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While other countries can’t boast Brazil’s doubling of online ad spend in 2011, they’re actually not that far behind.
It’s projected that Mexico will join Brazil in having its online ad spend reach 10% of the country’s overall ad spend in 2011. This marks an increase of 3% compared to 2010, when online’s share of total ad spend was at 7%. This surge comes on top of Mexico’s 35% growth in online ad spend between 2009 and 2010, when it reached 3.3 million pesos ($273 million).
While Mexico’s 35% increase in online ad spend is impressive, other Latam markets are also heating up in this area:
- Argentina: 50% increase in online ad spend in 2010, 27% projected increase in 2011
- Chile: 29% increase in online ad spend in 2010, 35% projected increase in 2011
- Colombia: 56% increase in online ad spend in 2010, 40% projected increase in 2011
- Peru: 44% increase in online ad spend in 2010, 40% projected increase in 2011
- Uruguay: 40% increase in online ad spend in 2010, (no 2011 projections available yet)
Total online ad spend in Latin America is also on the way up. Zenith Optimedia projects that it will grow by 14.4% in 2011, 2012 and 2013.
Where the Money Is Going
In many countries, display banners still rule. They make up 70% of the digital ad spend in Chile, 83% of the digital ad spend in Colombia, 61% of the digital ad spend in Mexico and 50% of the digital ad spend in Argentina. Search advertising is relatively low in many Latin American countries when you consider how it dominates the online activities of many users. For example, a recent comScore study shows that as an activity search grew 34% in Brazil between March 2010 and March 2011. In the same period, it grew by 23% in Mexico, by 28% in Colombia and by 21% in Argentina.
Among the growth categories are social media (106% in Mexico in 2010) and online video. In fact, an IAB Uruguay study suggests that advertisers will spend more than 25% of their budgets on online video ads.
Factors Behind the Surge
Obviously, improved infrastructure has made a huge difference. The region’s hot economies are also playing a role. With better purchasing power, more people can connect by either buying computers or connecting via their smartphones. And in Brazil, LAN houses have opened up Internet access for class C consumers.
But beyond physical and economic factors, what’s important to note is the Internet’s role in purchasing decisions. comScore’s 2010 study on Latin American e-commerce reported that 97% of Argentine Internet users go online to research products before buying. The same pattern was found among users in Brazil (87%), Mexico (91%), Chile (90%), Colombia (94%) and Peru (91%). This suggests strongly that advertising online to drive retail traffic is a strategy that will yield rewarding ROI.
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