Outlook 2020: The LatAm POV
How the four Outlook trends are shaping up in Latin America
By Dante Leví Bautista, Felipe Kopaitic, Santiago Garcés , and Sebastían González-Rubio
2020: The Race to the Next Platform
The Outlook report by IPG Media Lab is an overview of the trends and topics that we expect to break out in the next few years. These global trends manifest themselves differently in various regions of the world with differing market realities and technological developments. In this piece, we are providing a point of view on how these trends will develop in the Latin American region.
Democratized Creativity
W e know that the concept of content creation has changed dramatically with the rise of content creation and editing tools in smartphones, which require little more than a mobile camera and index fingers. Smartphones have enabled Latin Americans to generate content without a computer or special programs, leading to an increased level of user creativity.
Following the boom of mobile editing, Latin America became an incubator of YouTubers. That is why, in 2018, four of the five most followed YouTube creators in the world were Hispanic. Almost all of them started out streaming about gaming, showing the potential of the LatAm market in the gaming world. Their success in the region can also be attributed to high consumption of YouTube content in the region: Brazil and Mexico spend more time on YouTube than any other country globally except the U.S., according to data from the eMarketer There is an affinity for digital creativity, especially among the youngest generation: According to syndicated Kiddos research, 21% of Latin American kids want to be a blogger, influencer or YouTuber.
Social media is the most important platform for content creation in Latin America. Thanks to the user-friendly tools that some social apps provide, there has been a boom in user-created content in our region with most smartphone users creating their own stickers or memes and sharing them through messaging apps or social media platforms.
Latin-Americans are used to creating content with apps rather than with specific design programs. The region was one of the most relevant markets for Vine, and this platform helped current global social media superstars, such as Lele Pons (from Venezuela) and Juan Pablo Zurita (from Mexico), gain followings. Even after the demise of Vine, the love for short videos continues, with Mexico and Brazil ranking among the top five most important countries for TikTok based on growth potential.
Latin-Americans are used to creating content with apps rather than with specific design programs.
Another industry that is rising in our region thanks to democratized creativity is podcasting, where influencers have started creating their own channels. Based on a 2019 report by Voxnest, four out of the five top growing markets for podcasting were in LatAm. Spotify has also made an impressive expansion into the South American market, thanks in part to the company’s strong Spanish-language content, combined with the penetration of Android devices in the region. The expansion to Latin America by both Deezer and Spotify will increase awareness of podcasting among these populations, resulting in more listeners and more content.
Brands need to seek opportunities to generate strategic partnerships with bloggers and YouTubers. But more importantly, they need to believe in the co-creation with consumers, the people that create content every day and want to have an active role with the brands. This user-generated content (UGC) could be a key effort for brands to be more organic and establish a link with younger generations. Brands including TNT, Fanta, BIC, and Lego have used UGC to connect with consumers successfully in LatAm.
Ambient Computing
A mbient computing is the idea that devices will extend beyond the smartphone, to wearables, smart homes and retail environments. Google and Amazon are the two contenders to occupy this space through their respective smart home, smart city and connected retail initiatives.
In LatAm, Google has a much higher presence than Amazon. Indeed, 85% of the smartphones in the region are Android smartphones, which gives Google access to data about consumers’ behavior and location, according to data from Comscore MMX Multiplatform. In contrast, Amazon has only limited reach in the region, reaching respectively 5.7% of internet users in Brazil and 7.9% in Mexico. This gives Google an advantage over Amazon in terms of penetration with the LatAm population developing ambient computing technology in the region.
Ambient computing in LatAm will probably start in the home, albeit at a slower pace and, compared to other regions, more mobile-driven. This is because the penetration of smart speakers is much lower than in other markets: In 2019, 40.6% of smart speaker shipments were destined to the US and Canada, and only 1.8% were destined to Latin America, according to data from Kagan/S&P Global Market Intelligence. Therefore, access to virtual assistants will be mainly through Android smartphones in the near future. In terms of other connected devices such as home appliances, the access price in Latin America is a lot higher than in other markets, and the LatAm market is very price-sensitive, so the adoption of these devices will be slower than in other markets.
Access to virtual assistants will be mainly through Android smartphones in the near future.
Just like in the US, in LatAm privacy is an important issue related to ambient computing. For years, consumers in Latin America have resisted transacting online, fearing their personal data would not be secure. This is why the region’s leading players have been working to break down these barriers and put mechanisms in place to protect consumers’ data. These mechanisms may allow new, smaller contenders to enter the ambient computing race more easily than in other markets.
For example, Rappi, an on-demand delivery start-up headquartered in Colombia, may also be in the race to set the new standard of ambient computing for retail. Another strong contender is Cornershop, a Chilean app that allows users to order groceries on a mobile device. Uber recently announced it will be acquiring Cornershop in the next few months, giving Uber an advantage in the race for ambient computing in the retail world in the region.
However, there are barriers to ambient computing in retail environments in Latin America. First, low consumer trust leads to slow ecommerce adoption. Specific statistics vary from country to country, but a study by Minsait revealed that between 21.3% (Argentina) and 43.6% (Perú) said that making digital purchases is unsafe. This barrier will slow down the adoption of ambient computing in retail environments since users need to be logged in in order to interact at a physical retail location.
Second, though 4G LTE connection share in LatAm is almost 40%, according to Ovum and 5G Americas, geolocation is not very precise. This makes it rather difficult for marketers to leverage location data to track online-to-offline attributions, leaving digital and physical environments separate for the moment. The entry of new players into the mobile carrier market and the arrival of 5G may change this soon.
For brands in Latin America, the main takeaway is that ambient computing is a white space for innovation that could potentially drive a lot of business value. Consumers in Latin America are heavy users of digital platforms, and there are fewer barriers to entry for new players in our region. We can expect more tech giants to start acquiring local players, In the meantime, brands should explore partnerships with local players like Cornershop and Rappi to leverage emerging ambient computing platforms to reach consumers.
Algorithmic Culture
I ncreasingly, how we search for jobs, get a loan, or even find a soulmate are strongly influenced, if not entirely controlled, by algorithms, and Latin America is not an exception. As the region in the world with the highest social media penetration with over 81.5%, according to eMarketer data, we are comfortable with the idea of algorithms organizing content based on relevance and not on recency.
With all the content online streaming services offer, it’s impossible to humanly curate all the options; therefore, relevance prevails as algorithms prioritize what is popular among users, regardless of when they came out. For example, Netflix recently published the top 10 series and movies streamed in Mexico. Remarkably, Yo soy Betty la Fea (Ugly Betty), a Colombian soap opera that aired between 1999 and 2001, still ranked number five on the list, showing that in algorithmic culture, popularity trumps recency.
In algorithmic culture, popularity trumps recency.
Another sector where algorithmic culture has benefited the LatAm region is music and entertainment. For example, on Spotify, we constantly see Latin American music present in the rankings of top playlists and top songs. Thanks to algorithms, this has given exposure to this kind of music in the rest of the world. This is also applicable to Latin American content in streaming platforms like Netflix, whose algorithms are introducing Spanish-speaking content to a wider global audience. It is interesting to note that Spotify recently hosted the first Spotify Awards in Mexico City, an event destined to recognize the most popular artists in the LatAm region based solely on users’ listening data. Considering the important role Spotify’s algorithms play in recommending music to users, one could say that the award winners are also influenced by algorithms.
While these algorithms can be useful in helping us decide what to watch, which route to take and what to eat, what happens when this permeates other aspects of our life? In a region where there is political and social instability, and social media plays a key role in our daily lives, we need to consider how algorithms will filter or spread content.
The spread of fake news poses a huge problem during social protests, which impacts brands as well. Due to social and political issues in Chile last year, there was a blackout in advertising starting in mid-October, hampering growth in 2019 and bringing uncertainty in 2020. Advertising revenues decreased by 6% in 2019, according to IPG internal data from MAGNA. Brands need to be aware of where to communicate considering that algorithms may link them to information they don’t necessarily want to be associated with.
Overall, we see strong growth for an algorithmic culture to take hold in the region, inflicting strong impact on media consumption and user behaviors. Latin America is one of the fastest-growing mobile phone markets in the world, which will by default increase the number of people that are part of the algorithmic culture we are experiencing now.
The Age of Anxiety
T hese three trends we’ve explored so far, combined with the accelerating speed of technology and innovations, all contribute to a growing sense of anxiety in our ultra-connected life.
We have consistently seen Latin Americans become “heavy users” of everything we can adopt and consume. We remain the leader in social media consumption; in daily online time spent we can claim four of the top 10 markets globally, according to data from GlobalWebIndex. We don’t want to miss anything, we want to access the same content that everyone else does, and we are stuck to our smartphones no matter where we go,
While all of us have the benefit of walking with a cybernetic prosthesis with access to all the knowledge of the world, the truth is that we increasingly experience an inescapable feeling of anxiety and stress. This technology-induced anxiety is not an issue that we can escape, and we believe that in 2020 it will be a topic that takes on more relevance in national agendas, in parliament and at the family table.
We may believe that it is something we can control with self-discipline. But we must consider that today, content is designed to ensure we get a brief flow of dopamine, which functions as a shock of energy and well-being. But when this substance is not there, the body constantly searches for it and generates a state of restlessness and anxiety.
Of course, there is no incentive to avoid screens or disconnect, since the entire business ecosystem is sustained by our attention. Particularly in the LatAm region, where almost 85% of traffic is from Android devices, we have to consider that there is no business for Google when people are not connected.
Fortunately, we see a growing concern of Latinos for the use of their data and a greater understanding of how our devices share multiple data and information points to various players in the technological ecosystem. Globally, the three markets most concerned with the misuse of personal data are Colombia (80%), Brazil (79%) and Mexico (79%) while in the United States only two-thirds of the online population expresses this concern, according to data from GlobalWebIndex.
Adding to social anxiety, we must consider the concerns about the wave of unemployment that automation is set to unleash. This will have a more severe impact in Latin America, where the low cost of labor has been a disincentive to the investment in automated machinery, especially when there are already signs of automating service and retail jobs. Governments across Latin America have this mapped in the agenda and are preparing; still, the narrative is about re-training and the conversation has not reached a point in which lawmakers are committing to strong action.
Adding to social anxiety, we must consider the concerns about the wave of unemployment that automation is set to unleash.
People still believe that advertising can play a positive role in their lives. For example, in Chile, in the aftermath of the social crisis that still reverberates across the nation, 67% of Chileans agree that we need advertising that helps overcome fears and uncertainty and offers a return to hope; just 27% thinks that brands should just do business as usual, according to data from Cadem research.
Therefore, it is important brands do not contribute to this anxiety-including scenario. Instead, brands can provide some value for consumers, by offering entertaining content and protecting their privacy and data. It is in all of us marketers to create an ecosystem that places people’s well-being above excessive data collection and surveillance marketing.
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