Entravision Closes Headway Purchase: Increase of Smartphone Usage and E-Commerce Key Rationales
What: Entravision's purchase of Headway officially closed on April 4. Portada talked with the main architects of the transaction: Headway CEO & Co-founder Martin Kogan and Esteban Lopez Blanco, Chief Strategy Officer at Entravision.
Why it matters: The rationales for the transaction offer interesting insights into the current state of the Latin American and U.S. Hispanic marketing industries. Headway was one of the very few still independent digital media companies in the space.
In a conversation with Portada, Blanco and Kogan stress that digital marketing currently is having very high growth rates in Latin America. In fact, Headway's Q1 2017/q1 2016 sales growth rate was of 90%. "We expect a growth rate of more than 40% for many years to come," Lopez Blanco notes. He adds that he estimates the share of digital revenues in Entravision's overall revenues to climb from 20% currently to 30% by 2019 or 2020.
Several factors substantiate expectations of a very high growth rate over the next decade: Buyoed by the growth in Internet access in Latin America, smart phone penetration is growing at a very high rate. Headway's Mobrain unit -an in-house mobile marketing platform- is benefiting of the growth in smart phone usage. Researcher Appsflyer, places Mobrain as the fifth most used mobile platform in Latin America, in a ranking led by Facebook, Google and Twitter. Mobrain offers advertisers solutions to achieve a high ROI and deal with challenges including fraud and the high fragmentation of mobile advertising inventory. Kogan emphasizes that Mobrain technology is "artificial intelligence applied to delivering KPI to marketers and solving fragmentation and fraud challenges."
A second rationale that underlies the purchase of Headway by Entravision is the growth of e-commerce in the Latin American and U.S. Hispanic markets. According to Kogan, "in the age of artificial intelligence and marketing automation, technology that improves clients ROI needed to be created. " This particularly applies to marketing and advertising strategies that ultimately convert Internet users into online buyers (e-commerce). The e-commerce space is in a relatively early stage in Latin America and that is why there is a lot of room for growth. Lopez Blanco claims that Entravision;s unit has set up partnerships with e-retailers for data cooperatives which allow a better targeting of U.S. Hispanic customers. "There are very few data cooperatives in Latin America; Headway's open platform DMP DataXpand is one of the very few exceptions. "DataXpand is the biggest exchange in Latin America. There are enormous growth opportunities to make attribution models work," notes Kogan.
There is a huge market outside of Facebook and Google which no serious advertiser can ignore.
Rounding Up Pulpo Media's Offerings
Entravision made a substantial foray into ad-tech when it bought Pulpo Media for US$ 15 million in 2014. Pulpo Media's main strength are its publisher relations. "Perhaps oversimplified, Pulpo Meda is a Supply Side Platform. We needed to go beyond that to look at other uses of technology and ways to do programmatic and focus on mobile," Lopez Blanco notes. According to Lopez Blanco, Headway's offerings round up Pulpo Media's products very well. In addition to mobile marketing platform Mobrain and DMP DataXpand, Headway offers other solutions with propietary technology, Kogan and Lopez Blanco claim. These include DSP MediaMath, which Headway resells and manages in Latin America.
"Headway has developed special algorithms on top of Mediamath", says Kogan. Both Kogan and Lopez Blanco expect that Pulpo Media's strong datasets about the U.S. Hispanic consumer and Headway's for Latin America will be excellent complements when it comes to increase advertiser ROI in the U.S. Hispanic and Latin American markets.