The Pitfalls and Opportunities in Brazil

SAO PAOLO – Meu Caro (my friend, as we say in Portuguese). I write to you about the opportunities and problems of direct marketing in this incredible country of 162 million people living in an area just larger than the continental US.

And it is one hell of a time to discuss these issues. Interest rates are around 40 percent per year and until the beginning of this month the international press was predicting the country was in the drain. I’m happy to report that everyone is talking about the remarkable recovery. Optimism is the flavor of the month. Best of all, response rates are back to precrisis levels, or almost.

Brazil is not an easy market but it is a rich and exciting one for the courageous. National Geographic and the Economist sell a lot of English language subscriptions here with mailings from the US and the UK. Florida travel operators mail successfully into the country (in Portuguese, the language of Brazil). Multinational Concepts mails a catalog and Action Direct sells clothes.

Not surprisingly, the majority of direct marketing activity from US companies is generated by those who have established their own Brazilian operations or developed partnerships here. AIG Insurance, American Express, Citibank, Ford and, of course, Reader’s Digest all use direct marketing as a key part of their total communications and selling mix. Their people know the market and its peculiarities. They know where to find (and if necessary, adapt) the local infrastructure to support their marketing efforts.

They know, for example, that media costs, especially TV, are horrendous, often as much as 10 times as high as in the US.

The players on the ground know there are good mailing lists available. Credit card companies make names available. So do such Brazilian catalogers as Group Imagem. And, please forgive the commercial but my own database company, DataListas, offers more than 20 million individual consumer files with excellent segmentation.

As in most Latin American markets, the unwary direct marketer will be offered lists of dubious provenance. The market in these names exists even as professional direct marketers refuse to use them. My advice is to avoid them for ethical reasons and because they are almost always out of date.

With experience, local direct marketers will have discovered the prices and services which local or international direct marketing agencies (all the major international agencies have Brazilian offices) can provide. The range here is broad and the quality highly variable. There are only a limited number of clear-sighted DM professionals and they tend to move around. Keeping track of them is an art form but a worthwhile one. Agencies here charge very high prices if clients are prepared to pay them. Smart clients are not.

One problem is a tendency by polite and fun-loving Brazilians to soften the selling edges of promotional messages. In doing so, offer messages or “Act Now” statements tend to get buried. When they are resurrected, they work better than the softer versions. And prize draws, premiums and other incentives almost always work.

Postal costs vary with content weight for a largely dependable service. How you assess these costs depends on whether you are planning to mail from the US or are thinking solely in local currency. Again, you need local help. One reason is there are a growing number of services that will deliver addressed mail as efficiently, or more so, than the postal services at a savings of as much as 30 percent.

How do you fulfill? This depends to a great extent on what you are fulfilling. The postal service is reliable but expensive. Especially for large urban areas (and remember the majority of the economically active population can be found in Sao Paulo, Rio, Belo Horizonte and Brasilia) you might do better with private services.

So, to answer your penultimate question: should you seriously consider direct marketing in the current Brazilian market? My answer would be a qualified yes.

A recent piece in the New York Times ascribed Brazil’s miraculous return from the brink of the predicted economic disaster to something known in Portuguese as jeito – the ability to find clever solutions to legal, bureaucratic or financial quagmires. I’ve never seen any other country where the people were as creative and flexible.

This is important and should impress upon you the need to get close to the market before making your decision.

So why don’t you plan a serious business visit and then a long weekend on the beach? Both may help you decide.

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