Widespread social unrest and economic volatility during H2 2019 greatly disrupted market dynamics in several countries across Latin America. 2020 was expected to be a year of recovery and economic growth, but the arrival of COVID-19 on February 26 put a damper on such expectations.
Since then, the region has become a new epicenter of the pandemic. According to Johns Hopkins University, 3.6 million people in Latin America and the Caribbean had tested positive for COVID-19 as of July 17, accounting for more than one-quarter (26.1%) of confirmed cases worldwide.
The fallout from the coronavirus and the political turmoil seen throughout the region in recent months will have more negative consequences for traditional media this year than for digital media. While we expect traditional media outlays to decrease by 17.5%, digital will continue to grow in terms of share and real investment as advertisers pivot their ad budgets toward online channels amid market volatility.
From 2015 to 2020, digital ad spending in Latin America more than doubled from $4.18 billion to $9.33 billion. That means, for the first time, digital will account for nearly 40% of the regional ad market. Under these current circumstances, this share should further improve in the years ahead.
Given digital’s rapid acceleration across Latin America, our core six countries will all secure a spot in this year’s top 10 fastest-growing digital ad markets worldwide for the first time. Among the 37 markets we forecast, Colombia (11.2%), Chile (5.9%) and Brazil (5.2%) will rank first, second and third, coming in ahead of China (5.0%). Argentina and Mexico will come in fifth and sixth place, respectively. Peru will be right on the heels of Finland and Russia, in 10th, since the two countries will tie for ninth place.
Even though digital ad spending in Latin America tilts toward display—like social media and video—advertisers should keep search on their radar as retail ecommerce adoption surges in “other” emerging markets—like Colombia, Chile and Peru (22.6%)—as well as Mexico (20.9%).
For example, digital buyers in Mexico were roughly 1.5 times more likely to consult search engines (64%) than social media (44%) before deciding to make a purchase, according to a January 2020 Asociación Mexicana de Venta Online (AMVO) survey conducted by Netquest.
Professionals in Latin America have also shown a growing interest in search as evidenced in a March 2020 Rock Content survey. Among the 55.8% of respondents whose companies implemented an SEO strategy, 39.5% said their companies planned to increase SEO spending in 2020. Some 44.2% said spending would stay the same, while only 8.2% planned to decrease expenditures.
Overall, search advertising will be an effective way for brands to target consumers with relevant ads as consumer spending habits shift online in response to this “new normal.” Advertisers that adapt their digital strategies and formats accordingly will be able to influence consumers’ purchase decisions at the discovery and consideration stages of the consumer journey.