Outlook 2023: LATAM POV
Four trends shaping the future of media & technology in Latin America
Written by: Dante Leví Bautista, Head of Strategy Initiative Mexico and Sebastián González-Rubio, Digital Director Unilever México.
Welcome to the Outlook LATAM POV report by IPG Media Lab, it 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.
2023: INTERREGNUM
Recovery from the Covid-19 pandemic is expected to be slow and uneven in Latin America, with countries in the region facing different challenges and obstacles. While some countries have made progress in vaccination campaigns and reducing infection rates, others are still struggling to contain the spread of the virus. Economic recovery is also likely to be a major challenge, particularly in countries with high levels of inequality and poverty.
The pandemic has accelerated the adoption of digital technologies in the region.
In terms of people’s changing attitudes towards technology and innovations, the pandemic has accelerated the adoption of digital technologies in the region. When lockdowns and social distancing measures were in place, people increasingly turned to online platforms for work, education, entertainment, and social interactions. Some of those behavioral changes have been sustained in 2023, and this has created opportunities for tech companies and startups in the region, particularly in areas such as ecommerce, digital payments, and telemedicine.
This has created opportunities for tech companies and startups in the region, particularly in areas such as ecommerce, digital payments, and telemedicine.
However, the pandemic has also highlighted the digital divide in the region, with many people lacking access to basic digital infrastructure and services. Addressing this gap will be crucial to ensure that everyone can benefit from the opportunities enabled by this wave of digital acceleration.
As a result, the region is slowly navigating this transitory era of interregnum, as more brands seek to address the emerging consumer behaviors coming out of the pandemic while trying to address the pre-existing issues in the region with new tools, such as data-driven storytelling and generative AI. Local startups are breathing new life into the markets as they compete against global behemoths to address the market reality of each country.
The End of the Digital Media Duopoly
In the U.S., digital advertising has been long dominated by a de-facto duopoly of Meta and Google. But, in recent years, various factors are contributing to a shift in how people search online and use social media, which opens to the door for some media and tech platforms to launch ad products and compete for a piece of the pie.
In the LatAm region, however, the dominance of Google and Meta will take longer to disintegrate than in other regions, for several reasons.
First, Latin America is the region with the highest penetration of social media (86.6% of internet users), according to data from Insider Intelligence. This can be attributed to the fact that many people in the region only access the internet via mobile, and the mobile carriers in the region often offer unlimited access to social networks, such as Facebook and Instagram, as an incentive to win customers. Plus, WhatsApp is the most popular communication app in the region, which further contributes to the dominance of Meta in Latin America.
As for Google, their dominance in the region is tied to the popularity of Android OS. According to Stat Counter, it has a penetration of 77% (vs 21% for iOS) of the smartphone market in Latin America. This means that a lot of mobile users in Latin America use Google services by default, especially with Google being the default search engine on Android devices.
A lot of mobile users in Latin America use Google services by default.
That said, some local companies have seen some early successes in attracting users when it comes to their digital life. For example, in the grocery ordering space, Chilean company Cornershop (which was acquired by Uber in 2020) and Colombian company Rappi dominate the market in most of the region. In Brazil, iFood holds over 80% market share of the food delivery market, followed by Uber Eats with around 10%, according to Measurable AI Insights.
Local companies have seen some early successes in attracting users when it comes to their digital life.
In the ecommerce space, Mercado Libre has presence in 18 Latin American countries, whereas Amazon only has presence in four markets — Brazil, Chile, Colombia, and Mexico. To capitalize on their market share and diversify revenue streams, Rappi and Mercado Libre have each developed an advertising platform inside their marketplaces, where brands can be displayed with different ad formats to push the purchase intent. Also, their ad platform shares data on shopping habits with advertisers by categories, allowing brands to be more accurate in segmentations to improve their performance and knowledge about the shopper.
Finally, in the entertainment space, even though Netflix is the streaming service with the highest penetration in the region, local players such as VIX+ and Claro Video are growing rapidly and catching up. VIX+ was born from the merger of Univision and Mexican TV giant Televisa, and it owns the largest library of Spanish-language content and intellectual property in the world. It offers an ad-supported tier that allows brands to reach the growing streaming audience in Latin America, who are primarily watching on mobile devices.
The local streamers will stand a good chance to compete with the global streaming services and usher in a new era for the LatAm streaming market.
The opportunity for local platforms to keep growing will be based on two pillars. First, it is important to have a first-hand knowledge of the unique realities of each local market in Latin America, to which the global platforms have always worked hard to adapt. Second, being respectful of user privacy is also of increasing importance, as it has become a major point of criticism against both Meta and Google in the region. Colombia, Brazil, and Mexico rank as the top 3 countries in the world that are most worried about data privacy online, according to data from Global Web Index. If these two pillars hold up, the local streamers will stand a good chance to compete with the global streaming services and usher in a new era for the LatAm streaming market.
Twenty-Twenty-Me
Mass personalization is the practice of tailoring products, services, and experiences to meet the specific needs and preferences of individual consumers, at scale. In Latin America, mass personalization has become an increasingly important trend in recent years, as companies seek to differentiate themselves in over-saturated markets and meet the evolving needs of consumers.
In Latin America, mass personalization has become an increasingly important trend in recent years.
One example of mass personalization in Latin America can be found in the fashion industry. Regional fashion brands like Renner, Hering, and Dafiti, have implemented technology and data-driven strategies to personalize their offerings for individual consumers. They use artificial intelligence to analyze consumer data and create personalized recommendations for clothing items, sizes, colors, and styles based on consumer preferences and buying history.
Similarly, some brands are using data to tell stories and improve the connection and relevance with LatAm consumers. For a campaign in Mexico, Auto brand MINI by BMW partnered with Meta to identify the milestone life events of their target demo (getting married, graduations, becoming parents, etc.) and generated specific storytelling of their idea of have a MINI in different stages of your life. Starbucks also recognized the potential of the data they collect from their popular reward program, and launched at the end of 2022 the “Year in Review” program in México, which provided every consumer who signed up for their loyalty program with a recap of their spending with Starbucks and the impact of their Starbucks journey.
Burger King also recently ran several personalized marketing campaigns in Latin America. For instance, for the “Whopper Name” campaign, customers were asked to order a Whopper burger using their own name, and Burger King created personalized ads featuring their name[YR(U2] ; Meanwhile, in Brazil, the company offered a “Create Your Own” menu, which allowed consumers to customize their burgers and sandwiches according to their tastes. Those who choose to participate in the personalization-forward campaign are offered ingredients via a set of pools in nine different Stories. Once the consumer has completed the customize your own burger process, Burger King sends them a direct message on the social media platform with a coupon for the personalized Whopper, which will be given to them free of charge at any Burger King location.
Beyond personalization of services and products, the beauty standard, which has been warped by social media filters for years, is also contributing to this self-centric consumer trend.
Beyond personalization of services and products, the beauty standard, which has been warped by social media filters for years, is also contributing to this self-centric consumer trend. As a result, there has been a plastic surgery boom in Latin America, as the region becomes a popular destination for plastic surgery procedures. As part of the pushback, authentic self-expression has become an important selling point in Latin America, especially for beauty and fashion brands. For example, Natura, a Brazilian cosmetics brand, recently enhanced their online buying journey with authentic customer content by integrating real photos and videos of customers using their products into their online store. In addition, the brand ran a “Meu Mundo Natural” (“My Natura World”) campaign, which encouraged customers to create an online profile and receive customized product recommendations based on their skin types and product preferences.
As a medium perfectly suited for self-expression, podcasting is becoming increasingly popular in Latin America.
As a medium perfectly suited for self-expression, podcasting is becoming increasingly popular in Latin America, with many people creating podcasts to share their thoughts and opinions on various topics in an intimate and personal way of self-expression, as listeners can hear the host’s voice and get a sense of their personality. An example of this is the Se Regalan Dudas podcast, which consistently ranks in the most listened podcasts in the country. It is a project between two young women who started it as an intimate conversation with their friends, and it grew to be a platform for sharing thoughts on mental health, self-love, and self-confidence, themes that are not often discussed in mainstream media in LatAm.
Overall, hyper-personal media is becoming increasingly common in Latin America, as companies seek to engage with consumers in more meaningful and personalized ways. With the increasing adoption of technology and data-driven strategies, hyper-personal media is likely to continue to grow in importance in the region, shaping the way that companies interact with their customers and create value for them.
The Rise of Synthetic Media
Synthetic media, which refers to digital content that is generated or manipulated by artificial intelligence (AI), is an emerging trend in Latin America. The region has a growing number of startups and researchers working on developing synthetic media technologies, such as deep learning algorithms and computer vision systems.
The region has a growing number of startups and researchers working on developing synthetic media technologies.
One of the most prominent applications of synthetic media in Latin America is in the entertainment industry, where AI-generated content is being used to create more realistic and immersive experiences for audiences.
Synthetic media is also being used in marketing and advertising, where companies are using AI-generated content to create personalized ads and targeted messaging. Additionally, there is growing interest in using synthetic media for education and training, as well as in healthcare for medical imaging and diagnosis.
What’s unique about Latin America’s digital advertising and media landscape is that it’s concentrated in a few select media channels and networks: Globo in Brazil, Televisa in Mexico, and Clarín in Argentina. By partnering with one of these major media players, early-stage startups have a huge advantage in terms of building their audience and market in Latin America.
Some of the pioneers in the region in terms of synthetic media are focused on improving the creative process in advertising.
Some of the pioneers in the region in terms of synthetic media are focused on improving the creative process in advertising. In Brazil, an ad tech company called Jellyfish (Reamp) is using synthetic media to create personalized ads and performance marketing for their clients. By leveraging AI-generated content, they can create targeted messaging that is tailored to specific audiences based on their interests and behaviors. Similarly, GroovinAds, an Argentinian ad-tech platform, offers a real-time dynamic creative optimization technology platform for advertisers to create and optimize ad creatives. The tool uses audience segmentation methods or product interest segmentation methods by sourcing product data in real-time. It provides a platform that combines a decision engine, ad creation interface, and an ad-server with a tracking system, and then monitors feedback on conversion and performance data.
AI integration in Latin America is also being used to improving the consumer experience. In this regard, Vozyin Colombia and Yalo in México are two of the leading AI platforms designed to enable more humane customer service. Vozy has managed to make customer service up to 40% more efficient for its customers; Yalo enables brands to communicate effectively with their customers using chatbot assistants via messaging apps like WhatsApp and Facebook Messenger. Some of Yalo’s biggest clients include international brands like Coca-Cola, Amazon, and Walmart.
Overall, these cases demonstrate the potential for synthetic media to transform a wide range of industries in Latin America, from entertainment and advertising to healthcare and education. Too often, early-stage startups are so focused on growing their domestic user base that they overlook opportunities to expand internationally, especially in emerging markets like Latin America, which represents an exciting opportunity for innovation and growth that companies investing in generative AI should not ignore. As the technology continues to evolve, we can expect to see even more exciting applications emerge in the years to come.
A Return to the Kitchen Table Internet
The pandemic had enabled the creation or development of a lot of startups in Latin America for the past three years. The region has over 50 unicorns, particularly in the fin-tech, ecommerce, and on-demand delivery services categories.
A lot of these companies were created to address the problems in large Latin-American cities such as Mexico City and Sao Paolo. For example, to address the problem of traffic jams, which are common in large Latin-American cities, a Mexican bike-sharing platform called Zipp Mobility was created in 2020 to provide a sustainable and affordable transportation option for people who wanted to avoid public transportation during the pandemic. Similarly, Bipi, an Argentinean car-sharing platform, was another startup born out of the pandemic to address similar market demands.
Entrepreneurs in the LatAm region live and breathe uncertainty, making them highly adaptive and resilient leaders.
Entrepreneurs in Latin America are also built differently. For a variety of reasons (political, economic, and social), doing business in emerging markets can be a challenge. Entrepreneurs in the LatAm region live and breathe uncertainty, making them highly adaptive and resilient leaders. Having limited access to investment has also made them more resourceful and creative when solving problems.
After receiving a record of 15,000 million dollars of venture capital investments in 2021, Latin American startups see investors retreat. This context causes many LatAm entrepreneurs to rethink their business strategy and resort to expense measures such as reducing jobs.
Recently, the Greek startup Beat decided to close its markets in Latin America, which includes Mexico, Argentina, Peru, Colombia, and Chile, and a little later, Jokr did. A 180-employed cut at the Mexican Unicorn Konfío was also reported in September 2022. 200 Brazilian employees were disconnected from VTEX and the Peruvian Favo also announced the dismissal of its 170 employees in Brazil and its indefinite retirement from this market. In cryptocurrencies, the Mexican platform Bitso and Argentina Buenbit suppressed at least 80 jobs each.
The number of layoffs in the LatAm region this year are lower, due to the local technology industry being relatively less mature and developed.
However, in comparison to the other regions, the number of layoffs in the LatAm region this year are lower, due to the local technology industry being relatively less mature and developed. Additionally, many of the technology companies in Latin America are focused on servicing the domestic market rather than the global market, which makes them less vulnerable to economic downturns in other countries.
Many of the technology companies in Latin America are focused on servicing the domestic market rather than the global market.
Looking ahead, the LatAm region is well equipped to weather the interregnum period we’re entering. Despite the slow and uneven recovery from the Covid-19 pandemic, the region has shown resilience and adaptability in the face of challenges. The accelerated adoption of digital technologies has opened up new opportunities for tech companies and startups, particularly in areas such as ecommerce, digital payments, and telemedicine. Although the region faces challenges, its unique characteristics and opportunities, boosted by a growing middle-class and young population, make it an exciting space for technological advancement and economic development.
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