Nokia to double or triple Latam Advertising expenditure
What: According to Jorge Laverde, Head of Marketing Latin America at Nokia Services y Devices -the unit that recently was bought by Microsoft - Nokia's Latin American Advertising expenditures will double or even triple in the medium term.
Why it matters: Ad investment could climb to up to US $240 million from currently US$ 80 million a year. It is not clear yet whether there will be agency consolidation.
Jorge Laverde, Marketing Head Latin America at Nokia, tells Portada that he expects Microsoft to substantially support Nokia Services and Devices advertising expenditure in Latin America over the coming years. Currently Nokia spends approximately US $80 million annually advertising in Latin America. Laverde expects this figure to climb to between US $160 million and US $240 million as a result of the recent Nokia acquisition by Microsoft.
"For some time, there has been a process of cooperation and alignment between Microsoft and Nokia. Microsoft has already supported Nokia's Latin American advertising campaigns. Going forward there are 8 countries worldwide, where Microsoft will substantially support Nokia campaigns. In Latin America they are Brazil and Mexico."
Nokia Services and Devices will be integrated into Microsoft as a business unit. Laverde emphasizes that with the transaction Microsoft has acquired the know how of Nokia Services and Devices 32,000 employees as well as of Nokia's agencies. He expects very few layoffs as a result of the merger. "Particularly sales and marketing is an area where we are not looking to eliminate positions."
Advertising expenditures will particulary grow in the Mexican and Brazilian markets.
Laverde tells Portada that the acquisition of Nokia Services and Devices by Microsoft will be closed during the first quarter of 2014. He does not expect any changes in terms of the agencies Nokia uses in Latin America until April of 2014. At that point, "we could go one way or the other," he notes. On one hand, Nokia Services & Devices may continue with its current agencies as a unit of Microsoft. On the other hand, he notes, it is possible that some agency tasks migrate to Microsoft agencies as Microsoft may want to consolidate the Nokia business into some of its existing agency relationship (UM plays an important role as Microsoft media agency for Latin America). Nokia's main agencies in Latin America are Carat for media, JWT for creative and Wunderman for digital.
Major player in the Latam phone market
Laverde says that, from a consumer standpoint, the purchase of Nokia Services & Devices is a very positive development. The transaction merges the financial muscle of Microsoft with Nokia's know how. Windows, which is carried by Nokia-Lumia, is the second most used mobile operating system in Latin America after Google's Android. "Windows phone market share has actually increased in several Latin American markets, including Mexico and Colombia," Laverde says.
Due to the relatively low penetration of smartphones in Latin America, Nokia's Latin American cell phone market share is very high. In sales volume smartphones amount to 35% of the overall Latin American phone business. That ratio is at least 15 percentage points higher in the U.S. and Europe.