LATIN AMERICA: LESSONS IN LATINO - Latin America is a volatile market for any business to enter. Lucy Aitken and Jim Edwards investigate what to consider when heading south

Business practice in Latin America entails a new set of rules for

those who have been used to European or American ways of working. First,

some English is spoken in the region, but it is not good business

practice to stumble along with the Spanish and Portuguese for "hello",

"how are you?" and "two beers please".



Peter Minnium, Lowe Lintas & Partners' newly appointed chief executive

for Latin America, also believes there are a few cultural stumbling

blocks for outsiders entering the region.



"There are two major prejudices which reflect the region's 'developing'

status that need to be overcome," he says. "The first is that the region

needs to 'catch up' with the rest of the world in terms of advertising

sophistication. The second is that Latin American businesses are less

robust. While it is true that the markets are volatile - both

economically and politically - this has provided a graduate course in

business to the good agencies that one could never get in a developed

market. As a result, some of the best businessmen in our network are in

Latin America."



Certainly, the region's potential is magnetic to many networks,

particularly Brazil where GNP accounts for 38 per cent of Latin

America's entire GNP.



Fallon is the latest network to open a shop in Sao Paulo. The network

has hired strong creative talent formerly from BBDO and Talent, and

professes to like the "strong advertising community" and the "maverick

quality in Brazilian work".



Brazil is a notoriously tough market for foreign companies to

conquer.



Yet the country's five-largest companies - Volkswagen, General Motors,

Carrefour, Fiat and Shell - have all done it, and all of them are from

overseas. What's more, owing to privatisation policies under president

Cardoza, brands from all over the world such as Renault, Mitsubishi and

Spanish telecom Telefonica have become household names in the

country.



Despite similarities across the region, there are a huge number of

diversities, not least in how advertising is seen by the public. For

instance, in Mexico, there's so much clutter that some advertising is

barely noticed, whereas in Brazil, everyone has an opinion on the

latest, hottest ads.



Lorine Solomonescu, the creative manager of Salles D'Arcy in Sao Paulo,

believes that Brazil and Mexico are more influenced by US culture, while

Argentina and Chile mirror Europe. Comparisons with brands reflect this.

In Brazil and Mexico, two of the most popular brands are Brahma and

Corona - both beer brands. Meanwhile in Chile, the Lucchetti pasta brand

and the wine brand Conca Y Toro are among the most popular.



Latin America's advertising markets currently account for less than 8

per cent of world advertising. But in terms of investment, the time is

ripe. Despite the anticipated global downturn, Zenith Media has forecast

that adspend in the region will swell to be worth more than $26.5

billion in 2001.



Anticipating a boom period, media owners have already set up shop.

Earlier this year, CNN developed a full-service TV and internet newsroom

for its Mexico City bureau, the hub for the Mexican feed of CNN en

Espanol. BBC World has also built on its brand equity within the region,

often gained from its links with other networks such as Animal Planet,

which it co-launched with Discovery.



Yet since the 11 September terrorist attacks, forecasts have been

tempered as the Latin American economy is closely linked to North

America's. Bill Colantuono, the vice president/managing director of The

Media Edge's Miami office, predicts a 10 per cent drop in adspend for

2002. His estimates for total adspend in 2001 are also more conservative

than Zenith's.



What's more, Venezuela and Brazil have, respectively, discussed or

implemented legislation to restrict or tax foreign programming.



"It will add another layer of complexity," Laura Desmond, the chief

executive officer of Starcom MediaVest Group Latin America, admits, but

she adds that "nothing is impossible in Latin America."



Interestingly, Latin America's media companies, especially

Spanish-speaking networks such as Televisa and Azteca in Mexico, are now

looking to export their content to the Hispanic audience in the US. Just

as American and European media companies have made partnerships to

further their progress, home-grown companies are now following suit.

Globo in Brazil is now conquering outside markets, selling programming

to 14 markets.



Today, you're just as likely to see Walking With Dinosaurs on the small

screen in Brazil as you are to catch Terra Nostra, Globo's flagship

telenovela, in China, where a staggering 870 million viewers share in

the trials and tribulations of its heroe and heroine, Matteo and

Juliana.



ADSPEND FORECASTS FOR LATIN AMERICA: 2001 (dollars bn)

Brazil 6.6

Mexico 3.0

Argentina 2.3

Venezuela 1.5

Chile 1.1

Columbia 1.1



HOW US AND EUROPEAN MEDIA ARE ADAPTING TO LATIN AMERICA



Latin America is home to both American and European media brands that

have made local partnerships or produce local content for local

consumers.



A notable recent entry to the market is Rolling Stone, which is

published by La Nacion in Argentina. Evelyn Bernal, Rolling Stone's

ancillary products director, claims that 30 per cent of it is produced

locally. It has been published in Spanish since April 1998.



Most of the big US media owners have some presence. Dow Jones, for

instance, has a flagship Latin title, America Economia. Meanwhile, AOL

Time Warner has experienced mixed fortunes. Time magazine is firing on

all cylinders, and Time Latin America has increased its pan-regional

circulation from 100,000 last year to 120,000 this year, according to

Richard Hine, the president and publisher.



"We increased our circulation in Mexico by about 40 per cent in 2001,

during 2000, from 28,000 to 40,000," he confirms.



Most of that growth came from working with AOL Latin America, which has

a reported 750,000 customers in the region. Basically, subscriptions to

the magazine were marketed to AOL subscribers, an example of one of the

hoped-for cross-pollinations that fuelled the merger between the new-

and old-media giants. There might be, however, limits to Time's

progress. AOL Latin America cut jobs earlier this year as a result of

worsening economic conditions.



"It has been a tough year for ad revenue," Hine admits.



Contrast Time with other AOL Time Warner properties. Fortune pulled back

completely from the region a year or so ago and now circulates only

about 5,000 copies of its European edition there. People magazine, the

celebrity-laden juggernaut of American publishing that already offers

People en Espanol in the US, has not really pursued the market and

remains wary of getting its toes wet during uncertain times.



David Geithner, the general manager of the People Group, says: "We've

looked at it pretty seriously on a lot of fronts, but haven't, for a

variety of reasons, chosen to do much there." Geithner's opinion

reflects that of many of his colleagues - the region has given many

American media bosses late-night headaches. People has tried licensing

its product to local media owners, but found that the required scale has

never materialised. (People's circulation in the US is 3,250,000; the

Spanish version's is 325,000.) "They're tiny, and for us to do something

we expect a minimum return that's quite significant," Geithner says.

"It's not easy doing business in Latin America. If it's a pain to

collect, and if you're not selling that many copies to begin with, well

then you have to question overall, is it worth it?"



For Reader's Digest (or Selecciones, as it is known locally), the

headaches have been worth it. The title has been in the region for 50

years and publishes bespoke editions in most countries - about 850,000

in Mexico, 500,000 in Brazil and 200,000 in Argentina, where it is the

largest magazine, according to Michael Brennan, the president of

Reader's Digest Latin America/Asia-Pacific. Clearly, persistence has its

advantages.



"Latin America is an up and down place, you've got to be willing to

accept that," Brennan says.



In TV, the big news is in cable and satellite multi-channel

delivery.



Most American channels are now available in most of the region, with

varying degrees of localisation. The Discovery Channel broadcasts on a

regional basis, but ESPN, for instance, is moving toward as much local

programming as possible and has branded its channels on a

country-by-country basis. ESPN is also hoping to extend its ESPN

magazine brand to the region, according to Michael Fox, the vice

president of worldwide advertising sales.



However, not all American brands are vying for consumers' attention.



Colin Lawrence, the strategy and sales operations director at BBC World,

says: "We've initiated subtitling on our programming into Spanish and we

will extend that into Portuguese at a later date. At the moment, we

don't tailor any of our programming, but we are looking into that as our

next priority for 2002."



Multi-channel TV remains a growth sector, although its growth is

slowing.



Penetration is as high as 60 per cent in Argentina, but hovers between

10 and 20 per cent elsewhere.



While its reach is low, it does offer a preselected demographic of

upscale homes. As Lawrence puts it: "Cable and satellite TV has a

relatively high penetration among ABC1s, so it offers a good

opportunity."