Search Marketing in Brazil: Report from SES Latino

santiago.jpgI recently conducted an interview with Marcelo Sant'Iago the Director of Business Development of MídiaClick, a performance-based marketing agency from São Paulo, Brazil and a conference speaker at Search Engine Strategies Latino on the sessions, Search Landscape: US Hispanics & Latin Americans and Translate Or Create: Strategies For Those With English-Language Sites. Marcelo shares his experience and advice for search marketers to penetrate the Brazilian market, which today holds the largest internet population of any single country in Latin America.

For some background, Marcelo was the President of the Interactive Advertising Bureau (IAB) Brasil between 2002-2006, and now is Chairman of the Advisory Board. He also serves as board member for Fédération Internationale des Associations de Multimédia. Sant'Iago blogs about interactive media and search engine marketing at www.poucas-e-boas.com, is one of the regional editors of Multilingual Search blog, writes monthly for Caderno Propaganda & Marketing newspaper, Webinsider.com.br and has articles and interviews published in Brazil and abroad.

SEW: Brazil has the highest amount of Internet users of any Latin America country. What do you attribute that to?

Well, first of all we are more than 186 million people. In the last 10 years, since the web was available for everyone, telecom companies were privatized. That helped to increase the number of fixed telephone lines, mobile phones and broadband connections. Also, inflation is under control for some years now, and more people can buy computers, even though we still have high interest rates.

Still, less than 20% of the population has internet access (33 million users according to Ibope NetRatings), and a large part of low income Brazilians will not have access to Internet in foreseeable future, keeping Broadcast TV as the key medium for major industry segments (CPG, Food, Retail).

But internet advertising is growing year after year: Q1 2007 growth was 32% compared to 2006. And that's without search numbers, so everyone is very optimistic. According to NetRatings we lead the world in online time spent averaging 20 hours a month. Also, there's a high penetration/usage of Internet among the upper and middle class, meaning that even with less than 20% overall penetration among the entire population, people with purchase power are online. This is a key target audience for majority of business and Brazilian behavior is favorable to new technologies, such as videos, social networks, and instant messaging.

SEW: Is there any data on the total penetration of Brazilians who use Search?

Actually not many people in Brazil know, but yes. Brazilian Internet Steering Committee has a survey about internet usage with very interesting numbers. 75% of users have search as main activity online. Main searched categories are goods and services, entertainment, jobs, health, and travel. The full survey is available (in Portuguese and English).

SEW: Do many US-based Brazilians frequent Brazilian based sites?

I have to say yes, since you won't find many websites with content about Brazil in English. On the other side, many Brazilians are visiting US-based websites for content, such as music, international news, webmail, blogs. That is a good opportunity for advertising that most Brazilian agencies and marketers are not aware of.

SEW: Is there the same importance for US businesses to target Portuguese-speaking Latin Americans as there is with Spanish speakers?

Definitely! Brazil is one of the 9 countries where Google recently launched local versions of YouTube and the first having Yahoo's Panama rolled out in Latin America. Why? Because it is a fast growing market, with highest purchase power when compared to Latin-american Spanish speaking countries; and, of course, we have more internet users, despite the still low penetration when compared to some other countries.

Here are some numbers to back that up: in 2006 online advertising in Mexico accounted for US$80 million, Argentina US$50 million and Brazil US$180 million; and Q1 2007 growth was 32%. And e-commerce in Brazil reached US$114 billion in 2006 (36.4% B2B;12.7% B2C), 82% growth when compared to 2005.

SEW: What advice would you give for US businesses who are looking to market to Brazillians, but do not have a physical business location in Brazil?

1. Use search engines to reach the customers.
2. Localize (not only translate) your ads into Portuguese.
3. Develop a good landing page strategy: create a Portuguese version before considering have all your website translated.
4. Forget PayPal, and provide multiple payment systems including creditcards, and boleto (a local bank invoicing system).
5. If you planning to sell goods, sending the purchases by mail; then watch out for high taxes and duties.

SEW: How do Google, Yahoo, and MSN compare with offering regional-based search advertising services for Brazil?

Google is far more advanced. I'm handling regional campaigns with them since 2004. Yahoo's Panama is now up and running in Brazil, and we are all excited with the new capabilities. MSN is still under Yahoo Search Marketing flagship, so I think AdCenter won't be around shortly.

SEW: How do Latin America-based search advertising companies like Directa and Performa compare?

They have a big inventory not only for CPC, but CPA deals as well, and that is interesting to a performance agency like MídiaClick. But our experience shows that SERPs always provide better conversions than contextual solutions. And I personally do not believe in-text advertising is effective.

On the nutshell, I think they're an excellent option to add on our search campaigns and a fast way to reach Spanish speaking audiences within Latin America.

But, there is a bias, since Directa and Performa are part of a group which also owns a SEM Agency. But, if Google now owns Performics and Microsoft owns Atlas and Avenue/A, that shouldn't bother me, right?

Directa and Performa recently merged as part of DirectaClick.FOX. What affect will that have for LatinAmerica based search advertising?

The fact is: Brazil is the only Portuguese speaking country, so language is one of the barriers keeping Latin-american companies out of our market. That is why you won't find a publisher, vendor or agency from Argentina, Mexico, Chile or any other other country playing a lead role in Brazil. Even though, there are several companies based out of Miami telling US venture capital firms about their leadership in the region. What leadership, if you don't have a strong presence in the leading market?

Let's take SES Latino as an example: during one of the panels, a speaker listed what he said to be the most important community websites within Latin America. Even a website from Costa Rica was on his list, but none from Brazil! But Orkut, Google's social network (witch is the #1 website in Brazil), accounts for 60 million unique users/month, and the vast majority of them are Brazilians. Some of those countries don't even have 60 million internet users, total.

I think Brazilian companies are so busy doing business locally that they often forget regional opportunities. But I have to be fair: Spanish is a barrier for many brazilian executives, not to mention English. That means not everyone would be able to succeed regionally and probably aware of that, they keep its focus in Brazil alone, a much bigger market than several Latin-american countries combined.

Regarding to DirectaClick.Fox, they are a great company. We're willing to do business with them and I admire Damián Voltes for his accomplishments, but this merge will not change Brazilian online market landscape, at least in the short term.

On a regional perspective, I believe Google will maintain its search dominance thanks not only to its performance, but brand awareness as well. But on the agency side, AgênciaClick, the leading interactive agency in Brazil and one of most awarded in international ad festivals around the globe, was acquired early this year by ISOBAR (part of Aegis Group and owner of Carat and iProspect) for US$31 million and have already started its regional expansion. That might change the regional landscape very quickly.

SEW: UOL Busca is supposed to be extremely popular in Brazil. Can you provide some background information on this portal site? What are some features with this portal that might not be typical of a portal site like a Google/Yahoo/MSN/Ask?

UOL is one of the top ISPs and top destinations in Brazil, and was the first major portal launched in Brazil. That gives it a lot of credibility among local users. They are a public company, and all of their info is available (in English) here.
They also provide exclusive content from national and foreign media companies.

UOL Search is not a search engine per se: it's a feature of UOL portal, the first major horizontal portal in Brazil (they are around for more than 10 years). That's why I wouldn't compare him to Google or Ask. UOL was part of Yahoo's content network in Brazil, and just recently shifted to Google's. You can read all the details online.