Outlook 2022: LATAM POV
Four trends shaping the future of media & technology in Latin America
Written by: Dante Leví Bautista, Strategy & Innovation Director Initiative Mexico and Sebastián González-Rubio, Digital Director Unilever México.
Hello dear reader, welcome to the Latin American POV of the IPG Media Lab’s 2022 Outlook. Each year, we round up the ideas that excite us for the next few years: new technologies, market forces, and shifts in consumer behavior that are changing the media landscape. This Outlook is an overview of the trends and topics that we expect to break out in the next few years, why we’re convinced they’re important in Latin America, and how you should respond if you are part of our region. We hope you enjoy it.
2022: Embracing Entropy
Latin America continues to feel the toll of the Covid-19 pandemic. Given the economic structure in the region, only 20% of the workforce in Latin America have had the opportunity to work from home; the rest of the population didn’t have that luxury and had to keep working as before. Therefore, many of the digital accelerations that happened in North America and Europe over the past two years didn’t necessarily happen with the same scale in the LatAm region.
Nevertheless, some of the cultural and behavioral changes that the pandemic triggered over the last two years have shown considerable staying power. The local channels became the big winners, the new purchasing dynamics with more items per trip, and staying at home brought changes in who does the shopping. As the pandemic evolves into an endemic, the number of people vaccinated is increasing, with the average of the vaccinated population being about 60% in Latin America.
Coming out of the pandemic, the lower-middle classes in the region are at high risk of falling into poverty. This means that more LatAm consumers will prefer value-for-money options, such as private label and value brands from major players, which typically offer not only a lower price but also good quality.
“Coming out of the pandemic, the lower-middle classes in the region are at high risk of falling into poverty.”
Beyond all this, it is increasingly clear that the only common theme of the 2020s will be entropy. From hybrid models of back to the office to the new global sensation of the metaverse, the uncertainty of what global trends will impact in the region is constant, the reduction of the digitalization gap that we got on this last two years is an opportunity for the region to show that we are a fast adopter market, but the speculations about how we will adopt those new technology and digital trends are increasing. Over the next three to five years, the most reliable prediction will be a disorder, with multiple possibilities happening at once, and sometimes changing daily.
We are recalibrating our understanding of the consumer mindset, as 8 out of 10 consumers in the region say that the pandemic made them reevaluate their priorities. With this new approach, brands will have to figure out what added value they offer and how they are connecting with the new priorities of their consumers’ lives beyond the product or service they offer. In addition, brands will have to put their commitment into action, going beyond speeches to truly help their customers to navigate the increasingly chaotic decade ahead.
“We are recalibrating our understanding of the consumer mindset, as 8 out of 10 consumers in the region say that the pandemic made them reevaluate their priorities.”
The global pandemic smashed some of the existing barriers that Latin America had, and the concept of globalization took on more relevance in the region. As a result, we were able to observe more similarities with other more developed markets, reducing the visible gap between regions. So now in Latin America, we are optimistic about adopting new technologies, embracing the constant changes, and living one day at a time, as we Latin Americans have always done.
“We are optimistic about adopting new technologies, embracing the constant changes, and living one day at a time, as we Latin Americans have always done.”
Power to the People
The pandemic continued to accelerate the digitalization and internet penetration in 2021. For example, the number of internet users in Mexico increased by 3.5 million (+4%) between 2020 and 2021. This is partly due to some actions taken by the governments to lower internet prices, as is the case in Colombia, Chile, and Argentina. In Mexico, the government launched an initiative to increase in public areas, making Mexico City the city with the most WiFi hotspots in the world.
This acceleration in digitalization happened in a context of increasing socio-political uncertainty in the region, which has manifested in several incidents of human rights violations such as abuse of migrants and attacks on independent journalists and activists. The pandemic has exacerbated social inequalities in the region. In 2021, over 118 million Latin American women were in poverty, 22% more than in 2019 due to increased exposure to health issues, income issues and unemployment. Also, violence against women increased 25% in the region during lockdowns.
“This acceleration in digitalization happened in a context of increasing socio-political uncertainty in the region, which has manifested in several incidents of human rights violations such as abuse of migrants and attacks on independent journalists and activists.”
This combination of factors has pushed the general population in the region to use technology in their favor to voice their dissents and take action to make a difference. For example, the International Day of Women (March 8th) has become an important day of protests in Latin America, with people going out in the streets to make their voices heard in Mexico, Chile, and Argentina. In other countries like Colombia and Ecuador, activists have led digital protests.
Some brands have also taken notice and joined the action. For example, the British cosmetics company Avon (53% of Avon’s global revenue comes from the LatAm region) launched a campaign in 2021 to address how women can protect themselves against digital violence by making them aware of some signs that could be part of an abusive relationship. Soffys also took up the cause by launching a micro-site to organize a “virtual march” to protest violence towards women.
Bigger brands like P&G, Unilever, and Danone are taking up social causes in their non-digital media campaigns to empower women. They interrupted their TV advertising in Mexico and used those commercial spots to spread a message of consciousness about “un día sin nosotras” (a day without women), a civil protest campaign where women nationwide stay home for a day in order to protest against sexism and violence.
The #TodosSomosLoret protest session on Twitter Spaces is another recent example of how digital platforms have empowered everyday people in the LatAm region. Attracting over 399,000 attendees, including public figures, business executives, and journalists, this digital protest session reached the top spot on Twitter’s trending Spaces leaderboard and lasted over 10 hours.
Another way that technologies are empowering LatAm consumers is through decentralized finance (aka “DeFi”). Cryptocurrencies are becoming a hot topic in the news and on social media. While some people think that it is only a fad, others like the Government of El Salvador has become the first nation in the world to adopt bitcoin as a legal and national currency, allowing many large chains such as Starbucks, McDonald’s, and supermarkets to accept the digital currency for their purchases. Some smaller businesses in the region are also starting to accept cryptocurrencies.
“Some smaller businesses in the region are also starting to accept cryptocurrencies.”
Developing in tandem with the growing popularity of cryptocurrencies, NFTs are also becoming a more familiar concept that some daring brands are starting to explore. For example, Morton Mexico already had the first auction of a crypto art collection in Latin America, in addition, SeSocio launches the first NFT Marketplace in Latin America, providing consumers the capability of buying and selling digital assets.
Decentralized technologies have enabled people in LatAm to bypass corrupt authorities and increase personal financial security. In Venezuela, crypto has become the solution to hyperinflation caused by currency plummeting. This technology allows people to circumvent government regulations. This situation has made crypto-traders from Venezuela among the most active in the world.
“Decentralized technologies have enabled people in LatAm to bypass corrupt authorities and increase personal financial security.”
Lifecycle Loyalty
Around the world, consumers increasingly seek to understand the environmental impact of product life cycles, from manufacturing to distribution, with sustainability as one of the core issues across all categories. Consumers, especially the new generations, expect it and will observe the coherence, consistency, and real commitment of a brand’s actions. A recent survey showed 60% of consumers expect greater accessibility to products with greater sustainable impact.
“60% of consumers expect greater accessibility to products with greater sustainable impact.”
Therefore, brands should communicate their point of view on this issue and take action in order to strengthen long-term customers relationship. Although most brands in the LatAm region have a barrier in the infrastructure and logistics to show in action their concern for what happens after the use of their products, some brands are nevertheless exploring new ways to create loyalty through expanding the lifecycle of their products.
In recent years, platforms for bulk sales and reuse of packaging have been growing in Latin America, which also gives rise to new sales models that promote refilling of products to reduce packaging and carbon footprint. For example, in Mexico, Unilever’s haircare brand Sedal created refill stations of their shampoo products in supermarkets, reducing the use of plastic containers and promoting repurchase and brand loyalty. Meanwhile, in Chile, Mercado Circular and TriCiclos created an alliance to activate more than 60 Tiendas EcoCarga (eco-refill stores), which serve about 77,000 customers with essential cleaning products. This is the level we are at on brand loyalty in this region, as CPG subscription models are not yet as widely adopted in LatAm.
“In recent years, platforms for bulk sales and reuse of packaging have been growing in Latin America, which also gives rise to new sales models that promote refilling of products to reduce packaging and carbon footprint.”
On the other hand, the intention to extend the life cycle of the products has also been influenced by the economic limitations of a large part of the population of the region. As a result, the second-hand market has experienced a boom in recent years, driven by purchases and sales between individuals that are made through sites and marketplaces such as Mercado Libre, Linio, or eBay. While financial gains remain the main motivation for most consumers to join the resale economy, it is not the only reason. Buying second-hand can also help protect the environment by reducing the amount of waste.
“The intention to extend the life cycle of the products has also been influenced by the economic limitations of a large part of the population of the region. As a result, the second-hand market has experienced a boom in recent years.”
According to Statista, in Mexico, 47% of consumers have bought at least one second-hand item in the last twelve months, while in Brazil, 42% also bought used goods in the previous year. Clothing leads the list of resale categories, followed by electronic devices and physical media products like books and DVDs. As the leading second-hand fashion buying and selling platform in Mexico and Colombia, GoTrendier has more than 6 million female users and more than 15 million items on sale. It recently announced a merger with Spanish fashion resale platform Vinted to create the largest second-hand platform in Latin America and Spain. Driven by the same mission of providing an alternative to fast fashion, the group aims to accelerate its growth and enter new markets.
Beyond sustainability and resale economy, other social causes have also impacted the lifecycle of products. Catering to popular demands and leveraging circular economy principles, some brands in the region are taking a stand for better inclusion. For example, Belo Horizonte’s program of Computer Reconditioning Centers in Brazil, and the Proyecto Re-Conecta initiative in Mexico, are both dedicated to connecting students who need computers to people who have computers they no longer need.
Similarly, the extension of the life cycle of products has also reached the automotive industry in Latin America. For example, Kavak, a leading company in the used car market in the region, has become the first Mexican startup to reach “unicorn” status after being valued at over USD $1.15 billion in only four years of operations, as it strives for financial inclusion and empowering the middle class through car ownership.
While the extension of the life cycle of products takes on different interpretations in our region, brands have a great opportunity to be more proactive in their quest to forge and maintain a closer relationship with consumers, through initiatives that extend the life cycle of their products.
The Multiplayer Internet
Following the furor of the Meta announcement of its intention to create the next iteration of the internet: the metaverse, it became to be a popular discussion topic among brands and marketers alike. As with many emerging technologies, the metaverse still has a long way to go in the LatAm region. Although it will likely take the rest of the decade or so for the metaverse to reach its full potential, we are already beginning to see some changes that are laying the path to it. Excitingly, these changes are also present in the LatAm region, where some consumers are starting to place more importance on their lives in the digital realm rather than the physical.
One of the first steps towards preparing consumers for the metaverse is an increased sense of presence in the digital world, which refers to an awareness of who are in the same online space as us and able to interact in real-time. The fitness industry in our region had a clear intention to create this sense of digital presence. For example, Siclo, a cycling studio in Mexico, launched biSí, which, similar to Peloton, offers its users the opportunity to access on-demand or live classes at the same time, interacting in real-time with the community. Similarly, Smartfit, the biggest fitness center chain in the region, created the Smart Fit app to facilitate a complete training experience with digital health tracking and live-streaming classes.
“One of the first steps towards preparing consumers for the metaverse is an increased sense of presence in the digital world, which refers to an awareness of who are in the same online space as us and able to interact in real-time.”
Nowadays, mass culture is often driven by social media, and LatAm is no exception. Social platforms facilitate connected communities where those who share the same interests can easily find each other with no geographic constraints. For example, Mexico and Brazil are among the most active countries consuming TikTok content. This, in turn, forms the foundation for the multiplayer internet that enables new use cases that brands are already exploring.
For example, to promote their new movie Marry Me, pop stars Jennifer Lopez and Maluma hosted a virtual concert in Snapchat as their Bitmoji avatars. If users logged in with their Snapchat account, they could see their own Bitmoji avatars in the crowd, and engage with the experience in several fun ways, such as taking part in a stadium wave or showing off their virtual dance moves.
Live commerce is perhaps the most turnkey solution is for brands to harness the power of online presence. As one of the biggest retails in Mexico, Liverpool is launching Liverpool Live, a live streaming video platform with purchases in real-time. In this channel, product experts interact with customers while offering the power to buy with just one click.
“Live commerce is perhaps the most turnkey solution is for brands to harness the power of online presence.”
Working to expand immersion to the digital world, different companies in the region have made efforts to build their paths to the metaverse. For example, Brazilian investment platforms XP and Rico announced the launching of an investment fund focused on companies that work with the metaverse, with investments starting at BRL 100. Similarly, the Organization of American States (OAS) has announced an alliance with Meta to train more than 10,000 creators through free online courses in Augmented Reality (AR), a first step toward bringing the metaverse to Latin America and the Caribbean and creating new economic opportunities for 35 countries in the region.
“Working to expand immersion to the digital world, different companies in the region have made efforts to build their paths to the metaverse.”
As the internet connects us with new ways of doing things, the involvement of consumers in the digital world grows correspondingly, generating greater immersion and preference for those activities that used to be physical. As this emerging trend develops, brands will need to follow consumer’s lead in deciding what works best for them, staying with those that generate more value for consumers. Brands must listen to their customers and figure out which parts of the consumer experience they should keep in the physical world for better engagement, and what they can migrate to the digital world to increase accessibility.
The Great Escape
Faced with all the troubles ahead from climate crisis to lingering effects of the pandemic, LatAm is one of the regions where people have relied on digital platforms to escape from the dark reality of the pandemic.
“LatAm is one of the regions where people have relied on digital platforms to escape from the dark reality of the pandemic.”
One of the platforms that LatAm consumers have wholeheartedly embraced is TikTok: the region ranks as the second-highest penetration rate of TikTok users worldwide. According to eMarketer, the platform has over 100 million users in the region, with Brazil accounting for over half of them. In this context, Tik Tok has become a platform in which brands can no longer be absent in the region if they want to connect with consumers.
“One of the platforms that LatAm consumers have wholeheartedly embraced is TikTok: the region ranks as the second-highest penetration rate of TikTok users worldwide.”
Similarly, video games often provide people with a welcome break from reality, and gaming platforms have also grown tremendously in LatAm, with an estimate of 260 million gamers in the region. The most active gamers among them are from Mexico, Brazil, and Chile, as 66% of them play daily. Brands are following the attention to gaming platforms as well. In Mexico, deodorant brand AXE launched a special edition product destined for gamers in collaboration with Riot Games. The launch campaign for the product had a specific messaging and tone tailored to connect with gamers; it also sponsored a championship game, which users could enter as a team to win many gaming-related prizes.
On the contrary, some people are ditching their smartphones, advocating for limited screen time, and focusing on re-wilding themselves and their family. A lot of influencers have capitalized on this trend by sharing some ideas to escape. For example, the Mexican influencer El Javetas shared a series of videos to advertise the Nickelodeon hotel in Cancún, offering people who were tired of lockdowns some inspirations for a quick getaway.
But this instinct to escape is changing behavior in other places as well. We can see it in the increased focus on self-care and wellness, like increased appreciation of the importance of mental health and mindfulness. Sometimes, this is also manifested through the growing “vice economy,” which is increasingly being aligned with wellness trends For example, Paradise Shop, which is an ecommerce platform launched by Mexico’s former president Vicente Fox, sells some derivatives of marijuana. This platform is the first of its kind in Mexico.
“But this instinct to escape is changing behavior in other places as well. We can see it in the increased focus on self-care and wellness, like increased appreciation of the importance of mental health and mindfulness.”
Some brands have capitalized on this desire to escape through content. For example, the hit Netflix show Monarca, produced by Salma Hayek, is centered around a tequila family business and features the real tequila brand “Herederos” owned by the actress. This type of content is blurring the limits between advertisement, branded content, and entertainment, within a context where social and streaming platforms have conquered a major part of consumer attention.
For brands, this means embracing contradicting messages. On one hand, consumers want to align themselves with brands and companies that engage meaningfully with the issues of the day. But on the other hand, consumers are also looking for an escape, and that’s something that many brands may be more comfortable providing. The key will be threading this needle carefully and with authenticity, not expecting all consumers to have the energy to engage with values-driven activities all the time.
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