Introduction and overview
The following analysis is based on direct experience of managing PR teams in India and Latin America, in addition to extensive desk research as well as insights from entrepreneurs operating in both regions. The central thesis is that both regions have remarkable similarities ranging from huge land masses, and a reliance on new/wireless technologies (compared to so-called developed or established markets), to a continued reliance traditional editorial-based media, and vibrant, but relatively young democratic institutions. These similarities extend to respective business environment within each region; both are turning away from old school ‘clientelism’ and corruption, in favour of more transparent and ethical business practices. The latter are even attracting a premium – particularly from international clients – who are anxious to protect their image and remain fully compliant with international legislation such as the US’ Foreign and Corrupt Practices Act and the UK’s Bribery Act which extend beyond both countries’ respective borders.
Management practices in both markets are also catching up; with increasing demand for ‘international level’ services from global brands, local service providers who are able to step up – through the adoption of Western approaches and techniques, the incorporation of expatriate staff, or the acquisition of foreign-owned competitors – and secure a distinct competitive advantage. This is particularly the case in the service sector (travel, hospitality and, of course, marcoms); while the presence of international brands operating locally initiated the trend, best-of-breed local brands are increasingly demanding similar service levels from their agencies. One other similarity, particularly within the communications sector, is that both markets enjoy a relatively cheap labour force and operating costs (not least due to the continued strength of the dominant client currency, the US$; and that budgets are usually defined in this currency).
Despite these key similarities, there are a number of fundamental differences between India and Latin America including the latter’s overwhelming dependence on raw material exports to fuel growth (India is a net importer of raw materials). India continues to grow, while its commodities dependence has led to a stalling of Latin America’s economy. India’s population is young; its median age is under 30, compared to nearer 40 for most of Latin America . One principle difference, in PR terms, the level of attention global communications agencies are affording each market. India has long been a key focus international PR agencies with staff, resources and attention being dedicated to the region and helping to create a vibrant and extremely competitive operating environment locally. Latin America remains relatively neglected; as a result, the level of competence and genuine competition at agency level is far lower than that found on the sub-continent.
As a guide, of the top 5 leading PR agencies worldwide, only Edelman’s and Porter Novelli’s Latin America operations are led from within the region (with the latter being limited to a non-controlling stake in its Latin American offices). At Weber Shandwick, Latin America is managed from New York; while Fleishmann Hillard, Burson Marsteller and Hill and Knowlton runs its regional operations from Miami. Such arrangements would be inconceivable for the Indian market, but they provide an insight into the lack of consideration paid to the region.
The US and European PR networks’ continued neglect for Latin America represents a tangible opportunity for an ambitious and funded firm from an emerging market. Specifically, for an Indian firm to apply the same level of management discipline and international client service increasingly common in the sub-continent, to the region. To deliver an offering which is currently unavailable locally, which could command a premium (particularly from international brands) and which would be effectively insulated from the competition. The emerging market background would be crucial; traditional Western market approaches to Latin America consider the region a ‘subordinate’ version of the US and/or Europe. The reality is deeper and far more complex; like India, Latin America can only be ‘unlocked’ through the application of international best practice on a daily basis, taking into consideration the local context, and rigorous delivery on a daily basis. Adfactors has ample experience and expertise on the same; in fact, this is actually the agency’s ‘sweet spot’ .
Latin America’s new old media
Similar to India, social media is a growing force (particularly across mobile); Brazil is Facebook’s second largest market. But – unlike in the US and Europe, for instance – this shift is complementing rather than replacing traditional, editorial-based media. During the five-year period from 2009, newspaper circulation rose +32.7% in Asia, +3.7% in the Middle East and Africa and around +3% in Latin America; while it fell -8.8% in North America; -21.3% in Europe and -22.3% in Australia and Oceania. From the same report, 22% Brazilians subscribed to paid editorial sites in 2014; today, in Chile 78.4% of the adult population still read print media; compared to 19.3% who read via a PC or laptop.
Traditional media remains not merely relevant in Latin America, it is the biggest game in town (see above). Any PR agency, whether working for international or local clients ignores this at their peril.
But international firms continue to do just this; applying developed market logic to a region which is distinct. The advertising freefall across the traditional print media witnessed in the US (and illustrated starkly (left)), has not occurred in Latin America.
Editorial continues to play a far more profound role in the region in terms of validating, sharing and responding to content than in the US. In fact, the pattern resembles far more the Indian media situation, where print circulation and advertising are on the rise.
Daily Newspaper Circulation by region
Newspaper Advertising
The above does not suggest that alternative media sources and business models are not gaining ground in Latina America; according to Reuters research , 23% Brazilians regularly source news from their mobile devices, and a further 15% from their tablets, for instance. What it highlights is the continued importance of an ‘editorial approach’ to communication and information sharing; consumers in Latin America may not be as ready to disintermediate the journalist as quickly as their European and US counterparts. Rather like in India, it’s not only that traditional (print) media remains important in Latin America, but the role of independently validating, verifying and endorsing (or otherwise) content, irrespective of the platform, before sharing remains primordial.
PR communications environment; the Latin American blind spot
The above illustrates one particularity to the region in terms of media landscape; such trends are palpable to a greater or lesser degree across Latin America. But there are distinctions – Mexico’s cultural and geographical proximity to the US makes it the most open and ‘westernised’ environment, Brazil is doubly isolated, in terms of geography (Sao Paulo is over 9 hours from Mexico City, for instance, and the country is nearly three times the size India) but also language (Portuguese while 90% of the region is Spanish speaking), as well as business environment which is heavily protectionist.
Such commonalities and distinctions would be a familiar and comfortable process for an Indian professional accustomed to communicating across India’s 29 states and innumerable religious and cultural particularities. The reality is that none of the World’s leading PR networks have grasped the
Latin America opportunity; while the majority attempt to manage the region as a US subsidiary (without any senior presence actually in the region), none see the commercial opportunity presented by the complexity of the market and continued absence of realistic, professionalised competition.
The situation resembles that of India in the early 2000s. By 2009, it should be remembered, Edelman had entered into a joint venture agreement with R&P Management Communications, Burson-Marsteller had acquired Genesis, Fleishman-Hillard had opened its first Indian office, in Mumbai, Publicis Groupe had agreed to acquire leading Indian consultancy Hanmer & Partners, while public affairs specialist APCO Worldwide had opened offices in Mumbai and New Delhi . . . . and of course Waggener Edstrom Worldwide had entered into an affiliate agreement with Adfactors PR!
The Latin American acquisition spree has already commenced; in September last year, Hill+Knowlton Strategies acquired a majority stake in Ideal (a Brazilian public relations, advertising, digital and content firm ), later that month, another WPP agency – Ogilvy PR – purchased Brazilian public relations and digital content firm ConceptPR (effectively doubling the size of its operations in Brazil). A month later, Cohne & Wolfe (part of WPP) acquired Brazil’s third largest agency, PR Maquina , in the same month, Spanish-based PR group, Llorente Cuenca acquired Brazilian PR agency, S/A Comunicação .
The ‘agency real estate’ has been purchased, but the approach remains distinctly and unfailingly US; an attempt to map the integrated model direct onto the Latin American PR landscape. No consideration is paid to the continued role of traditional media nor the particularity of the region and the importance of an editorial approach irrespective of the platform. In none of the above acquisitions are local teams being actively supported (on the ground) by expats or internationally experienced, multi-lingual practitioners to share best practice and ensure genuine integration.
Brands, therefore, will continue to be faced with Latin American agencies focused (in some cases, exclusively) on offering full/integrated services direct to the CMO, who consider media relations little more than a loss leader, and who no longer prioritise the CCO as a relevant, long term partner. The resultant dynamic is typified by:
The situation resembles that of India in the early 2000s. By 2009, it should be remembered, Edelman had entered into a joint venture agreement with R&P Management Communications, Burson-Marsteller had acquired Genesis, Fleishman-Hillard had opened its first Indian office, in Mumbai, Publicis Groupe had agreed to acquire leading Indian consultancy Hanmer & Partners, while public affairs specialist APCO Worldwide had opened offices in Mumbai and New Delhi . . . . and of course Waggener Edstrom Worldwide had entered into an affiliate agreement with Adfactors PR!
The Latin American acquisition spree has already commenced; in September last year, Hill+Knowlton Strategies acquired a majority stake in Ideal (a Brazilian public relations, advertising, digital and content firm ), later that month, another WPP agency – Ogilvy PR – purchased Brazilian public relations and digital content firm ConceptPR (effectively doubling the size of its operations in Brazil). A month later, Cohne & Wolfe (part of WPP) acquired Brazil’s third largest agency, PR Maquina , in the same month, Spanish-based PR group, Llorente Cuenca acquired Brazilian PR agency, S/A Comunicação .
The ‘agency real estate’ has been purchased, but the approach remains distinctly and unfailingly US; an attempt to map the integrated model direct onto the Latin American PR landscape. No consideration is paid to the continued role of traditional media nor the particularity of the region and the importance of an editorial approach irrespective of the platform. In none of the above acquisitions are local teams being actively supported (on the ground) by expats or internationally experienced, multi-lingual practitioners to share best practice and ensure genuine integration.
Brands, therefore, will continue to be faced with Latin American agencies focused (in some cases, exclusively) on offering full/integrated services direct to the CMO, who consider media relations little more than a loss leader, and who no longer prioritise the CCO as a relevant, long term partner. The resultant dynamic is typified by:
- Neglected, traditional/editorial-based media relations; the absence of deep CCO relationships around whom incremented services can then be channeled
- Direct competition with the ATM/full service establishment; against whom at present – PR remains the ‘junior’ partner
Alternative, boutique/local agencies often retain strong media departments but offer no scale, international perspective and – in many cases – insufficient language capabilities to take on international clients.
With no internationalised teams or on-the-ground integration, even these acquired agencies will continue to fall into one of the above camps. The Latin America opportunity, therefore, is the creation of an offering which responds to the current reality; the role of traditional earned media and relationships with at CCO level, the provision of consistent and genuinely ‘international class’ client service, all delivered efficiently and profitably (as opposed to the ‘loss leader’ approach, currently adopted by most PR agencies). In effect, an adapted approach to the Indian model.
With no internationalised teams or on-the-ground integration, even these acquired agencies will continue to fall into one of the above camps. The Latin America opportunity, therefore, is the creation of an offering which responds to the current reality; the role of traditional earned media and relationships with at CCO level, the provision of consistent and genuinely ‘international class’ client service, all delivered efficiently and profitably (as opposed to the ‘loss leader’ approach, currently adopted by most PR agencies). In effect, an adapted approach to the Indian model.
Owning the narrative – which would be multi-platform and multi-audience – would also place such agencies in the driving seat, ultimately, beyond the CCO to the CMO. PR agencies are uniquely positioned to own the narrative for three reasons:
- PR understands dialogue (two-way communication); advertising in Latin America remains overwhelmingly unidirectional broadcast
- PR is real time every day; Latin American ATL is fundamentally campaign/product based and punctual
- PR is flexible; it is able to adapt to strategic shifts, crisis and contingencies in real time
The utilisation of this narrative-based PR profitable base as a bridgehead from which to sell additional services such as digital, creative content, research, public affairs etc remains a huge business opportunity in Latin America. In fact, the absence of productivity, efficiency and client service which reflects the majority of PR offerings across the region, represents a huge competitive opportunity – the firm that gets this right locally would enjoy a virtual monopoly.
Now is the moment to find PR Eldorado
Today, we are witnessing a confluence of factors that make Latin America compelling next step for an Indian PR firm looking to globalise:
- The absence of genuine, world-class competition; no one else is looking at Latin America, the market is proven but an ‘emerging markets’ approach is required. In this sense, the Indian experience is the most appropriate template and represents a clear and proven competitive advantage.
- Economically, the market is at the bottom of a cycle, assets and currency are cheap; international budgets are fixed in US$ which represents a guaranteed formula for business
- Politically, Mexico is on the rise; the North America Trade Agreement (free trade block) and recently signed Trans Pacific Alliance are good news for the country. The country is proving a reliable alternative to China as an outsource provider; Caterpillar, Chrysler, and Stanley Black & Decker are amongst the brands who have relocated operations to Mexico. With the election of Mauricio Macri, Argentina is hoping to put the inflation-fuelled populism of Cristina Kircher behind it. Columbia’s ‘peace dividend’ represents an economic commitment to growth as much as a political agreement. And for Brazil . . . . the bottom of the cycle has been reached; the local stock market actually rose upon news of Dilma Rouseff’s impeachment. The interim president, Michel Temer, is making economic stability the centrepoint of his policy for the coming two years.
- Professionally, clients, partners and employees are placing a premium on firms with modern management approaches, transparency, compliance and strong ethical values; tolerance of corruption and illicit activities is now zero. A firm from a market with experience of such environments and how to navigate them ethically will also be competitively placed.
The current blind spot being accorded to Latin America by the World’s largest PR agencies will not last indefinitely; now is the moment to enter the market and apply the logic of ‘editorial based’, integrated campaigns, driven by operational excellence and world class service. The approach has been proven in India and only an emerging market-based firm has the perspective and experience to make it work in Latin America. Now is the time to strike.
