Why online advertising is thriving in Brazil

The Brazilian population is getting more and more connected to the internet. Certainly, this has a significant impact on the online advertising market.

Especially for younger generations, it is hard to imagine a life without internet access, using smartphones or other digital devices. That is why the number of internet users is constantly increasing worldwide, with about 1 million new users per day. According to global statistics, China, India and the USA are among the top three countries with the highest number of internet users.

But did you know that Brazil already comes right behind, in 5th place, ahead of any European country? The Brazilian population is getting more and more connected to the internet. According to a recent survey, three out of four Brazilians regularly access the world wide web. That is equivalent to 134 million people.

Certainly, this has a significant impact on the national online advertising market. As stated in the ADSpend 2019 report, online advertising investment in Brazil experienced an increase of 10% in 2018, compared to the previous year. For the period between 2019 and 2023, market experts estimate an even national market growth of about 13% per year.

How the online advertising market has changed over the years

The digital advertising system has become increasingly complex over the past decades. Historically, the selling process was tailored for the traditional media, between an advertiser, an agency and a publisher, who offered its advertising spaces for specific campaigns at a fixed price and for a previously defined time slot.

Nowadays, due to constantly increasing online advertising space as well as new data collection and processing technologies, new players have entered the market and this is changing. These players have brought solutions to automate the selling process of online advertising media. Consequently, the market has adapted to the new technologies, focusing on the so-called Ad Exchange.

The term describes online marketplaces where publishers and merchants negotiate advertising space. Publishers are, for instance, the operators of a website, blog or online magazine and offer their available advertising space. Merchants, on the other hand, are individual advertisers or marketers, who want to place their advertising material on the available spaces. The prices are calculated by an automated process, based on supply and demand.

The Brazilian online advertising market

In Brazil, a big part of the online advertising industry comes from e-commerce businesses of many different categories, ranging from retail to electronics to automotive accessories. Despite the economic instability in Brazil, Brazilian e-commerce grew by nearly 23% in 2019, to 75.1 billion reais, compared to 2018, according to the NeoTrust 2nd edition report.

The leading region is the Southeast, with more than 66% of purchases made in the national territory. The region concentrates the population with the highest purchasing power in Brazil. Additionally, a great majority uses their smartphones for internet purchases. Statistically, 85% of Brazilians who own a smartphone buy online.

Accordingly, the online advertising industry lately focused its investments primarily on mobile (67%), more so than on desktop or tablets (33%). “Geolocation targeting, connection type and quality, consumer habits and the possibility to reach the user at all times of the day, are some possibilities of creatingunique strategies on mobile and combine them with other devices, whether on or offline”, said IAB Brasil consultant, Alexandre Grynberg.

Increasing relevance of video in Brazil

Analyzing online advertising formats, video (38%) and display (34%) registered most investments in 2018. The term “display advertising” addresses all kinds of static or animated image ads. “The big highlight in the breakdown by formats is the relevance of video in Brazil. In 2018, it represented 38% of the digital investment in the country, a number much higher than the 15% recorded in the same period in the USA”, said Fabio Coelho, Vice-President of Google Inc and president at Google Brasil.

Its success is directly linked to the fast pace of online video consumption in Brazil, Coelho added. “The content attracts a new generation of Brazilians who watch what they want and whenever they want via smartphone. Online video has its space guaranteed in the daily lives of many Brazilians and should represent a significant part of investments in marketing.”

The AdSpend report of 2019 also shows the importance and distribution of investments regarding social media channels. Following the analysis by platform, Facebook and Youtube are the most important social media platforms for online advertising in Brazil, taking up 47% and 26% of investments, respectively. Instagram comes in third place with 19%.

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