"Here you have a highly dominant TV network named TV Globo, which is a cultural phenomenon with soap operas, hard news and soccer," Journey said. Projeto Inter-Meios reported that free TV, including TV Globo, accounted for 65% of all 2012 ad spending in Brazil.
"There is also the problem of low internet penetration in Brazil — we have between 45% and 47% internet penetration — and the speed of broadband isn’t higher," Journey added. "The government will advance a lot for the next 3 or 4 years to accelerate the digital penetration, but these are the barriers here to increase digital advertising." eMarketer forecasts that 44% of the Brazil population will be internet users in 2013, rising to 46% in 2014.
Journey highlighted Criteo, a US-based ad network that came to Brazil and saw success. "In the past, portals were the owners of the ad networks," he said. "The introduction of specific ad networks is a new phenomenon for our market."
Procter & Gamble also sees the importance of TV but has expanded its online advertising presence in recent years, according to Gabriela Onofre, P&G Brazil Head of Communications: "Consumers are watching the soap opera and talking to their friends in Facebook and sharing videos on YouTube. We have to be there. We have to adapt the pieces of communication to each one of those mediums."
She added that P&G, which has 24 brands in Brazil including Gillette, Pantene and Pampers, is "scratching the surface" with RTB and programmatic, but that the company is interested because of the targeting capabilities.
"We are seeing excitement about the idea of ad networks and ad exchanges and RTB and other tools that accompany that," said Thiago Guimaraes, eMarketer's analyst focused on Brazil. "But we haven’t seen enough data to show us that it is actually going on. The Facebook Exchange is probably the biggest thing to happen in a while, and we imagine that this will push the market forward as it gets everyone used to the ecosystem."
Yet DSPs including Turn, Triggit, Sociomantic and DataXu have all opened up offices in Brazil in the past year or two.
Jocelyn de Almeida, a senior director at Turn, said it has taken about a year to fully set up, understand the dynamics of the market and educate clients about programmatic and RTB. Turn currently works with more than 20 clients in Latin America.
"There’s not an enormous demand yet, but the testing for us has really started to occur over the past 90 days, where a lot of our global clients are going into the market and testing," de Almeida said. "That’s really going to be telling for the second half of the year."
Sociomantic CEO Jason Kelly noted that comparing Brazil to a mature programmatic market like the US is interesting. Whereas in the US, something like 25% of all media moves through the programmatic channel, in Brazil "it is single digits, but growing quickly," Kelly said.
Sociomantic works with ecommerce platforms and retailers, which Kelly noted are often early adopters when it comes to something as performance-driven as RTB. Sociomantic has worked on 100 campaigns in Brazil. Companies including Walmart and Brazilian retail chain FastShop have taken advantage of RTB in the country, Kelly said.
"In each region we're working in, each market has its own level of liquidity in terms of available inventory, how much and what type," he added. "Are publishers leaning into leveraging this channel as a distribution channel, or are they being more restrictive? Brazil, we've found, is rapid, rapid growth."
DataXu's Journey highlighted that the market for video is huge, but because of the dominance of a few TV and media companies, online advertising can seem more restricted.
"There’s a very strong interest between the consumers and video," he said. "There’s a lot of consumer usage. But it is controlled by about five major media companies and they obviously control the sale of the inventory, so they’re going to command the best value they possibly can for that inventory, which is pretty high-quality."
Facebook and Google are naturally two publishers with the most display ad impressions in Brazil, according to comScore, leading a lot of growth in online advertising and RTB. Globo and UOL, a Brazilian internet company, are also high on the list.
Advertising agencies are making moves in Latin America, including the growth from Brazilian-based Grupo ABC and WPP acquiring a 20% stake in Argentina-based Globant SA. In WPP's first quarter 2013 earnings call on April 26, CEO Martin Sorrell said the company's revenues in Brazil were about $800 million and within the BRICs, WPP is "growing 10% in those markets."
Fast Company recently highlighted Sao Paulo-based social media advertising firm Boo Box as an innovative company to watch, and Samba Ads, a Brazilian-based video ad network, raised $500,000 in February. In January, Sao Paulo-based digital marketing company Predicta partnered with Google DoubleClick for Publisher.
With increased focus on the advertising market and the global events about to take place in Brazil, Triggit CEO Zachary Coelius said the time is right for programmatic players to move into a big Latin American country, after getting more settled in the US and Europe. Triggit focuses mostly on the Facebook Exchange platform; Coelius said the company also had a bit of a learning curve in Brazil but has since seen success there. Social media analytics company SocialBakers reported that Brazil has more than 71 million monthly active users on Facebook, behind only the US.
“We’ve seen tremendous adoption down there," Coelius added. "The performance is so good that very early on, a couple of innovative advertisers started to experiment with FBX when it first came out, and it worked well. Now I would say it’s probably the most active market for FBX in the world."
In March, Coelius wrote a blog post showing how, despite having more monthly active users, the US market for FBX is smaller than Brazil's because the number of retargeting opportunities in a day for a pixeled user on Facebook is often higher in Latin American countries.
Data shows that consumers are highly engaged – even as broadband penetration and infrastructure aren't quite up to speed (literally) – and are heavy users of Facebook, which will boost RTB in the country, thanks to FBX.
According to comScore's Brazil Digital Future in Focus 2013 report, Brazilians spend 27 hours a month online via their PCs, which is the most out of any Latin American country; in December 2012 they spent an average of nearly 10 hours on social networking sites. More than 60% of the Brazilian online audience is under the age of 35, and along with improving broadband penetration as the years pass, more Brazilians will be online and on social media, in addition to watching the ever-popular TV.
"The online advertising space in Brazil is vibrant," said Alex Banks, MD for comScore Brazil. "We’re seeing the ad spend, the percentage dedicated to digital, steadily increasing. But the traditional mindset of 'TV is king' is proving rather difficult to break away from."
He added that US and European ad tech companies are coming down on "fact-finding missions" and reaching out to the IAB to learn more about the opportunity. When it comes to RTB, Banks said, "we have a lot of clients here in Brazil who are still very curious as to how this works. A lot of people in Brazil came from traditional media and all of a sudden had to learn digital. I see RTB platforms and all of those players bringing an extra level of efficiency to the digital advertising ecosystem, but that’s yet another thing for people to have to learn and understand and begin to feel comfortable with."
When it comes to social media — and this is also relevant to the RTB discussion — Facebook is by far the most popular site. Of time spent on social networks in Brazil, 92.8% was spent on Facebook, so the introduction of Facebook Exchange in Brazil in 2012 was a major event.
Clark Fredricksen, VP at eMarketer, noted the importance of big players like Facebook and Google: "Growth will rely on how much platforms such as Facebook and Google decide to invest in Brazil. The more they invest in Brazil, the more they will work with ad partners to improve infrastructure and improve the ability to make larger ad buys."
While marketers, ad tech companies and others working in the Brazilian online advertising space deal with educating advertisers and working to bring online advertising to the same level as television (or at least a bit closer), the overall future of advertising in post-Olympics Brazil is unclear.
Onofre said the challenge for a large marketer like P&G is keeping the marketing team and partners educated about the newest and best tools to use.
Turn's de Almeida suggested that a challenge in Latin America is "a lack of third-party data. Within programmatic buying, that makes it a bit more challenging, of course, but it’s picking up fast. I would imagine in the next 12 months we’ll be up to speed."
As an emerging market, and one with highly active consumers, Brazil will be the place to watch. RTB is still very new there, but with the advertising industry and brands already learning best practices and tactics for RTB in the US, the transition to a market such as Brazil may be easier.
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