By Andre Bodowski and Edvaldo Acir

The IAB (Interactive Advertising Bureau) in Brazil has recently presented an extensive study on the current state of online advertising spending, adding new criteria and expanding the scope of previous studies. In the past, the IAB considered only spending data from display media. Now it also includes spending in major search engines in Brazil: Ask, Bing, Google, and Yahoo. Because search engines do not report their data to the organization, the Brazil IAB creates spending estimates which are the result of surveys with Brazilian ad agencies and advertisers. In addition, the Brazil IAB analyses investment guidelines and data from markets similar to Brazil.

The new study indicates that roughly 50% of online advertising spending in Brazil is invested in search, while display represents the other half. The study forecasts online ad spending in Brazil to reach $3.1 billion in 2011, a 10% share of the total advertising market in the country, with an expected growth rate of 25% compared to 2010.

“Brazilian advertisers and agencies are very good at adapting to the ever-changing trends in online marketing” says Fabio Brunelli, Director of Online Ad Sales for Fox.com in Brazil. “In addition, we are seeing very strong growth in ad spending. The market is significantly more mature than just a few months ago. Agencies and advertisers have completely embraced online as a main channel to reach their targets and goals, and they are concerned with KPIs beyond just CTR: starting with solid planning, they are deploying integrated strategies using multiple online marketing tools, from search to social. Social media is under intense ROI scrutiny: advertisers see money going in, and expect revenue out of social media, which is no longer included in the media plans simply because that was the trendy thing to do”.

Mr. Brunelli also points out to the future of online advertising spending in Brazil: search will continue to be a main part of the game plan, but there will be less focus on social and more focus on mobile.

Growth potential

As Brazil’s economy grows and social inequalities are slowly reduced, the digital divide will also be reduced. In 2002, 19 million Brazilians were online, and by the end of 2011 more than 85 million people will have access to the Internet according to the Brazil IAB, and the Brazilian government wants to expand that number and is now offering low-cost broadband to lower-income households.

Ricardo Viotti, Account Manager at Facebook Brazil, says: “This is an outstanding moment for the online industry in Brazil. There is still enormous market growth potential: the number of active online users is still rising with double-digit growth year over year. There is a large mobile base (231MM), more handsets than the total number of people in the country. And that is reflected in online ad spending: we expect double-digit growth in 2012”.

There is also consensus in the industry that the economy in Brazil will continue to grow despite the Euro zone problems and the slow growth in the U.S. In addition, online ad spending is expected to skyrocket because of the 2014 FIFA World Cup of Soccer and the 2016 Summer Olympics – both of which will be hosted by Brazil. Expect new and important digital players coming Latin America’s largest economy in 2012.

About the authors

Andre Bodowski (bodowski@yahoo.com) is a digital marketing professional based in New York and São Paulo.

Edvaldo Acir (edvaldoacir@uol.com.br) is a digital marketing management consultant and Brazil IAB’s Director of the AdNetworks Committee.