ERA Show Touts Opportunities in Latin America
Mary Teahan, executive director at CPComunicacion-Proximity, an Argentine division of BBDO Worldwide Group, and president of the Argentine Direct & Interactive Marketing Association, whetted marketers' appetites with information about the growth potential in Latin America during a Feb. 25 lunch session at the meeting.
While direct response sales make up only 3 percent of retail sales in Latin America, compared with 13 percent in the United States, Teahan said that percentage is growing. The highest direct response sales are in Brazil, Mexico and Argentina.
Teahan attributed this growth to a changing Latin American consumer demographic. Historically, the direct response consumer has been a lower- to middle-class worker located in interior regions, where local retail centers may not be readily accessible. Teahan equated the new consumer demographic to her own sons, young adults in their late 20s and early 30s who are economically active, bilingual, "cannot remember a military government, do not know what it is like to live with inflation" and are located in the coastal larger cities.
The online consumer in Latin America has an average age of 29 and is primarily male, though the number of online females is growing, upper middle class and living in major urban centers, Teahan said.
"I asked my son to do the grocery shopping and he did it all by the Net," she said.
Teahan said the majority of online direct response sales consist of auctions, travel, financial services, music and video, books, consumer electronics, software, clothing and food. One of the most popular sites is Amazon.com, she said, adding that more shopping is being performed on non-Latin-American sites than on local sites.
Major obstacles in the direct response market include a low GDP per capita in which wealth is concentrated geographically; low catalog-buying experience; the perception of unreliable delivery and fulfillment options; and lack of credit card penetration. Teahan said credit card use is high in the big cities.
Ambler H. Moss, former U.S. ambassador to Panama and current director of the University of Miami's Dante B. Fascell North-South Center, told attendees in a broad keynote speech that Mexico in particular has "done an extraordinary job positioning itself for trade" through memberships with both NAFTA and APEC.
Moss said the United States must step up its role in trade leadership, adding that while there are 130 trade agreements, the United States is only party to two. One attendee asked whether Latin America might one day have a free trade arrangement similar to that of Europe. Moss said that while he anticipates agreements between specific markets such as Chile and Bolivia, he does not anticipate pacts across the entire region.
Anthony Lujan, co-president of Williams Worldwide Television, Santa Monica, said American marketers trying to break into the Latin American market must take into account that local products are usually cheaper to produce and are priced lower. To avoid competition, U.S. companies should sell products that cannot be replicated, he said.
Williams buys panregional media and handles product marketing throughout Latin America.
"When testing products we don't have to roll out country by country," Lujan said. "The market goes in waves. In 1995, Mexico, Argentina and Chile were big. Now we are seeing growing sales in Guatemala and Panama."
Toni Knight, president of WorldLink, a global media seller, said obstacles include developing back-end support; creating relationships with local fulfillment, telemarketing and distribution companies; and dealing with import issues.
WorldLink has had success in Latin America, Knight said, because of its relationships with panregional networks. WorldLink has partnerships with Latin American networks including MGM Casa Club, Fox Sports Americas, Tristar Networks and Cisneros Television Group.