What: MAGNA has released its summer 2019 update of advertising forecasts, which predict the Latin American advertising market to grow by +7.3% this year. Why it matters: Global market growth is slowing down compared to the record growth recorded in 2018 (+8%), mostly due to the lack of major cyclical events in 2019.
According to the latest MAGNA report, global advertising revenues are forecast to grow by +5% to reach US $600 billion in 2019. This is 3% less than 2018 growth, a difference that is due to the absence of major cyclical events this year. As the report mentions, this lack of cyclical events will affect editorial media that generally benefit from them, such as TV, print, radio, video, etc. Magna predicts editorial ad revenues to stagnate at US $366 billion this year, while direct digital ad sales, including search and social formats, will grow by +15%.
“Global ad spend continues to grow as the economy remains strong in key markets but two factors are slowing down the growth rates in 2019: one is cyclical (the lack of major events in 2019, following a record year in 2018) while the other is structural,” said Vincent Létang, EVP, Global Market Intelligence at MAGNA, and author of the report. “Digital ad formats now account for more than half of total advertising sales. However, product innovation (smart homes, cloud services, OTT, 5G) and marketing innovation (direct-to-consumer brands) will continue to drive ad spend growth this year and the next.”
Among the key predictions in the report, MAGNA forecasts ad spend will grow in all key markets this year, television ad revenues will shrink by -2%, print ad sales will decline by -10% and radio by -1%. Also, OOH will continue to outperform traditional media, and social media will be the fastest-growing digital format in 2019 (+23%) ahead of video (+22%), and search (+13%).
Also, MAGNA predicts that digital advertising revenues will grow by +14% this year, to reach US $304 billion, more than half of the total global advertising economy (51%). In 2020, digital advertising will grow by double digits again. The report points out that digital advertising growth has slowed down compared to the previous four years, which had been expected because digital media penetration is now near universal in many markets. However, growth remains strong: MAGNA anticipates search ad sales to grow by +13% this year, while social ad sales will grow by +23% and digital video by +22%.
Moreover, MAGNA’s report states that thefastest-growing markets will be Argentina and the Ukraine (both +22%) where ad spend is driven by hyper-inflation. Other emerging markets that will grow around doublé digits or more are India (+15%), Egypt (+19%), Vietnam (+11%), and Brazil (+9%). Asia Pacific and Latin America will be the fastest growing regions (+7.4% and +7.3% respectively).
For 2020, MAGNA forecasts global advertising to grow yet again, for the eleventh consecutive year. Linear ad revenues will reportedly stabilize while digital ad sales will grow by +11%. Total advertising sales will reach US $627 billion thanks to the return of events like the Summer Olympics, the U.S. Presidential elections, and the European Football Championship.
What: A summary of the most relevant consumer insight research in the US, US Hispanic, and Latin American markets. Why it matters: If you’re trying to keep up with the latest happenings, this is your one-stop shop.
STR’s Consumer Travel Insights 2019report series revealed 69% of global travelers used online review sites for their most recent trips. Word of mouth was very important for 51% of travelers, who used personal recommendations to help plan their trip. Of those who booked their holiday through an OTA, 55% used the service because it enabled comparison of multiple accommodation options. Only 29% of travelers used the service because it offered the best deal. 41% of travelers have at some point used Airbnb, with 92% being aware of the property sharing service.
According to new data by Nielsen, frozen, fully cooked chicken wings are still a very popular Super Bowl food. Deli counter wings remain a popular option for fully cooked chicken wings (with sales up 15% to $650 million from $565 million last year). Fresh wings have also skyrocketed, with sales up 31.4% in the past year. Moreover, online wing sales in the seven days leading up to and including the Super Bowl catapulted from $7,984,198 in 2017 to $11,562,723 in 2018, a 45% increase.
According to the new study conducted by MAGNA, IPG Media Lab and ViralGains, obtaining and responding to consumer sentiment is crucial to optimizing the consumer ad journey. The study tested two video ad journeys among 6,000 consumers in the third quarter of 2018. On average, 59% of ad impressions were wasted with standard video retargeting. Consumers on a sentiment-driven journey were more likely to take action – 7x more likely to search for the brand and 2x more likely to visit the brand’s website.
Food companies target Hispanic and black youth with advertisements almost exclusively for fast food, candy, sugary drinks, and unhealthy snacks, according to a new report by the University of Connecticut, DrexelUniversity, and the Universityof Texas Health Science Center. Those unhealthy foods represented 86% of food advertising spent on black-targeted television programming, and 82% of advertising spending on Spanish-language television, in 2017, the study found.
Seventy-three percent of Republicans in a Pew Research Center study say the media does not understand them. The study found that Republicans surveyed felt misunderstood by the media, regardless of demographic traits and media consumption habits. Across the aisle, 40% of Democrats in the survey felt misunderstood, while 58% felt understood by news organizations.
Also according to Pew Research Center’s data, Hispanics are on track to be the largest racial or ethnic group to be eligible to vote in a presidential election. According to Pew, Hispanics are projected to be about 13.3% of the electorate in 2020, which would make them the largest racial or ethnic minority of the electorate for the first time. In 2016, Hispanics were 11.9% of the electorate; African-Americans were 12.5% and are projected to remain the same in 2020.
What: MAGNA LatAm has released its ad spending forecasts for 2019 in the different Latin American markets. Why it matters: MAGNA’s predictions show an overall optimism that has to do with the new stability of economies, the presidential elections in five countries, and the 2018 FIFA World Cup. However, political uncertainty could bring unpredictable effects in 2019.
According to a recent statement, media forecaster MAGNA (@MAGNAGLOBAL) has predicted advertising revenue to grow in Latin America by 7.6% in 2019, reaching US $28.5 billion. If true, this would mean a 9.6% deceleration. In 2018, regional markets benefited greatly from economic stabilization and short-term cyclic drivers such as elections and FIFA’s soccer World Cup (@FIFAWorldCup), which was the most connected sports tournament ever, and had direct attention from the seven classified Latin American countries.
Digital is expected to become the most important media format by 2023, but even then it will account for a mere 50% of all ad spending.
In the words of Karla Natareno, Regional Head Latin America, MAGNA, “In 2018, ad spending in Latin America was boosted by the stabilization of the economy, presidential elections in five countries, and the 2018 FIFA World Cup. In 2019, however, the high level of political and economic uncertainty, as well of the lack of global sports events, will take its toll.”
The landscape seems a bit uncertain, as the great political changes in five regions could have a negative effect on commercial trust and marketing spend. A 7.6% growth will not have enough impact once we take into account economic inflation, stated MAGNA. Hopefully, the Copa América (@CopaAmerica) in Brazil (will make up for the lack of a World Cup to a certain extent.
Television Prevails, Digital Might Catch Up in a Few Years
Television is still the most important media category in Latin America, and it is expected to account for 51% of all ad spending in 2019, way above the global 31% average. Television is expected to stay in its leading position until 2023, when Digital will become the main media format in the region. In certain markets, such as Argentina and Brazil, Digital is already surpassing TV by a small margin, but in others, such as Mexico, TV is definitely above all other formats.
Digital advertising will grow by 19% in 2019. However, in spite of its solid two-digit growth, and even though it now accounts for 34% of all ad investment in Latin America, it’s way below the global 49% average. This is not only due to the fact that TV prevails over digital, but also to the importance of print and radio. Digital is expected to become the most important media format by 2023, but even then it will account for a mere 50% of all ad spending.
What: UCI, IPG Media Lab, and MAGNA have revealed the results of their study “Marketing to the Hispanic Mindset”. Why it matters: In-language and in-culture video ads are more engaging for Hispanics, at times twice as effective as non-contextual targeted ads.
“Marketing to the Hispanic Mindset”, a new study by Univision Communications Inc (UCI) in partnership with IPG Media Lab, and MAGNA (an intelligence and innovation unit within IPG Mediabrands), has proved that contextual targeting in digital video ads can double purchase intent among Hispanics.
Marketers need to understand how to strengthen their connection to Hispanics, whose spending power is projected to reach $1.7 trillion by 2019 and grow by 85% over the next 10 years. The study, conducted across mobile and desktop devices, focused on how topic, language, and culture have an effect on the relationship between consumers and brands.
“We’ve long known the benefits of tailoring brand ads to reach U.S. Hispanics via Spanish-language content and Hispanic cultural nuances,” said Roberto Ruíz, EVP of Research, Insights & Analytics at UCI. “By using breakthrough technology to conduct research on mobile devices and utilizing facial coding technology, this study goes a step further to prove that the content used while running an ad is just as important. We found that ads created to reach the Hispanic consumer work best when they run alongside in-language and in-culture content, helping marketers create deeper and more meaningful connections with this burgeoning demographic.”
One of the key findings was that language and cultural targeting are important for deepening relationships between consumers and brands, as they capture and maintain the user’s attention throughout the ad, allowing the brand to communicate its message successfully. According to the study, language-targeted ads are twice as effective among total Hispanics, while for Spanish dominant Hispanics, language targeting increased brand relevance.
Moreover, facial coding showed that Hispanics see cultural targeting as a better experience in mobile devices: 60% among the 6,000 interviewees showed more emotion when watching culturally targeted ads than non-culturally targeted ones. In-culture ads were twice as effective at making consumers wanting to recommend the brand more.
“We have intuitively known that context is important in advertising, but we were surprised to see the exact same ad performed best by addressing language and culture,” said Kara Manatt, SVP, Intelligence Solutions Strategy at MAGNA. “We were pleased to be able to explore this topic in depth, especially given the purchasing power of the Hispanic audience.”
For the study, the representative Spanish-speaking sample could select video content according to their preferences. Participants were randomly shown a control or test video ad, which ran as pre-roll. Facial coding technology was then used to record attention and emotions throughout the duration of the video played on each device: webcam for PC and camera for smartphone. The impact of the same ads was compared to each other, allowing researchers to understand the effect of context while tracking differences of effectiveness in individual ads.
What: Latin American media owners’ net advertising revenues (NAR) to grow by +9.3% in 2018, to US$26.3 billion, following a +7.3% growth in 2017; thanks to a more robust economic recovery in the region, according to MAGNA. Why it matters: Television remains the top media category in the region with 54% of total advertising sales while Digital advertising in Latin America remains lower than the global average.
MAGNA is expecting Latin American media owners’ net advertising revenues (NAR) to grow by +9.3% in 2018, to US$26.3 billion, following a +7.3% growth in 2017, thanks to a more robust economic recovery in the region. The latest IMF update forecasts real GDP growth of +1.9% next year in the region, compared to +1.7% in 2017 and -0.9% in 2016. Economic recovery remains extremely fragile, however, and political instability continues to loom over several countries, including Brazil.
A +9% growth would not be that impressive considering the high levels of economic inflation in the region, and the growth rates experienced pre-2014 that usually range between 10 and 15%. However, that would the strongest growth rate since 2013.
Ad spend trends continue to vary by country. Digital switch-overs, the introduction of new TV channels, government reconstruction programs in natural disaster areas, and elections are all expected to impact marketing activity and advertising spending. Nevertheless, most LATAM markets are expected to see slightly higher ad spend growth in 2018 versus 2017, as economies in the region are stabilizing and benefitting from the recovery of commodity prices.
Television remains the top media category in the region with 54% of total advertising sales at the end of 2017
Television remains the top media category in the region with 54% of total advertising sales at the end of 2017, way above the global average (35%). Television is forecast to hold its media leadership until 2021, when digital finally becomes the top media format in Argentina and Brazil. Free-to-air TV is the dominant segment (+4% in 2018) controlling 80% of total TV NAR but Pay TV is experiencing faster growth (+6% in 2018) as subscription fees and programing are gradually becoming more attractive. Another driver is the change in selling models, from a cable model (where advertisers buy packaged airtime with little control over which channels their campaign appear on) to a direct sales model (where advertisers and agencies buy from individual Pay TV vendors). This is taking place in Chile and Uruguay, for example.
Television will benefit from increased viewing and brand interest around the FIFA World Cup as usual, although the excitement may not be quite as high as four years ago when the tournament was hosted by Brazil; time difference may also be an issue but the event is still guaranteed to boost TV ad sales especially in the eight nations that qualified this year: Brazil, Argentina, Uruguay, Colombia and Peru in South America, as well as Mexico, Costa Rica and Panama for Central America.
Digital advertising in Latin America remains lower than the global average, inhibited by a relatively low digital penetration and the sheer power of television. It is expected to grow by +23% to reach 32% total media share at the end of 2018, still well below the global average of 44%. Social media (+30%) and digital video (+33%) will grow significantly again next year, while search (+21%) remains the number one media type with 36% of total digital ad sales.
With BRL 49 billion in NAR (approx. $14 billion), Brazil is the sixth largest advertising market in the world and accounts for over half of LATAM’s advertising spend.
Brazil’s economy has begun to stabilize from the recession in 2015 and 2016. Real GDP will grow by +1.5% in 2018, accelerating mildly after the stabilization of 2017 (+0.7%) and the severe recession of 2016 (-3.6%), while Consumer Price Index (CPI) inflation has dropped from its peak of 9% in 2015 to just 4% expected in 2018. Media cost inflation, on the other hand, remains high (between 6% and 10% across media categories). Business confidence however, continues to be hindered by political instability with unelected President Michel Temer, successor to impeached president Dilma Rousseff, himself facing various corruption scandals. The next presidential election, scheduled for October 2018, will hopefully clarify the political environment but is not expected to directly affect advertising spend, as parties are not allowed to buy television advertising time.
In that mixed environment, MAGNA anticipate media owner NAR to grow by +11.8% in 2018 following a decent performance in 2017 (+9.7%). That will be driven by strong digital growth (+23%) coupled with robust TV ad sales: +5.4% for free-to-air channels and +9.2% for pay TV. The FIFA World Cup, which will air on Globo, SporTV, and FOX Sports, will help drive cost inflation (CPM +9%) and offset declines in viewing.
Mobile advertising is growing dramatically (+52% in 2017) and now accounts for over 55% of digital advertising expenditures in Brazil. Internet and mobile penetration rates reached around 60% in 2017 and will continue to grow over the next five years. Google, Facebook, and YouTube dominate the search, social, and video markets, reaching of over 90% of the total internet audience.
Digital advertising in Latin America remains lower than the global average, inhibited by a relatively low digital penetration and the sheer power of television.
Mexican media companies’ net advertising revenues will grow by +5% in 2018, to 92 billion pesos (approx. $4.9 billion). Mexico’s participation to the FIFA World Cup typically drives TV ad sales up, but that may not be enough to prevent TV NAR from decreasing (-1% to $43 billion pesos). Presidential elections are scheduled that take place in July 2018 but should not have a direct impact on TV revenues as political parties are not allowed to buy commercial air time beyond the free minutes allocated by Law.
Ad growth will be primarily driven by a +16% growth in digital ad sales (rising to a 31% market share) while print NAR will decrease by -5%, radio will increase by +5% and OOH NAR will grow by almost +8%.
The extinction of analogue terrestrial broadcasting at the beginning of 2016 disrupted television reception and introduced new digital channels competing with incumbent broadcasters Televisa and Azteca. That in turn created audience fragmentation and cost inflation (20%+) in Free TV CPMs as well as in digital video. CPM inflation has nevertheless cooled down in 2017 and will remain moderate in 2018 (+5%)
Online Video has been growing faster than any other ad format and already accounts for 32% of digital advertising, more than double its global share of 13%. Alongside Youtube, Facebook is becoming another important video advertising platform, especially in Mexico, where the social network has close to 80 million monthly active users. In addition, Mexico has one of the highest smartphone penetrations, driving mobile ad sales to grow by +22% in 2018, accounting for 64% of ad spend.
Advertising sales in Argentina will grow by +24% in 2018 to reach 100 billion pesos (approx. $6.7 billion at a constant average 2016 exchange rate).
The economy began to stabilize in 2017, when real GDP grew by +2.5%, and 2018 is expected to see continued economic growth and gradual slowdown in the inflation rates. CPI inflation is expected to slow from 27% in 2017 to 18% in 2018, and will continue to drop over the next five years.
Nominal advertising sales growth, which peaked at 47% in 2014, when inflation was around 40% per year, will thus also stabilize over the next five years, to around 10% per year.
Television is still the largest media in Argentina, accounting for 36% of total advertising sales. Newspapers remain relatively strong too with a market share of 19% at the end of 2017, significantly higher than regional and global averages (5% and 8% respectively); however the slow nominal growth rate (3% in 2018) means that the category is quickly losing share. TV NAR is expected to grow by 29% in 2018, driven by the FIFA World Cup and the last-minute qualification of the national squad.
Digital advertising is more developed than in the rest of Latin America. It already accounts for 32% of total advertising sales at the end of 2017, and will surpass television NAR by 2019.
Colombia’s net advertising revenues (NAR) will grow by +5.2% in 2018 to reach COP 4.8 trillion pesos (approx. $1.6 billion). The Colombian ad market ranks 4th in the region, behind Brazil, Argentina and Mexico.
Pay TV channels control more than half of TV NAR in Colombia, due to high multichannel penetration and reach. In 2018 Pay TV ad sales will grow by +7% and account for 58% of TV ad spend, while Free TV will grow by just +3%.
Digital media advertising is still very under-developed, accounting for 16% of total ad spend. It is the fastest growing media though (+27%), growing from a small base.
Furthermore, Colombia is in the process of a digital switch-over, expected to be completed by December 31, 2019. Television signals are currently offered in Simulcast (analogue and digital), allowing for everyone to continue watching terrestrial TV, a frequency resource to accommodate analogue and digital, and a transition period to full digital.
A new free national TV network, Canal Uno, was launched in August 2017 by Plural Comunicaciones. Although Canal Uno aims to become a competitor to the commercial duopoly of RCN and Caracol, Canal Uno cannot compete yet in terms of coverage. However, as the digital switchover transition progresses, there are expectations it could reach 90% of the population by the end of 2018.
Some of Latin America’s other smaller markets will continue to experience ad spend growth.
What: IPG Mediabrands‘ MAGNA has closed an industry-first strategic partnership with Roku, Inc. to deliver targeted advertising to OTT audiences. Why it matters:Partnering with Roku builds on these efforts, enabling MAGNA clients to reach viewers who have shifted their TV consumption to OTT.
MAGNA, the intelligence, investment and innovation unit of IPG Mediabrands, announced an industry-first strategic partnership with Roku, Inc.to deliver targeted advertising to OTT audiences. Through this partnership, IPG Mediabrands clients will gain accelerated access to the advanced advertising capabilities of the Roku® platform, including precision targeting, programmatic workflows, interactivity, and audience measurement.
MAGNA’s partnership with Roku further cements the agency’s video diversification efforts. During the 2016 Upfronts, MAGNA secured the largest ever Google Preferred deal and shifted a portion of clients’ TV advertising spend to YouTube.
Partnering with Roku builds on these efforts, enabling MAGNA clients to reach viewers who have shifted their TV consumption to OTT. MAGNA clients already active with Roku include BMW, Coca-Cola, The Hershey Company, MillerCoors, JetBlue, Dunkin Donuts, Charles Schwab, IHOP, Sony Pictures Entertainment and Office Depot.
Digital advertising spend will surpass TV this year
“Last year, we made a concerted effort to provide marketers with viable sight, sound and motion opportunities beyond linear television,” said David Cohen, President, North America at MAGNA. “Now, we’re continuing to diversify the mix, transcending audience demographics while leveraging data in a new and exciting way through our partnership with Roku. They offer the most sophisticated OTT advertising path to reaching customers.”
“By integrating advanced ad technologies directly into our TV operating system, Roku is able to offer advertisers the most advanced ad capabilities in OTT,” said Scott Rosenberg, Vice President of Advertising at Roku. “This partnership accelerates our work with IPG Mediabrands, and opens the door to close collaboration on new ad products in 2017.”
OTT viewing, and digital video more generally, are growing rapidly. Ad-supported viewing is now the fastest-growing segment on the Roku platform, accounting for half of the top 250 most-watched channels. MAGNA’s latest Global Advertising Forecast, released in December 2016, which projected that digital advertising spend will surpass TV this year.MAGNA is actively expanding its television advertising strategy across emerging platforms like OTT, enabling the agency to provide client solutions at the pace of the consumer.