Some considerations about the advertising industry in Latin America in a competitive environment and with an advertising market in a situation of oversupply….
When economies grow and expand, advertising budgets are high and the advertising world experiences periods of great bonanzas, huge returns, and easy product placement with large client portfolios. On the other hand, when economies slow down, advertising budgets are the first affected by cost reduction policies in companies.
Latin America is experiencing days of "tense calm" in its economies. Argentina is experiencing a recession of almost four years, Brazil is contagious and experiences its own problems, especially in the energy field, the Andean countries do not show sufficient levels of economic growth to overcome the terrible crises they faced at the end of the last decade. Overall it can be said that growth in the region is simply discouraging.
The signs of weakness shown by the Latin economies affect the confidence of people and companies in the different regions of our continent, in addition to this, the United States does not seem to show clear signs of a prompt economic recovery under an environment of slowdown throughout the world. world, with the recession in Japan and signs of weakness in Europe.
These general problems unquestionably affect the world of advertising in Latin America. In the following lines, some ideas will be reflected about what I think will be the factors that will determine the success of the world of advertising in these times for our region.
Latin America is experiencing days of uncertainty in its economies, despite optimism about the global economic recovery.
SOME FIGURES:
Advertising budgets in Latin America have increased modestly in recent years, thanks to the entry of new global players, who have sought to position themselves in the Latin American market. Multinationals such as Telefónica de España, Repsol and some international banks such as BSCH or BBVA, have encouraged an advertising market that in general has remained constant throughout Latin America. Simply reflecting the economic growth figures of the regions.
The advertising pie in Latin America will represent approximately 26,000 million dollars annually by the year 2004. Today the mass media of advertising such as television, radio and the press account for more than ninety percent of said pie, while the Internet, despite its rapid growth in the region, only represented in 2001 just over 3% of the Latin advertising market. However, online advertising is expected to partially displace traditional forms of advertising in the coming years.
Although the figures seem high, the abundance of advertising media and the excess of spaces to offer, make companies that are financed by advertising risky, fragile and totally dependent on economic cycles, therefore competition will very surely punish companies whose only form of income is advertising.
It is important to clarify that this article is not only talking about the Internet sector. In general, the abundance of advertising space supply is simply driving out of the market both dot com companies as well as television channels, radio services and even print media such as magazines, newspapers or specialized magazines.
CAKE IS NOT FOR EVERYONE:
The positioning of companies in the advertising market and their ability to generate profitable business even in difficult times, will be fundamental factors to ensure the long-term stability of companies dedicated to advertising. Today the competition for advertising space is fierce and as in any predatory market, the smallest will suffer too much compared to the large companies.
A clear example of the phenomenon of expulsion from the markets, has been presented with the old "national", cultural or public channels that have had to close their doors due to the displacement that large entertainment companies (cable television, sports, cinema, etc.) have forced.
The notion is very simple "there simply isn't enough capital for all advertising companies or companies that make a living from advertising to survive" this rule applies from Mexico to Argentina.
But then which advertising companies will be the successful ones and which ones will be excluded?
Today there are more advertising options, more products to offer, new media to use, different marketing strategies, where the new e-conomy plays a fundamental role in changing the advertising landscape. Being prepared for changes will be essential.
The answer to the previous question has its own name: «EFFECTIVENESS»
Any company, when contracting advertising, is concerned about the effectiveness of the advertising it obtains, so the first characteristic of advertising companies should be effectiveness, a characteristic that is achieved by the following elements:
1. Targeting:
Advertising must be targeted and must target specific and clearly identifiable market niches.
2. Economy:
The cost-benefit effectiveness must be high. Regardless of the volume of resources used (from a small.com to a large multinational), campaigns must show that the money invested will effectively generate higher cash flows and better brand positioning for companies looking to establish successful advertising campaigns. It is not a volume problem, it is an efficiency problem. From the advertising of small companies, to the advertising of large multinationals.
3. Continuity.
Advertising flows must be constant and must generate long-term brand awareness. The flash campaigns that are used today can generate interesting income streams in the short term, but they cannot guarantee long-term consumer loyalty, a fundamental factor in times when every customer counts due to the economic situation.
4. Segmentation:
Advertising must effectively attack the consumer's profile taking into account (age, sex, economic condition, educational level, preferences, etc.
5. Personalization:
"Advertising tailored", the advance in telecommunications, especially the Internet, allows the personalization of advertising, thanks to different forms of data information collection.
6. Don't forget the marketing mix:
And the combination of the so-called four P. (Square, Product, Price, Promotion)
Another important factor will be the constant feedback between the advertising company and the client, seeking that the philosophy of the companies is clearly identified with their advertising campaigns.
THE CHOICE OF THE MEDIA:
The choice of the means of communication to use (Internet, radio, press or television) will depend on the service or product to be offered. In my opinion, the long-term distribution of advertising media will depend on two fundamental factors. Type of product and type of advertising offered by the medium.
The following table will seek to summarize a little the type of medium to use according to the type of product.
Advertising medium to be used according to type of product
The notion that the above table wants to convey is the following:
- Media such as the Internet and specialized publications are excellent for advertising exclusive, specialized articles from segmented and personalized markets. Television and radio will continue to offer mass consumption products (food, household items, beverages, and non-exclusive goods. Services in general may be capable of being advertised in all possible media, the typical example of service, they are the communications sector and the tourism sector, which can implement successful communication strategies both online and offline Products of local scope, (small businesses) can use local strategies: newspapers, magazines, flyers, posters and some graphic media such as banners and parades to make direct promotion. Micro-enterprises should try to make direct advertising strategies, speaking directly with potential buyers.
The use of various media will be the guarantee of success for advertising companies.
Today there are more advertising options, more products to offer, new media to use, different marketing strategies, where the new e-conomy plays a fundamental role in changing the advertising landscape. Being prepared for changes will be essential.
