Latin America's Digital Lag
Small Budgets, Consumer Trends Hinder Interactive Marketing
Despite the region's rep as a hub for creative brilliance, Latin America lags the rest of the world when it comes to digital innovation. Blame it on small budgets that correspond to consumers' relatively slow uptake of digital media.
Daniel Granatta, technological-creativity director of Grupo W, the most notable digital agency in Mexico and a shop that's prominent within the region, says something both alarming and brutally true: "In Latin America, with the salvation of the digital creative force from Brazil, you only spot great efforts that, although being on the right track, are isolated. It's more of a region with certain brilliant pieces, rather than a region of integrated campaigns."
Echoing that is Fernando Barbella, interactive creative director of BBDO Argentina: "In Argentina, we still handle a kind of approach to digital media that's more related to technological resources than to the search for a [solid] concept or idea."
Not central to strategy
What's missing is that Latin advertisers don't include digital media as an essential part of their strategies and instead ask for one or two technological experiments from their agencies. The industry will have to get beyond fractured efforts and make digital a centerpiece rather than a communication appendix. Such is the situation that Argentina has often functioned as producer of interactive campaigns for the rest of the world, being reduced to the role of executor.
"That is not the core business of an agency but of a multimedia production company," Mr. Barbella says. "An agency should be focusing on planning, strategy and creative." He points out, however, that in the past year and a half, there have been some campaigns that excelled for using one solid idea above the mere use of technology.
While in the U.K. and the U.S., the percentages destined for digital platforms take a big piece of the cake of total investment in media, in Latin America the figure doesn't typically surpass 5%. One of the reasons is that use of technology by consumers is significantly lower than in developed countries. But in no way does that technological deficit justify the extreme austerity of budgets.
"In regards to investment, we are still behind if we consider the quantity of time that the consumer dedicates to digital media in his or her daily routine and the low correlation between this reality and the effort that brands make to be relevant within this context," Mr. Barbella says.
More-mature digital markets
There are exceptions, however, and Brazil is a big one. Mauricio Mazzariol, founder of the Brazilian Bigman shop and, since last January, part of the Wieden & Kennedy team in Portland, Ore., says: "Brazil has a potentially huge digital market -- 150 million Brazilians have mobile telephones, and the rate of hours spent on the internet is amongst the highest in the world."
Even with the economic barriers technology imposes, Brazil has 38 million people with home internet access, according to a study by Ipope this month. And even after the explosion of the financial crisis, high-speed internet service grew 24% in comparison to February 2008. Despite Brazil's digital vastness, Mr. Mazzariol warns, "Nonetheless, the country is also still in the process of maturing into the digital era; it is still far from Europe or the United States." But "in absolute numbers, Brazil is as digitalized as Spain."
Spain -- which, despite not being on the American side of the ocean, is considered part of the Latin universe because of its roots and its language -- is another exception, probably because of its location on the globe. Daniel Solana, founder and creative director of Double You, one of the top digital agencies in the Spanish market, compares his country to Brazil: "Brazil is a country with a very high level of creativity and, additionally, it has had important economic development in the digital realm. Spain is not as competitive in the creative aspect, because its industry lacks that profound creative culture. Nonetheless, it does possess a mature digital-creative market and has enjoyed a marked economic growth in the last three years. Following these, Argentina and Mexico have projects of first-class level but in not-so-developed markets."
Nevertheless, there are flaws. "We are far from taking advantage of the potential that digital media offers," Mr. Solana says. "We barely use 5% of its possibilities. But that doesn't worry me; it's only a matter of time."
Last to take off
Mexico -- which, incredibly, has only recently found its place in the global digital scenario despite neighboring the U.S. -- can probably be considered, among the four countries mentioned here, the last to take off from the almost embryonic state that still sums up the rest of the region.
"I think that advertisers don't give enough room to the digital platform, but they will have to eventually -- some because of conviction and others because they won't want to feel left out of what's happening," says Mr. Granatta of Mexico's Grupo W. "As for investment, you can tell it's growing. In the past years, the invested figure was practically nonexistent. Nonetheless, investments are mainly destined to forms of media that get quick results, like banners and e-mail marketing, instead of formats that look to build the brand in the digital terrain over long-term periods, which is exactly what we should be doing."
Mobile marketing, too, has its challenges. The last official data the Mobile Marketing Association presented indicated that there are more than 410 million cellphone users in Latin America. Colombia appeared as a highlight in this area, with 15% users of the mobile web. As for 3G technology, it has, for the moment, only 2% market share in the region.
"Despite the big differences standing between us and the first world, when it comes to mobile marketing and the needs of the business, our agendas have a lot in common," says Terrence Reis, director of the Mobile Marketing Association in Latin America. "While the U.K. has 25% of mobile web users, a considerable number of issues around business models, metrics and education of the advertisers are yet to be considered. These issues are similar to those we have to deal with in Brazil, where we only have 7% of mobile web users, 2% [using] 3G, and a content market that's healthy but not booming."
He adds: "Mobile marketing will grow in this region, as advertisers will look for effective ways to interact with the consumer. However, the process isn't simple; we have to build up an industry, and there's a lot of learning in the process. Our research shows that Mexico, Brazil and Argentina have an average of 66% of household interest in mobile marketing."
Apart from a few exceptions, the general opinion of the Latin advertising leaders is that the financial crisis will have a positive impact on the digital industry. With more or less caution, they all agree that investments in digital platforms, which continue to be small, can do nothing but to grow. Moreover, that growth will accelerate, given that many budgets that were destined for other media will be assigned to digital.