fully digital, through-the-line ideas.

As Mariano Dorfman, director of digital agency Icolic, wrote in an article in magazine Mercado: "Just imagine this were a soccer match between Argentina and Brazil, in which the result were 71–1 for Brazil. We would have hanged the team's coach, players would be in exile and we would be talking about a national tragedy. Well, here it is: In the last five years in Cannes Cyber Lions, Brazil obtained 71 trophies and Argentina just one."

Advertisers and digital agencies said there are three three main reasons for these delays: culture and knowledge issues among companies' top managers and even between marketing managers; excessive connectivity prices for web and for mobile access to digital media; and the lack of convenient, easy-to-read, manageable metrics for the digital platform.

TV, radio, print and outdoor are not only well-known media, with lots of users, but they are also popular and easy to understand for non-native digital managers. As a prolific creative director said in a lecture in 2008: "You show your client a 30-second spot, and there's nothing to explain, it's just there. In the web, they have sometimes to go through five or six layers of clicks to get him to understand it, and it's confusing. Besides, no marketing manager gets greeted in the meeting room by the CEO for his web strategy, but he does if the TV spot the CEO or his wife saw last night on the TV was funny."

As one digital manager in a top-five company, who asked not to be identified on grounds of not violating company policy, put it: "GRPs [gross ratings points] on TV are pretty inexact, and mean little from a mathematical and statistical point of view, but it's an agreed-upon, easy, understandable and known measure -- and it works. Digitals have to find their own GRP, be it clicks, prints, whatever, and stick to it for 10 years until it's accepted and imprinted in the managers' head. It doesn't matter if it's good, it has to be known."

There is another, harder-to-speak-about truth underlying this delay: the vast production TV production costs that mean money for agencies and the vast underground corruption net behind it. "A 30-second spot costs about $100,000 or more in production. When you say to a brand manager 'Doing it for the web will cost some $20,000,' what he may think is 'That's $80,000 less going into my pocket,'" explained the CEO of one of Latin America's three largest digital agencies, on condition of anonymity for not being punished by his colleagues.

But there is, in the area, a lot being done to solve the problems.

According to Marina Méndez, regional CEO in Zed Digital, "What I propose is that we go past the divorce lines between online and offline, understanding that everything is online because we all are digital natives, we all are human beings who have a cellphone, a computer, an e-mail inbox. When we understand that, this process will be more logical, and a lot more natural."

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