Outlook 2021: LATAM POV
How the four Outlook trends are shaping up in Latin America
Written by: Dante Leví Bautista, Strategy Director Initiative Mexico and Sebastián González-Rubio, Digital Director Unilever México.
Forward Momentum
After what will go down as one of the strangest years in history, we’re pleased to be here in 2021, with an eye keenly focused on the future. The Lab spent much of 2020 discussing the pandemic as a trend accelerator, pulling forward consumer behaviors by five or so years, particularly in areas like ecommerce, remote work, and telemedicine.
According to eMarketer, ecommerce in Latin America grew by 36.4% and achieved about 3 years of digital acceleration in only 3 months, which makes Latin America the fastest-growing regional ecommerce market in the world. This impressive growth can be mostly attributed to three of the region’s economic powerhouses: Argentina, Brazil, and Mexico. For example, ecommerce saw rapid uptake in Mexico thanks to high smartphone penetration, although limited access to digital payments complicated the situation. The country’s lockdown likely pushed some late-adopters, most of whom are able to shop online via smartphones already.
Ecommerce in Latin America grew by 36.4% and achieved about 3 years of digital acceleration in only 3 months, which makes Latin America the fastest-growing regional ecommerce market in the world.
Quarantine demanded that our lives be lived online, even more so than we had been doing before, shifting the center of gravity from the physical world to the digital. It impacted our online video consumption, eMarketer estimated the planned growth of subscription OTT video viewers in LATAM grew by 138%, going from 11.6% to 27.5% in 2020 versus 2019.
As we come out of the pandemic, there will be two very different reactions to the new world order: those who have embraced the changes wrought by 2020 and want to push even further, and those who want or expect things to return to the way they were before. This divide will vary widely around the world, as places like China and Australia, who recovered more quickly, will have less established new habits, and will more quickly snap back to the way things were.
In contrast, in Latin America, where we have fared less well with the pandemic, and with a large population to vaccinate — we will have had more time to establish new habits and rhythms. If you’re looking for a silver lining in a dark time, it may be this: that countries who have been hardest hit may maintain a greater forward momentum. With restriction comes invention, and this could be the push that our region needed.
This tension between holding on to the advances caused by the pandemic, and a desire to return to life from the previous decade, will be the driving cultural force of the next five years. This tension is palpable in our region due to income inequality. Two out of every three households in LATAM as Mexico are seeking to cope with it by stockpiling basic supplies. Unanticipated expenses are being covered with savings, loans, and selling personal belongings. People in many countries in the region saw their personal income reduced by more than 50%. Due to the loss of income, only about 50% of people could only afford expenses for a period of four to seven weeks, and four out of ten could only cover one to three weeks. Because of this situation, just over half of them with a loan or credit have not been able to pay any of their debts.
People in many countries in the region saw their personal income reduced by more than 50%.
The end of the pandemic will mark the beginning of what comes next, where we must reinvent the pieces of society which have been stubbornly clinging to the past (healthcare, education, government, finance), while balancing the needs of those who can’t or won’t be ready for that new world. It will be a period of transition, which is always difficult. We owe it to each other to find a way through, and to make sure that everyone has a bridge to the other side, whether they choose to take it or not.
We’ve identified four ways this forward momentum will play out, impacting how we work, play, shop, and live beginning tomorrow, and through the first half of the 2020s.
The Anyware Economy
For any industry that was able to do so, at least part of 2020 was spent shifting to remote work, rethinking communication and processes to allow employees to maintain social distance. Going forward, remote working will be the norm for many white-collar workers (32% of the workforce in our region) at least some of the time, with some industries like tech leaning more towards full-time remote, and some settling more on a traditional schedule, with 1–2 days of flexibility per week, or increased remote work during the summer months. According to IBM Institute for Business Value analysis, up to 52% of Latins want to continue working exclusively from home or with occasional trips to the workplace when the pandemic ends.
This shift to an increasingly hybrid lifestyle means that the tools of tomorrow will have to assume it’s some mix of each, changing day by day or even hour by hour, built from the ground up as “Anyware” — software designed for hybrid physical and digital presence. We’ll also see advances in smart home devices, as coronavirus impacted the use of voice searches and the use of voice-based interfaces. According to eMarketer, Latin America was the region with the highest growth in demand for smart home devices with 83% compared to the previous year.
While the next few years will be focused on hybrid work/play extended vacations, by the middle of the decade, some countries will be more focused on moving beyond physical location entirely, enticing businesses and workers to engage with them via digital currencies and citizenship. Estonia’s digital e-citizen program sets a template, and similar programs are about to be rolled out in 20 additional countries, including Brazil.
2020 turned out to be a good year for financial inclusion and digital payment adoption in our region. Between May and October last year, 40 million previous unbanked people have been opened a bank account in the region. The Coronavoucher program in Brazil, Ingreso Solidario in Colombia, and Ingreso Familiar de Emergencia in Argentina, compelled users who previously used only cash to open a bank account. According to a Mastercard report, the unbanked population throughout Latin America fell by 25% due to COVID-19. As a result, Latin American consumers quickly adopted the various payment options within banking applications and digital wallets, such as bill payment, e-commerce, mobile top-ups, and especially person-to-person payments, which have doubled in usage since the pandemic began.
Between May and October last year, 40 million previously unbanked people in the LATAM region have opened a bank account.
For brands, this means that the 2020s will be a breakdown of assumptions. Our most affluent consumers might be anywhere in the world at any given time, as their work life and their home life becomes less predictable and less tethered. But the same technology that will adapt to help keep them connected will also give us new channels to reach them. And as connectivity expands to deskless workers, it will open up even more opportunities for connection, as wearables unlock new media time beyond the traditional screens.
Gaming Eats the World
Ten years ago, venture capitalist Marc Andreessen famously said “software is eating the world,” correctly predicting the coming wave of software that would eventually disrupt and transform every industry. While we are very much still in the middle stages of this transformation, we would like to add to his prediction: a second wave of software is coming to eat the world, and this one is rooted in the technologies and platforms of the gaming industry.
Gaming has become a major media segment in our region. 40% of internet users in Latin America were playing video games during quarantine, and 57.2% of them watch esports content at least once per week. As traditional sports were forced to shut down, many fans turned to esports to fill the gap. In some countries of the region, such as Mexico, the National Soccer League and National Baseball League quickly pivoted to virtual championships, with live broadcast of their teams playing and helping recruit new fans to esports.
40% of internet users in Latin America were playing video games during quarantine, and 57.2% of them watch esports content at least once per week.
And with a live event platform already in place, proto-verses like Fornite and Roblox were ready to host live concerts on their platforms, reaching up to 33 million unique viewers for their in-game events. Even Complex turned their music and streetwear event into a virtual venue this year. All of these contributed to trends that were already developing: an expansion of the gaming audience. In counties such as Brazil, the esports audience is strongly represented in every age group under 50.
As gaming expands to swallow parts of the internet, the most important players to watch are the companies building infrastructure and the platforms that are aggregating users. Among the U.S. tech giants, Facebook and Apple throw the largest shadow, but it’s the digital infrastructure upstarts, which includes NVIDIA, Roblox, and Fortnite-maker Epic Games, that are most exciting to watch. Together, these companies will build a new layer of the internet commonly referred to as the metaverse — an interconnected set of 3D immersive experiences. LATAM consumers will likely be engaging with the metaverse developed by these companies, which already have a strong foothold in the region.
Although the LATAM region may be behind in developing our own metaverse infrastructure, that has not deterred some brands from making an effort to connect with the audience through gaming. Mondelēz México sponsored Rivals, one of the most popular gaming leagues in the country; a similar example is Unilever looking to connect with gamers with AXE Gaming Academy. Some forward-thinking brands have also started engaging customers through virtual worlds in video games. For example, Burger King Chile worked with “Wena Los Cauro,” a group of Chilean influencers and video game modders, and invited fans to visit a Virtual Burger King in GTA San Andreas to stay safe at home and win free Whoppers delivered to their doorsteps.
For brands, it is well past time to figure out a gaming strategy, both how to reach gamers as an audience, and increasingly important is how brands should show up in immersive spaces. While the former will vary widely from brand to brand, for the latter, it’s time to build out a 3D asset pack in widely compatible formats.
Welcome to the Splinternet
In another sign of maturity, our major tech platforms are facing down their first real regulatory and antitrust challenges around the world, and the outcome of these inquiries is likely to make it clear that GDPR and CCPA were only the first tentative steps of global governments. Over the next five or so years, the actions taken by governments will vary greatly around the world, and that variance will make for a fragmented digital media landscape, a Splinternet that will diverge in capabilities, culture, and permissions as the decade wears on.
Regarding antitrust and privacy regulations, it is worth noting that Latin America is the region where internet users are the most concerned about privacy (65% of users vs 53% worldwide average). Additionally to this, the region also has the highest penetration of Facebook users (97%) and it is the second biggest video streaming market, after APAC. However, there is a privacy paradox in the region because despite of being heavy users of social platforms and the most concerned about privacy, few countries have introduced laws to regulate data practices and protect privacy: only Brazil and Argentina. The rest of the region is likely to mostly adhere to US regulations, which tend to be stricter in the media space.
Latin America is the region where internet users are the most concerned about privacy (65% of users vs 53% worldwide average).
Over the course of the decade, local players in the LATAM region will continue to gain strength and influence with consumers, as companies like Mercado Libre, Cornershop, Rappi, and Bitso build up consumer trust and digital infrastructure. They will provide brands an opportunity to engage deeply with the culture and community in the region in ways that international platforms can not, and they may one day challenge them for attention from both brands and consumers. For now, platforms like Facebook and Google will leverage their tools for businesses and free access to WiFi for consumers to maintain a strong foothold in the region.
For global brands, this means an increased balkanization of the digital platforms that we use to reach consumers, with everything from designing and targeting audiences to developing creative becoming more complex. While many of these activities are already managed at a market level, it will be an increasing challenge for global teams and brand managers to even offer meaningful input outside their home markets, as capabilities, content formats, and norms diverge.
The interesting counterpoint to this trend is TikTok, which will have over 1 billion global users this year, out of which over 65 million are located in our region. Though it is technically a separate repository of content from its Chinese sibling Douyin, the features and formats are evolving in lockstep. And with video being the most cross-cultural form of media, it’s easy to see how content could be shared between the two. This might provide a template for platforms moving forward.
The Reinvention of Social Context
The development of the Splinternet mirrors the secular shift that is happening on many social platforms, with users migrating away from public squares and into more private digital environments. This reestablishing of social context online will increasingly allow consumers to fluidly redefine the face they present to various audiences. As consumer attention moves to these smaller groups, the way brands reach them online must evolve as well.
This trend manifests in various ways in different region. In LATAM, the average person has 9.3 social media accounts, so switching between different social contexts is nothing new for us. As consumer attention moves to these smaller groups, the way brands reach them online must evolve as well.
In LATAM, the average person has 9.3 social media accounts.
As we move into this next phase of the internet, and both governmental and individual scrutiny of privacy practices increases, this reinvention of social context will only help brands and advertisers, as we’re able to use data about the context — rather than the individual — to target our messaging.
Some brands have gotten on non-public social channels in the hopes of establishing more intimate connections with consumers. For example, in an effort to promote its show “Daughter from Another Mother,” Netflix recently infiltrated a closed Facebook Group for mothers “Lady Multitask” with a profile that used the name of the protagonist from the said show. Another example is Domino’s Pizza in Perú, which launched a campaign in Tinder in which users who matched with the brand’s profile could receive a heart-shaped pizza delivered for free.
As the world continues through a tumultuous time of social upheaval and climate crisis, brands will have to consciously choose, at each touchpoint, whether it’s appropriate to engage the consumer in conversation on the issues they care about, or to help them temporarily escape those concerns. A brand can prioritize both values and escapism but must carefully target the messaging to fit the context.
Some brands in our region have embraced this opportunity to engage with causes that are relevant to them. For example, Fernet 1882 launched the “Tómalo con Orgullo” campaign (Drink with Pride) in Argentina in which the brand responded to offensive comments on social media directed towards the LGBT community. Similarly, Dove collaborated with Getty Images in Perú on the “Muéstranos” campaign (Show Us) that aimed to increase diversity and inclusion of all women in stock photos.
For the mission-driven brands that can earn their way into the most secluded channels, there will be an opportunity to truly do good, by ensuring that they bridge these contexts. It’s not a brand’s job or responsibility, but as entities that inherently exist across many contexts, some clever brands will see that they can provide the shared context, bridging isolated groups, and reminding us of our shared experience.
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