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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.

Brazil: +12%

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.

Mexico: +5%

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.

Argentina: +24%

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: +5%

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.

 

With increasing pressure from digital, broadcasters will strut their best and brightest stuff this week. Here’s what media buyers from Zubi Advertising, Horizon Media, Havas Media, Dieste, Bromley and Innocean USA expect.

-baila-si-puedes-1971641
Azteca’s Baila si Puedes

Ahead of the TV Upfronts, Azteca America gave a sneak preview of “La Hora Ganadora,” an hour of family-oriented programming that will rotate shows in short seasons of a few weeks.

Says Manuel Abud, president and CEO of Azteca America, “For advertisers, it means I am committing to a genre that will bring a similar type of viewership.”

“La Hora Ganadora” offerings include dance competition “Baila si Puedes” and game show “El Rival Más Débil.” Each show will run for around eight weeks. Abud says of the new approach, “It’s getting more difficult to get an audience engaged for a longer period of time, so we don’t ask for such a big commitment as in the past.”

La Hora Ganadora
La Hora Ganadora

His statement is central to the conundrum of the Upfronts, as networks try to get advertisers and agencies excited enough about shows to put big bucks upfront – as viewing habits and media consumption change.

TV: Still Relevant

Make no mistake, though. TV as we know it is not going away, and neither are the Upfronts. Certainly, TV consumption overall is changing, with people – especially younger people – watching less broadcast and more over-the-top and direct-to-digital video. Nevertheless, media buyers say television is important for reach.

karina-dobarro-188“We are dealing with a consumer that over-consumes media, so we are still able to find them through linear TV as well as online video,” says Karina Dobarro, vice president and managing director of multicultural brand strategy for Horizon Media.

Media buyers agree that television remains the fastest and best way to generate reach, even as it evolves.

Media buyers agree that television remains the fastest and best way to generate reach, even as it evolves. It’s important even when reaching Hispanic millennials, according to Isabella Sanchez, vice president of media integration for Zubi Advertising – and so is Spanish-language programming. “People think millennial equals English, and that’s not necessarily the case. Millennials just happen to be younger. If you look at Univision’s numbers on any given day, they have a huge foothold on the 18-to-34-year-old populations,” she says.

Isabella Sanchez_Zubi_BW
Isabella Sanchez, Zubi

A case in point is the gigante gap in Sunday-night television that will be left with the demise of the elderly and beloved Sabado Gigante. Univision may reveal a replacement during its upfront. Says Sanchez, “It looks like a dated program, but millions of people watch it. I have no doubt Univision will come up with something tremendous as a replacement.”

Sabado Gigante looks like a dated program but millions of people watch it. I have no doubt Univision will come up with something tremendous as a replacement.

Meanwhile, says Dobarro, the end of the show “represents an opportunity to continue to attract their current TV audience while trying to grow that younger audience.”

Broadcasters Expand Digital

Of course, digital placements on network dotcoms have been available for years. As TV consumption continues to move fluidly across screens, media buyers are interested in seeing how networks will showcase and handle digital.

At last year’s Upfront, Azteca America announced a partnership with YouToo Technologies, a “social TV platform.” This year, Azteca and YouToo will offer online and mobile trivia games for new programming including “La Hora Ganadora” and “Viernes Futbolero.”

Manuel Abud foto
Manuel Abud, Azteca America

Abud says, “Digital will be a bigger part of the upfronts in general. As the technology keeps moving, we will.” Because consumers have become device-agnostic when viewing TV, he says, “My focus is on developing content-centric franchises.”

Eric Bader, CMO of RadiumOne, a provider of programmatic advertising solutions, points out that television and digital aren’t so much at odds with each other when it comes to marketing goals. He says, “Television is essentially designed to meet brand and exposure metrics at the top of the funnel. Digital has effectively grown to service the bottom of the funnel and more direct marketing expectations.” Instead of buyers trying to decide which content is superior, or how much budget should go to TV versus digital, he advises, “The first thing that has to happen is that the advertiser has a full picture of both the brand goals and the direct engagement goals. It has to start with the measurement goals being defined, and then going into the market and seeing where you will find the audience that meets these goals.”

Says James Zayti, group director of Hyundai Media at Innocean USA, “We have to think about all the touchpoints where someone buying a car would be viewing content. For younger consumers, that would be more digital touchpoints, but we definitely need a marriage of both.”

Horizon Media’s Dobarro has seen a shift in how Spanish-language networks position their digital offerings. While they used to compare their online video to established, digital-native content companies like Yahoo, now they are going up against other broadcaster dotcoms. “It’s more of an even playing field for them,” she says. “They have realized they are not going to be able to gain the audience and reach of Google, for example.”

Still, much more needs to be done, according to Sue De Lopez, group account director for Bromley. The new marketing model, she says, is “dynamic, always-on and iterative. There is a tremendous void in multi-platform and multicultural content right now.”

She is seeing advertiser budgets shift from television to digital and to multiscreen. In fact, Bromley has shifted its own rhetoric, now talking about “video” instead of TV/digital; and it now sees its teams as working in content instead of advertising.

Meanwhile, De Lopez says, “Broadcasters are offering digital, but the units they offer are basic, the same old units: banners, static, B-roll videos. It’s all very cookie cutter. Brands and agencies are looking beyond the expected digital offerings. We want to know how we can tap into culturally relevant digital content that is customizable, so brands can fit in in a very organic way.”

The question of rates

In earlier days, broadcasters may have thrown in some digital advertising on their dotcoms as a value-add. With today’s shift to digital, that would be crazy.

Says Bader of RadiumOne, “Now they are bundling it in a different financial package, because there is more viewership on those platforms.”

Abud says that Azteca will be flexible – but not give freebies. “There are some clients that want to deal with digital separately, some want to see it as a combined effort,” he says. So, some advertiser budget that formerly went to Azteca broadcast may now be split. He adds, “Digital is still a complement for broadcast. Someday it will have a life of its own, but I’m not there yet.”

Univision has one strong property next year — soccer — and will probably try to bring in a lot of revenue for that

Zubi’s Sanchez acknowledges, “Everyone always wants to increase their rates; it’s the game we’ve all been playing for years. They ask for a lot and then buyers fight them on it.” She thinks that more cross-platform opportunities can help networks increase revenue without raising television rates. She notes, “Univision typically has led the pack in setting CPM increases. They have one strong property next year — soccer — and will probably try to bring in a lot of revenue for that. But all predictions say it will be a soft upfront when talking about base programming.”

Greater accountability from networks

Measurement continues to be a concern of TV buyers. Dave Morgan, CEO of Simulmedia, says, “There is no question we will see a greater use of data. There is a lot of rhetoric with buyside and sellside positioning, both saying they are bringing their best data to the table.” Simulmedia uses data to aggregate audiences for agencies and advertisers, mostly in the scatter market. “Brands and marketers themselves are clear that they want true ROI, but that isn’t how most TV media has historically been bought.”

Joseph Abruzzo, Havas Media
Joseph Abruzzo, Havas Media

Joseph Abruzzo, chief exploration officer for Havas Media, concurs. “One thing that’s changing is networks are very interested in protecting their revenue base. They will be selling greater accountability [by] starting to offer data-infused targeting options,” he says.

For example, Azteca is working with Furious Corp, the Nielsen-funded startup that works with television programmers to use real-time data from smart TVs and other connected devices to plan and optimize revenue across platforms. Meanwhile, Turner Broadcasting System, CBS and NBCUniversal have announced initiatives to add performance-based metrics to TV buying.

Abruzzo says that merging third-party data sets gives broadcasters the ability to create richer profiles of those who are actually watching a program, so an advertiser could target, for example, people who are most likely to buy a Lexus. “These are still linear buys,” he says, “but you are buying a program that has an audience composition mostly made up of [your target audience].”

Better targeting is especially important to buyers on multicultural desks, according to Greg Knipp, CEO of Dieste. “In our space in past, it’s been Univision and Telemundo, and then you fill in around those two. As we get more sophisticated in segmenting our audience, and the more targeting we can get in traditional media, the better off we’ll be.”

Knipp expects even greater shifts in the media landscape in years to come. He notes that a lot of the most talked-about content among young Hispanics and bi-culturals is stuff you can’t buy: programs like “Game of Thrones” and “Orange is the New Black.” Acknowledging that broadcasters must be more conservative than OTT providers, the question he sees is, “How will we reach this audience that is watching things that don’t have advertising?” The answer, in his opinion, is using data from set-top boxes and smart TVs, combined with third-party data, to get better addressability.

Morgan of Simulmedia thinks it’s possible that measurement could actually show that some TV spots are undervalued. His question for agencies is, “Now that you have sellers willing to sell on ROI, are buyers willing to buy on ROI?”

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What: CNN Latino ends television programming after broadcasting for a year in Spanish for the  U.S. Hispanic market.  CNN  en espanol (in Spanish), the Spanish-language version of CNN that is mostly aired in Latin America, will continue on air.
Why it matters: CNN Latino did not meet revenue expectations. The failure highlights the challenge in building a Spanish language news network targeting the U.S. Hispanic market. 

Translated by Celeste Martorana

CNN Latino -CNN Latino, the news network directed to the Hispanic market in the US, will close down its programming operations after a year, this February.

“CNN Latino was a bold effort to emphasize CNN’s commitment to the Hispanic market in the United States,” said Isabel Bucaram , a spokeswoman for CNN in Spanish.

“During 2013 we learned a lot and will use that knowledge to continue to innovate and evolve our presence in the Hispanic community in the United States,” Bucaram added.

Unluckily, despite the best efforts of many people, CNN Latino did not meet business expectations  and its programming will finish this month.

CNN in Spanish, the Spanish-language version of CNN, will continue on air.

CNN Latino’s history

CNN Latino began operating from Los Angeles in January 2013. Months later, it expanded coverage to Miami, where it began broadcasting on August 19 including a programming Spanish block made for the US Hispanic market.

CNN Latino Miami programming included shows like “Cala” featuring Ismael Cala, “Maria Elvira,” with María Elvira Salazar, “Showbiz Latino”, CNN Vida, “Buenos días Miami” with Tomás García Fusté y “Prohibido callarse” with Roberto Rodríguez Tejera.

The programs were transmitted on Channel 18 WDFL open signal, Comcast Channel 18, AT & T channel 20 and Atlantic Broadband channel 82. In addition, it was broadcast to other markets such as Los Angeles, New York, Orlando, Tampa, Phoenix and Salt Lake City, where they calculated it reached more than a third part of all Hispanic households in the United States.