What: The challenge that newspapers and other print media face in Latin America to stay afloat through selling advertising.
Why It Matters: Brands are increasingly focused on the relevance of having a presence on digital media, also in Latin America.  but the decline  of print media is somewhat slower in Latin America compared to the United States.
According to a PWC Global study published in 2014, ad spending in print media in Latin America had reached US$4.8 billion, although that number has decreased by 3% annually since 2009.

Tomas Salvagni, the manager of the commercial division at Grupo Clarín and Guido Conterno, executive director of Grupo Diarios America,  agree that although print media is stalling, it is still an important advertising vehicle for brands.

“In Latin America, the impact of the industry crisis came by the end of 2013 and 2014,” explains Conterno. “There, we started to see a real change, one as significant as those in Europe and the U.S.”

The industry’s fall isn’t all that surprising, though. The challenges that international print media face are many. On the one hand, there is the surge of digital media, where all buyers want a presence, but consumer habits have also changed, and they don’t necessarily seek the same content on the same platforms as they used.

Guido Conterno
Print media’s biggest enemies are bandwith, wifi and flat rates for smart phones.

Plus, new graphic concepts and ways to display information have emerged, Salvagni and Conterno agree. That is why for print media to stay relevant it is key to adapt to new trends.

No more Church and State?

What’s more, the way that advertising is presented has changed. Before, editorial and commercial were separated by a clear line. Now, strategies like content marketing have revolutionized the concept of journalistic content.

“In the creative part, you can be more aggressive from a graphic design point of view. Content is more audacious, and there are ad formats that are more embedded and less intrusive,” admits Conterno.

Just as design and content have evolved, so have advertisers. Many have migrated to the digital world, but there are still “economic sectors that digitalize more quickly than others,” says Conterno. “For example, the auto industry has been quicker than retail, while education still uses a great deal of print.”

Tomas Salvagni

Tomas Salvagni

Clarín still finds the great majority of its advertising through advertisers from the service, banking and textile industries, admits Salvagni.

But print media doesn’t want to fall behind, so many properties that were born 100% in print, have substantially developed their own digital channels and have added them to their offerings for advertisers. “We offer combos to everyone that buys advertising,” says Conterno. “Our sales forces are all multi-platform and offer both media.”

We are in a maturation phase. We aren’t growing, but we are staying steady.

The same happens at Clarín, where “the commercial team has a very complex portfolio and the advertiser can choose multiple platforms.” Most of this strategy is related to integrating print with other supporting platforms.

“It seems like we are going against the current,” believes Salvagni. “Agencies believe that everything has to be digital. But it could just be a fad.”

While demand side platforms (DSPs) continue to propagate across Latin America, major supply side platforms entering the region experience some resistance from publishers or at least are not fully understood by them. So, are Latin American publishers really adopting SSPs or not? Lorena Hure, a digital marketing expert in our editorial staff, asked several major players to answer the above question.

14271338940_ddbbaf7a55_oAccording to experts interviewed by Portada, publishers are undergoing a paradigm shift, which calls for a period of training and adaptation to this relatively new technology.

On the one hand, supply side platforms seem to aid publishers in their selling process; however, on the other hand, as these platforms introduce the concept of cost-efficiency and automation, publishers are faced with the challenge of redefining their operations and business models.

According to Lucio Grimaldi, Managing Director for Latin America at Publicitas, “the main obstacle still remains a cultural and business shift in the way that publishers have been monetizing their digital inventories. Working with a SSP platform implies a completely different business model and this has been the major challenge for publishers, who have been working differently and relying on traditional digital sales for a long time. I also believe there is still a fear from publishers that the SSP model will ‘cannibalize’ traditional digital sales and reduce CPMs significantly. Thus, it’s key for publishers to have the right SSP partner/approach and a clear inventory and monetization strategy in order to be successful in this transition.”

The enormous opportunities and the evolution of Advertising technologies in Latin America will be examined in-depth by major experts of the brand marketing, agency, media and measurement world at the Portada’s Latam Summit on June 3 -4 in Miami (part of #Portadalat.)

The fact that some LatAm publishers consider the entrance of supply side platforms as potential threats to the level of their  eCPMs, is reflective of another important factor when it comes to challenges in the region: Lack of education. As Fernando Narcio, Regional Manager Latin America at PubMatic puts it “I think that the biggest obstacle for programmatic adoption in Latin America is education. Given the rapid change in the industry, many publishers need to be brought up to speed in terms of what programmatic is, what are the roles of the different players in the eco-system (DSPs, SSPs, Exchanges, DMPs, etc.) , and how  programmatic can  help them maximize the value of their digital assets.”

Even if Brazil often has its own logic, the situation is similar to the one experienced in the rest of Latin America. According to Rafael Pallarés, Manager Director at Aunica, “the Brazilian market faces several challenges regarding programmatic advertising, and the low levels of acumen among the digital community and loose guidelines are the greatest among them. As secondary challenges, publishers need to better organize and package data in order to take more value out of their assets, and players in the ecosystem should define their roles with more clarity – many players claim to be DMPs, DSPs or SSPs, for instance, without carrying the core expertise and technologies to claim so.”

 Publishers need to better organize and package data in order to take more value out of their assets.

SSPs platforms challenged

6969804173_e4651ecd8b_oAs we have seen, in order for publishers to incorporate supply side platforms across the board, not only training and education will be needed. Additionally, the lack of confidence in this technology needs to be overcome. This is quite a challenge for SSPs willing to gain new markets in the region.

 In order for publishers to incorporate supply side platforms across the board training and education is needed, this should help to overcome the lack of confidence that still exists in the technology.

Patrizio Zannatta, Managing Director Latin America at Rubicon Project, suggests that “ it’s certainly not for a lack of willingness to experiment or innovate. I think Latin America is in a similar position to Italy when I began working there for Rubicon Project: the only thing lacking was perhaps a little understanding and confidence in what is still a relatively new technology. In Italy, we saw the majority of the top 50 sellers embrace automated advertising within a matter of months. Every market is of course different and the way we have seen sellers using the technology in different, and often creative ways to suit their individual businesses could be especially interesting. Global media agency Magna Global predicted that programmatic will make up between 60 and 70% of digital ad revenues in the three major Latin American markets by 2018”.

When asked about the challenges being faced by publishers, Guido Conterno, executive director at GDA, stated that as for “supply side platforms, there is the fear of use of the cookie re-targeting the SSP can do, whereas as for programmatic buying, contextual audiences via programmatic are sold at low prices; user audiences and private deals have higher prices. Once these Private Marketplaces are set and there is no spillage of the Publisher’s Users cookies outside the market place, programmatic will grow in the region”.

The real challenge is not only on the part of the publishers who should implement this technology, but also on SSP service providers.

The adoption of Supply side platforms in LatinAmerica, even if not yet widespread, seems to be imminent. It is all a matter of seeing how 2015 develops, considering that there is a promising outlook for programmatic buying in the years to come. The real challenge is not only on the part of the publishers who should implement this technology, but also on SSP service providers who should work hand in hand with publishers in order to help them incorporate it.

The Latin America media and advertising markets are almost ruled by huge TV budgets. In this context, non-linear TV properties (e.g.  native digital properties as well as digital properties of magazines and newspapers ) have a tremendous opportunity to capture some of these TV advertising monies.

Lorena Hure contributed to this article.

GC_2008_400x400Guido Conterno, executive director at GDA, a consortium of major Latin American newspapers including Argentina’s La Nacion and Mexico’s El Mercurio,  says that  “newspaper and print based sites are rapidly incorporating video as a substitute of photos; once the processes are in place, and  robust webTV sites set, they will get a share of those investments.”

An important aspect that will greatly contribute to channel TV ad investment to the digital environment, is the technology provided by supply side platforms (SSPs).

2a39571According to Jorg Nowak, Head of Latin America at YuMe “This is certainly a global trend that is an important topic in LatAm as well.  Reason being is that clients request a faster turn around time to measure the ROI of the campaigns and that puts pressure on everyone in the campaign life cycle to work faster, as well as becoming even more detail oriented when it comes to categorizing the inventory by the various demographics. The latter can only be achieved by automating the process”.

An important aspect that will greatly contribute to deriving TV ad investment to the digital environment, is the technology provided by supply side platforms (SSPs).

However in Latin America, not so much in the U.S., it may take a while until traditional TV advertisers decide to transfer their budgets to digital video. For now, other experts tell Portada, most of the growth of online video comes from monies exiting display advertising (banner ads). Free TV ad and Pay-TV ad budgets, while much bigger budgets, are only threatened by online video in the medium and long terms.

066e2d4 As Carly Bellis, Co-Founder & CSO at Impaktu suggests: “I do not see this happening in the short-term, but it is possible that the shift will happen in the medium term, most likely via private marketplaces.  Right now the SSPs with inventory available in Latin America tend to have lower quality, non-local content at lower prices. From recent studies we also know there is a high incidence of fraudulent sites.  Local LatAm publishers with high quality, brand safe content do not want to lump in their content with the existing content and seemingly devalue their inventory.  The same is true in the U.S. with most premium publishers.  However, I do think that private marketplaces will be more readily adopted in the medium term, giving publishers more control over the buyers, the pricing and how their inventory is bought.”

Programmatic Video’s Latin American Infancy

Manny_0165(1)Manny Montilla, sales director at Adapt.tv (photos left), takes a similar position to Bellis: “I do see publishers adopting sell side platforms. However, I think it will happen in the medium term. Programmatic video is still largely in its infancy in Latin American markets. Right now there’s a lot of ‘toe dipping’ happening where publishers are brokering deals for their video inventory with a multitude of 3rd parties (mostly ad networks) who in-turn are trying to activate that inventory across programmatic partnerships and attract significant demand volume. As the comfort and education around transacting video increases and reasonable understanding is attained I think publishers (especially the larger ones) in Latin America will be losing out on major revenue if they don’t consider partnering with programmatic video solutions directly. The advantages of doing so are too compelling to ignore, especially as publishers establish their own private exchanges and start offering buyers more interesting slices of their inventory than would be available in a public market place.”

Major publishers in Latin America will be losing out on major revenue if they don’t consider partnering with programmatic video solutions directly.

What lies ahead?

The fact that implementing this technology would contribute greatly to deriving investment to the digital environment is confronted with the resistance publishers are confronted with.

iWl5-mjI_400x400As Eric Tourtel, General Manager for the Latin American market at Teads.tv (photo), says: “We also see some publishers that are a bit concerned about losing control of their inventory or their pricing, with some people incorrectly thinking that programmatic means ‘bought cheaply’ when in fact it means ‘bought automatically’. It is, however, simply a matter of training and sharing experiences”.

Programmatic does not mean ‘bought cheaply’ but ‘bought automatically’.

In short, even if everything shows TV ad investment will eventually be derived to the digital environment, there are a few challenges to be overcome first. So far, users are giving a positive sign to publishers with regards to their consumption habits; however, the implementation of the right technology to enable digital advertising in lieu of TV, might take some time.

The enormous opportunities and the evolution of the Latin American online video landscape will be examined in-depth by major experts of the brand marketing, agency, media and measurement world at Portada’s Latin Online Video Forum on June 3 in Miami (part of #Portadalat.)

CHECK OUT: 10 things you need to know about the Latin American Online Video Advertising Market

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