Does Social Media Mirror Reality?

Online users in LATAM are also connecting with brands on Facebook, with nine out of every ten users having connected with at least one brand on social media and, on average, maintaining 10 brand connections. This is encouraging news, at least at first glance. However, a closer examination of what’s really driving this behavior reveals that users tend to connect to brands primarily in response to marketing tactics; special offers and promotions, rather than true brand affinity. Secondary drivers hold more promise for deeper brand/customer engagement. Significant portions of users are looking for specific information and relevant, curated content; all opportunities for brands willing to invest time and funds into a strategic plan for social engagement. It is also important to note that one-quarter of those surveyed say they connect with brands they are passionate for. Understanding who these consumers are, identifying them, and courting them to the highest degree possible is likely to yield results or, at least, to keep your competitors from doing so (see Figure 21).

Few brands have done a good job facilitating deeper relationships with users on social media to date in Latin America, instead choosing to focus on the short-term and relying on discounts, promotions, or contests in exchange for a “like”. Brands tend to be cautious in the social media space, worried that one misstep, such as a wrong tweet, a misunderstood video, or an event that doesn’t meet expectations, can quickly go viral and harm the brand.

“One of the greatest challenges companies face in adjusting to the impact of social media, is knowing where to start.” -Simon Mainwaring

Now is the time to stop “playing it safe”. In the digital space, brands who take the risk of embracing a vision — which could provoke a negative reaction in some, but would also mobilize people, will more often than not be rewarded for their efforts, with more significant, long-term brand beliefs. The key to success is strategic planning in the social media engagement, and tight integration with other components of the brand’s story. Here are some examples of successful social media efforts in the region:

Super Pollo, one of the largest and most recognized Chilean brands of chicken products, launched a digital and TV campaign http://www.youtube.com/watch?v=iomY6nGkveQ, highlighting how Chileans are losing the tradition of eating meals together at the family table. The solution was a piano table: a strange, funny, and creative table with piano keys in its borders. The idea was to show a fun excuse to get Chilean families back together at the dinner table and have a great time, as it has always been.

The “I saw a Fiesta on Facebook” campaign in Venezuela is another successful case. As part of the campaign, a Facebook game was created where a Ford Fiesta car would randomly appear on a gamers profile page for one minute, during which time users had to take a digital photo of it. The game had four stages and lasted one month. Participants who managed to capture a photo at each stage went to the final round, where they had to create and upload a video of themselves at a Ford dealership. The video with the most “likes” won a new Ford Fiesta.

As a result, more than 20,000 people played the game. The Ford community earned 431,000 new Facebook Fans in only 10 weeks, the equivalent of 6% of the entire Internet population in Venezuela at the time. Ford achieved over 60,000 unique visitors per day, making it the most visited website in the world at its peak during the campaign.

Moreover, as digital platforms becomes more developed, it will become increasingly more difficult to get the consumers’ attention on social media. Offering the right content at the right time becomes paramount. Consumers are hungry for this, affording brands an opportunity to feed that hunger with interesting engagement or brand content. It’s important to remember that while social networks provide functionality for users to talk with friends or tend to important matters, consumers also turn to social networks simply for fun, surprise, to share, and, at times, to engage in unimportant things. There is great opportunity for brands to offer content that is simply funny and, more important perhaps, shareable.

An example of this comes from Venezuela and the website “El Chigüire Bipolar” or Bipolar Capybara, inspired by American satirical TV shows like “The Colbert Report” and websites like “The Onion”. El Chigüire Bipolar offers Venezuelans a break from political issues, by offering articles with a sense of humor that intelligently twists negative information into funny content. Many Venezuelans share content from the site every day on their social media pages. As a result, this 2-year-old website is rivaling, and in some cases surpassing, leading Venezuelan newspapers like Caracas’ “El Nacional”. Surprising and delighting consumers can go a long way to building your brand, especially when done with strategic intent.

Path to Purchase

Latin Americans spend their days connected to the Internet, with many experiencing the addictive aspects of it, so it’s not surprising to see this behavior extend into the path to purchase. When considering a purchase, consumers spend a significant amount of time researching products online. This is especially true for bigger ticket items and high consideration items such as travel and telecommunications (see Figure 22).

As expected, the research process tends to start with search engines and then fragment across a variety of site types (see Figure 22).

Clearly, marketers will benefit from focusing on Search Engine Marketing (SEM) and Search Engine Optimization (SEO) strategies to optimize users’ initial contact with the brand. Whether it’s moving your search results higher when consumers search for competitors, or understanding the scope of search terms that lead consumers to your competition, you have to be where the people are, and that starts with the search engine.

“Social media allows us to behave in ways that we are hardwired for in the first place — as humans. We can get frank recommendations from other humans instead of faceless companies.” — Francois Gossieaux.

Consumer-generated reviews are extremely influential in the path to purchase, as Latin Americans read and create reviews of products and services at high rates (see Figure 23).

Latin Americans and Online Shopping

Why? Across most markets, consumers tend to trust their peers more
than brands.

Argentineans tend to be skeptical of press, blogs, and site reviews. Our research shows that seven out of every ten shoppers will search for recommendations and opinions on social networks before completing any kind of Internet purchase.

In Venezuela, there is a fair amount of distrust regarding the prices of products, as some retailers are seeking to take advantage of costumers due to the current economic crisis. As a result, user-generated feedback has become more important than ever. This is amplified by the fact that peer power plays a significant role in Venezuela, with most Venezuelans being highly influenced by their social groups or by people that are experts in a particular subject. In Venezuela, social circles apply a significant amount of pressure on people. Much of what they do every day is defined by their environment, what they read, and what they see around them. To this end, purchase decisions are highly influenced by the opinions of others. This is a way for many to get group approval, be recognized, be on trend, and also define what and who they are in society.

In Brazil, as the middle class grows, consumers are demanding more and more from the products and services they purchase. As a result, review sites or “complaint sites” such as “reclameaqui.com.br” (“complain here”) have grown extremely popular. Few Brazilians will make a purchase decision without visiting a “complaint site” first. Reclameaqui alone has nearly eight million registered users and nine million monthly visits. Given this reliance on consumer-generated reviews, brands must be aware of their online buzz and make sure they are part of the conversation. Community managers need to be viewed as vital members of the marketing team, as critical reviews can negate campaign investments and have a greater negative effect on sales than a competitor’s successful campaign. Navigating a brand’s place in social media can be tricky, but it is no longer optional. Here are some examples of brands that have benefited from, or gotten hurt by, social media:

Movistar Argentina maintains a blog to answer customers’ questions and, more importantly, allows users to answer one another’s questions. The more questions a user answers correctly, the more they are rewarded and leveled up in the blog. These mechanisms of transparency instill a sense of trust in the consumer that extends beyond the website, and into the brand image itself.

Starbuck’s Argentina ran into trouble recently when they tweeted an apology for running out of their regular Starbucks-branded coffee cups, replacing them with locally manufactured cups which did not bear the Starbucks logo. The Twitter-sphere erupted, with Argentineans questioning why Starbucks should apologize for using locally manufactured cups, which many viewed as supporting the local economy. Starbucks ended up tweeting an apology to their initial apology.

When it comes to actually purchasing products online, the incidence of doing so varies considerably by market (see Figure 24).

Not surprisingly, for those who shop online, convenience is a main driver. Online shopping makes Latin Americans’ lives easier by allowing them to run some errands in the comfort and security of their own home. For example, products and services in Venezuela have been undersupplied over the last five years due to the economic crisis. In response, e-commerce has become a more efficient way for people to find specific products and services where consumers do not have to spend a whole day searching for those goods in brick-and-mortar stores. For varying reasons, shopping online also saves consumer’s money:

The postal service in Ecuador provides a unique service called Club Correos, which provides a P.O. Box in Miami, Florida, United States. The service allows users to make purchases in the U.S., get them delivered to a U.S. P.O. box, and then have them delivered to the purchaser in Ecuador. Why are people using this service? Primarily cost. Buying a pair of designer shoes in Miami might cost around (USD) $30, one-third of the price in Ecuador. Even with the cost of the Club Correos service factored in, Ecuadorians save money.

In Puerto Rico, savvy e-commerce users know they have a better
chance of purchasing goods at a discount online, with the added
benefit of avoiding local taxes (IVU).

Venezuela has one of the most complex currency exchange systems in the world, and certainly in the region. As a result, many Venezuelans have had to alter some of their purchasing habits, making online buying a larger portion of their total shopping basket, frequently driven by the lower cost of goods online. This has fueled Amazon.com’s growth in Venezuela, to the point where they have become one of the top online shopping destinations (69% say they visit Amazon at least monthly). While this is largely due to Amazon having less expensive products than the ones they can buy at a brick-and-mortar retail store in Venezuela, the simplicity of currency exchanges is a significant benefit.

Conversely, infrastructure issues and security concerns are the main barriers to shopping online, particularly in Peru, Argentina, and Colombia:

Peruvians lack confidence in online payment systems as many are concerned about credit card and financial fraud. This is largely due to a lack of education and experience with online shopping. Like the Internet in general, online shopping in Peru is still relatively immature and still emerging.

In Colombia, financial products are just not there yet. The incidence of consumer financial tools—such as the acceptance of credit cards—is relatively low. Security is also a significant concern: according to the e-crime department of the Prosecutor in Colombia, 187 complaints of digital theft are registered every month, on average. That ranks Colombia as the third highest digital theft nation in the Americas, trailing only behind Brazil and Mexico (Source: Manual for online shopping with tranquility (2012)).

Argentineans simply don’t trust the system. After the 2001 economic, political, and social crisis, many Argentineans lost part of their savings and investments. They also saw the value of their currency fall dramatically. As a result, people have lost trust in financial institutions in general and in economic services in particular and still prefer to make purchases through traditional channels.

Also, as highlighted in Colombia, some simply prefer the in-store
experience:

In Colombia there is a need to “see and touch” what we are buying and make sure everything is all right. For many years (1980s & 1990s) the country was threatened by a variety of terrorists, causing people to become cautious and wary about going to open spaces such as streets and parks. Everyone was afraid of leaving the city by highway. Merchants took advantage of the situation and became a “safe haven” for Colombians.

Across the region, and across categories, we see a relationship
between researching and purchasing online: if you research online,
you’re more likely to make a purchase online (see Figure 25).

Travel, electronics, durables, telecommunication and financial products are the categories most often purchased online. Some success stories in the region include:

The air travel market in Colombia has led the way in developing online platforms for consumers. Through these efforts, they have simplified the consumer path to purchase and provided great benefits to customers. Some even offer a price reduction when purchasing online. For example, Avianca and Lan Colombia only charge an administrative fee for web purchases of (USD) $8.49, which is 40% lower than the taxes and fees that are charged offline (Source: La República (2013)).

In Chile, the financial sector has done a particularly good job of migrating their services online:

Chileans often obtain many quotes when looking for financial products. This behavior has translated well to the web, where a significant range of digital portals are available to help consumers obtain quotes and acquire new products.

The banking sector has historically been a pioneer in promoting and teaching new technologies to Chilean consumers. Today, every bank has apps where consumers can see their accounts, pay bills, make bank transfers, and even ask for a loan, all with just one click. For the time being, traditional FMCG and drug/health products have yet to generate significant traction in the digital space.

When purchasing through digital channels, consumers tend to go directly to the source by visiting brand, manufacturer, and retail store websites (see Figure 26).

This is especially true for Peruvians, who tend to be distrustful in general, and prefer to buy directly from the company offering the product or service. As a rule, Peruvians don’t like intermediaries in the purchase process, in part due to a fear of counterfeit and fake products. There have been numerous instances of fake or refurbished products in Peru being sold as new. Buying directly from the brand or manufacturer gives them a sense of security and authenticity in the process.

Online-only retailers play a more important role in some markets than in others. Brazil is one of those markets where only two of the top 10 most visited e-commerce sites are also offline retailers. In Brazil, online-only retailers have been perceived historically as an alternative to offline retailers, since most traditional offline stores took a long time to get online after many of the pure play online retailers had established themselves. For example, Casas Bahia, the biggest offline retailer in Brazil, only became an online presence in 2009.
As shown in Figure 27, there are many opportunities for smart marketers to deepen their post-purchase engagement with consumers through digital platforms, since many (74%) consumers are looking for continued interaction after an online purchase.

As a result, marketers need to invest in Customer Relationship Management (CRM) applications that take their post-buying relationship with customers to another level through digital platforms. These online platforms can collect and organize customer information from different sources and buying cycle stages, and later use it to establish meaningful and relevant communications with them at the right moment, when users are more open to listening and reacting. Some brands have already started using behavioral targeting and retargeting—online advertising tactics based on user navigation and shopping trends—to generate awareness of their products to optimal users.

Mobile technology is, of course, another important and powerful tool for e-commerce, since consumers are already using their devices to engage in the path to purchase (see Figure 28). Using geo-location and geo-fencing technologies, marketers can offer shoppers relevant in-store content and services, such as checking for additional versions online, comparing prices, and providing augmented reality solutions, recipes related to specific ingredients, customer reviews, etc. In the recent “Our Mobile Planet” study by Google, they found that 29% of smartphone users changed their mind about purchasing a product or service in a shop as of a result of information they gathered using the smartphone.

It’s also useful to note that few LATAM consumers are using scanning technologies (QR and UPC code scanners).

Digital Personas

As part of our exploration of the Latin American digital consumer, JWT segmented the region’s population based on their attitudes and behaviors in the digital world. We found five distinct personas in the digital population (see Figure 29).

As we might expect, the prevalence of one persona over another varies-in some cases significantly- by the market (see Figure 30).