This time last year, Latin American agency executives whose balance sheets had been battered by the economic collapse of Argentina were warily eyeing Brazil, wondering whether that country and its new president would also be plunged into its neighbour's economic maelstrom.
As it turned out, Brazil and Argentina have been the least of their problems. Instead, it is oil-rich Venezuela that has been creating worry lines.
A general strike against the president, Hugo Chavez, left the Venezuelan advertising business in tatters. By one estimate, 45 per cent of all private businesses have gone bust. Agencies in Venezuela literally did no business at all during January and February - meaning no billings, no revenue, no profits and no work.
While ad executives in Europe and America worry about recessions and low growth, their colleagues in Latin America are facing some surreal questions about what it means to be in advertising when there is no way to advertise: how do you ask your staff to come to work when there is no food? How do you conduct business in an OPEC country that has no petrol?
And how can you create new campaigns when there is a shortage of everything required to make them, including money?
"For a while we couldn't do anything," BBDO Worldwide's president, Andrew Robertson, whose clients in the region include Pepsi and Mizuno Trainers (whose press work won the Brazil-based agency Almap BBDO a gold at Cannes in 2002), says. "Getting to and from work for a while was incredibly difficult.
Getting money transferred around the banking system, which was on strike - you just don't have to worry about these things in so many other markets."
"You have a zero market. There is no activity. You don't have mail. You don't have banks. You don't have investments," Jean-Christophe Petit, the chief operating officer of Initiative Media Latin America, says. "You wake up every day, look at the papers, have a look at your cashflow, which is the only thing that counts, and forget about planning."
Even if they had clients with cash to spend, there was nowhere to spend it. For instance, the Latin American edition of Newsweek didn't make it past the airport for almost a month, according to David Swanson, its publisher.
"We went for about three weeks where we were not able to clear customs," he says.
And media providers based outside the country have found themselves in the odd position of catering to an audience that advertisers can't reach.
"It has basically turned into a non-market for us, in terms of advertising," Kevin Razvi, CNN's executive vice-president of news and advertising sales, says. "You can still take orders but the problem is collecting, and now there are no orders flying around. In Venezuela, the machine has just stopped."
BBC World's strategy and sales operations director, Colin Lawrence, concurs.
"There appear to be no Venezuelan clients," he says.
The situation has claimed its victims. The Weather Channel, a mainstay of cable in the US, shut its Latin American operations after collecting too many bills in currencies that weren't worth anything.
Aside from layoffs and locked doors, ad agencies have come up with ways to survive that would be unthinkable elsewhere in the western hemisphere.
At Euro RSCG Latin America, staff have been working half days. "Half the people work in the morning, half work in the afternoon," Douglas Patricio, the general manager for the region, says.
At Lowe Lintas & Partners, Latin America, staff are essentially ignoring the riots and calls for revolution in favour of concentrating on the future.
"We have a skeletal crew that attends to clients in terms of planning for when things return to a degree of normalcy," the agency's president, Peter Minnium, says. "But other than that, the disturbances you see on the streets are enveloping everyone."
It has been tough for agencies to maintain their usual fallback posture for hard times - to advise clients to keep spending in order to be ahead of the curve when recovery comes. "International clients have learned in other markets over time that stopping spending is not an intelligent option," Minnium says. "At the same time, the extent of the drop was so dramatic that you feel like a clown making that argument to a client who simply has no product on the shelves. There's a certain point where it seems as self-serving as it is."
At the time of writing, the strike was easing and people were drifting back to work. Chavez - a table-thumping populist - may have toughed it out until a referendum can be held on his rule in August. But that leaves the country adrift in uncertainty. While this is likely to give agencies time in which to regroup, its real impact will be that clients will shy away from doing business until after the vote, when a modicum of stability may return.
Of course, Latin American agencies are used to this sort of thing. "The thing with Latin America is that it ends up being the 'ex region', by which I mean that for the past few years it has been in a position where people said 'overall, we did this - if you exclude such-and-such a country'," Robertson says. "In 2002, the excluded country was Argentina. This year, the market that is going to be excluded is Venezuela."
As it happens, there has been a trickle of good news to come from countries outside Venezuela. Omnicom's TBWA Worldwide bought a stake in Brazil's Grottera, a shop that claims $28 million in billings. Euro RSCG made non-equity alliances in seven countries (the Dominican Republic, Guatemala, El Salvador, Honduras, Costa Rica, Panama and Nicaragua) and opened a fifth office in Argentina.
And BBDO was actually profitable in Argentina last year, according to Robertson. "Nobody else in Argentina was," he adds. That's an astonishing achievement in an economy that was described as a "disaster", "collapsing" and in "a depression" by ad execs during the middle of 2002.
But it's hard to quantify how good the news is. With currency devaluations in Brazil, Argentina and Venezuela - the region's economic powerhouses - it has become impossible to compare apples with apples. With the situation in some countries changing by the week, anecdotal evidence has largely replaced the spreadsheet as the totem of success.
On the vendor side, ESPN contracted with Union Radio in Venezuela last November (just in time for the strike) to carry its news reports. The move adds to the sports giant's reach in that country, which consists of two cable TV channels and a website. It is also a reflection of ESPN's long-time policy of ignoring local conditions in favour of expansion, come what may.
BBC World, a 24-hour news channel, had about six million subscribers across the region in June last year and that has expanded to just less than seven million today, Lawrence claims. "The broader message is that, if anything, news is becoming more relevant than ever, and as a genre is becoming much more sought after," he says.
That is reflected at its American opponent, CNN, which is also seeing steady growth. It now has 9.6 million subscribers in the region, up from 9.5 million in the summer of last year and 8.6 million at the end of 2001, according to Razvi.
Since 11 September, news media vendors have offered a double-edged sword to ad agencies and their clients: on one side, there are larger audiences, who remain glued to the screen as they watch explosions, riots and currency catastrophes. On the other, it is a grim environment for brands that may not want to appear sandwiched between Osama bin Laden and Donald Rumsfeld.
"Our advertising page count over the past two years has been down," Swanson says. "It's ironic. We are winning lots of editorial awards, our circulation demand is terrific, but it's not the kind of editorial environment that advertisers really relish. Then that gets compounded - do you really want to be advertising a travel campaign when the cover has a building burning down? Or do you want a corporate branding campaign when the chief executive of a Fortune 500 company is being pictured on the cover in handcuffs?"
Swanson finds himself having to remind clients that his Latin American readers are intelligent enough not to muddle editorial with advertising.
"My audience is a well-educated, bilingual, well-employed group. I tell clients, if you are advertising for luxury goods or financial services, real estate or investments and travel, my audience is still an effective group to reach."
BBC World has a policy of telling clients why people watch the news in the first place. "Somewhere in the world every day there is a war," Lawrence says. "That gives the channel the kind of profile it has." By contrast, CNN en Espanol has created gentler islands of programming in between the gory headlines. "There's still enough features and sports programming to create areas where clients aren't buffeted against bad news all the time," Razvi says. "We've done a lot of work on lifestyle and business programming and sort of up-market consumer programming."
One thing that everyone agrees upon, however, is that the standout area of the continent is Mexico. Mexico's good fortune, they say, is largely a result of the country having thoroughly roped itself to the US economy in the north.
"We increased revenue 17 per cent at the end of 2002 to about $100 million," Minnium says. "This is in a country where the industry was estimated in volume to grow 3 per cent."
"Mexico today has a weight that has tremendously increased on the whole continent, as a consequence of its own stability and the collapse of Argentina. If one country disappears, the survivor is bigger," Petit argues.
Brazil is also being regarded with enthusiasm. Before its new president, Luiz Inacio "Lula" da Silva, was elected late last year, the advertising business was worried that Brazil might get pulled into Argentina's black hole because of Lula's left-leaning political tendencies. But that has not happened.
"Brazil was able to weather the storm - people were surprised," Patricio says. "Businessmen in general had an unfair fear of Lula because of his leftist past. (But) he was elected and has done what he has promised - to be a moderate and to stick with the economy and keep inflation low. So far, he has done exactly what he said, so there was an initial boost in confidence. We feel that this year will be a good one for the country in general."
BBDO is also upbeat on Lula. "When you talk to guys in Brazil, they have a slight sense of wait-and-see, but it is a curiously optimistic wait-and-see attitude," Robertson says. "Lula is doing a lot of things that needed to be done to keep the economy strong and keep business growing, in order to provide for the social programmes." Robertson estimates that BBDO Brazil's revenues grew "something like" 15 per cent last year, off clients such as Volkswagen, Pepsi, Bayer and Frito-Lay.
But Brazil is still grinding its way out of recession - its automobile industry is on a four-day week, for instance - and its creative output has come to reflect that. "Almost all clients turned their view very short term, and even over the airwaves focused on promotion and retail advertising.
Watching TV in Brazil this year, the commercials are quite depressing if you are a fan of creativity," Minnium says. And this in a country where the creatives are held in the same regard as movie stars.
Traditionally, Latin American ad executives maintain a sunny demeanor when asked about the future - they insist that the region has always been dramatic, seeing incredible growth one year followed by disaster the next.
Success will only be achieved by those willing to stick it out for the long term, they all agree.
"Stability, to us, is a good month. We're optimists. Things are always going to improve," Patricio says, illustrating the point. "It's the same thing about 11 September. Everyone said that this was going to destroy the region - it didn't. A lot of times this is an excuse for poor performance. We have to survive any crisis. Now it is elections, tomorrow it's the war. We have to be able to tell our clients that they have to invest."
However, Patricio aside, executives were unusually gloomy when asked to predict how their operations would close out 2003. The cause of those worries is the US and Iraq. In the absence of a definite decision to go to war, the uncertainty is hamstringing their clients' spending plans.
One TV provider, who requested anonymity, said that media buyers weren't planning anything beyond the advent of conflict.
The broader worry is that the US's unilateralism and the cost of war will depress the American economy and lead to the devaluation of the dollar, thus crushing the spending power of the American multinationals whose attention they need in the south.
"I think an awful lot depends on the US," Robertson says. "A lot of regional business is going to be driven by the US corporations and last year, the domestic market got most of their focus."
As Minnium described it, 2003 could see Latin America leap "from the frying pan into the fire".
BEER AND BANKS: Brazil's big-spending clients
It is easier to have a global commercial in several countries than to have a Latin American ad because there are so many different cultures within the region. Even among the Spanish-speaking countries, they speak Spanish in different ways.
I think Brazil is one of the three creative powerhouses in the world.
But what we don't have here and what I'd like to see improved is the planning function. I believe more in the British way of thinking about planning as there's something creative about the way British planners work.
Beer ads in Brazil always have a huge budget and there are always strong opinions flying around about them. Banks, too, have recently changed tack.
They used to do quite boring work, but over the past two years they have started making much better ads.
It has become more difficult for agencies to have a long-term relationship with clients. The average is now three or three-and-a-half years. Loyalty is less of a priority when there are savings to be made, although I think there are mistakes being made at the moment because of false economies.
In the past five years, the number of agencies in Brazil has grown and that is partially responsible for an improved offering on the agency scene.
But the main problem is that quality is not yet matching quantity. There may be more agencies for clients to choose from, but clients need to ask who is really offering something new? Who is really interested in standing for the principles of producing good advertising? - Alexandre Gama is the creative director of Neogama BBH, Brazil.
ESTIMATED ADSPEND IN LATIN AMERICA 2003
COUNTRY Total TV Radio Press Outdoor
(dollars m) (dollars m) (dollars m) (dollars m) (dollars m)
Argentina 1,248,729 610,330 62,188 536,009 40,202
Brazil 3,745,915 2,306,655 176,549 1,086,162 176,549
Chile 477,905 238,952 46,340 160,070 30,620
Mexico 2,993,394 1,896,717 269,209 323,682 266,026
Source: Initiative Media.
LATIN AMERICA'S TOP ADVERTISERS
1 Unilever $28.5m
2 Grupo Telefonica $20.0m
3 Sprayette $17.1m
4 Procter & Gamble $13.7m
5 Telecom Art-Stet France $10.3m
1 Intelig $107.0m
2 Embratel $98.5m
3 Gessy Lever $91.5m
4 Itau $84.8m
5 Volkswagen $83.5m
1 Telefonica $39m
2 Lever $34m
3 Nestle $29m
4 Procter & Gamble $26m
5 Coca-Cola $22m
1 Commercial Mexicana $193m
2 Telmex $163m
3 Mexican Presidency $156m
4 Gigante $140m
5 Procter & Gamble $134m
1 Procter & Gamble $47.5m
2 Empresas Polar $42.1m
3 Grupo Cisneros $39.5m
4 CANTV $39.5m
5 Graffitti $35.1m