SHARE:
Weak Signal
Most of these networks began operations knowing it could take several years before they earned any money. Cable penetration in Latin America is very low: except for Argentina, where over 50% of households subscribe to cable TV, no other country has penetration higher than 26%.
Even with that caveat, the fledgling cable networks seem to have overestimated the interest of advertisers. There are now about 40 U.S.-based "pan-regional" cable channels that send programming to Spanish-speaking Latin America. Yet according to industry literature, advertisers spent less than $20 million in 1995 on the medium. There are several theories why advertising hasn't taken off. For one thing, the market is small, albeit affluent. Some suggest that because the ability to reach viewers in a multitude of countries with a single ad didn't exist until recently, it has taken advertising agencies time to accept pan-regional cable. A more significant reason, however, may be that the channels miscalculated in thinking they could send the same programming to every country in Latin America and get viewer and advertiser response. This strategy presumes that Spanish-speaking Latin America is a single market.
In reality, advertisers find it difficult to develop messages that are as effective in Mexico as in Chile or Argentina. Many household products are sold under different brand names in different countries. Plus, there is the basic fact that when it's summer in Mexico, it is winter in Chile, so all sorts of seasonal ads don't work. Recent reports in trade magazines and in the Spanish-language business press suggest many of these pan-regional channels are struggling. For example, the trade publication TV International reported in July that CBS TeleNoticias lost $14 million in 1995 and would lose a similar amount this year.
Jose Del Cueto, president of TransAmerica Media Group, a Miami company that helps advertisers plan Latin American media buying strategies, says the total 1996 ad market for the pan-regionals will be only $20 million to $25 million. "For 40 players, that's peanuts," he says. "Some people are hurting."
Les Margulis, international media director for the advertising agency BBDO, New York, says there are too many cable networks chasing too few dollars in Latin America. "There is not enough money out there right now. Will there be enough money in ten years? Probably for about a half-dozen channels," he says.
The pan-regionals themselves say it is far too early to render a thumbs-down verdict. Dawn McCall, senior vice president and general manager of Discovery Channel Latin America/Iberia, says more patience is required. "I think that for us, it's never been where we'd like it to be, but it's where we expected it to be," she says of the advertising market. Discovery Channel began ad sales in 1995 and McCall says response has been positive. "We feel like we've built a real solid foundation," she says.
Even at MTV Latino, recognized as one of the most successful channels in Latin America, there are reports of problems. The Spanish-language business magazine AmericaEconomia recently asserted that MTV Latino is in financial difficulty and quoted officials of several South American music channel competitors as saying MTV Latino is viewed as too generic for local tastes.
MTV officials scoff at the notion of financial trouble, but a few months ago, MTV Latino did split its signal to Latin America. It now sends different programming to Mexico and Central America than to South America. Damaris Valero, senior vice president of sales for MTV Latino in Miami Beach, agrees that many pan-regional channels are suffering, but says MTV Latino isn't one of them. "I think that [growth in viewers and advertising] has been a little bit slower than everyone expected, if you look at the industry as a whole," she says. But, she adds, "We feel we're a little bit of a different story from everyone else."
She says MTV Latino's revenues will double in 1996 and that ad sales have "exceeded our expectations. But I can't say that's the same for the industry." Splitting cable signals to tailor programming and advertising to different markets appears to be the next move for the pan-regionals. Like MTV Latino, Discovery Channel took a step in that direction in July by splitting its commercial feed into Argentina from the rest of its signal. Advertisers can now buy time solely in Argentina, by far Latin America's biggest cable market.
Del Cueto expects more split-signals and possibly even a contraction in the number of cable channels. He argues that advertisers need to be able to target their messages to local tastes. "That's why I believe the pan-regionals are going into local feeds, because the advertisers are saying I don't want to be in Chile at the same time I am in Argentina at the same time I'm in Mexico," Del Cueto says.
--
Miami: Madison Avenue Of The Americas
The troubles of the pan-regional cable channels shouldn't obscure the good news about Miami's position in the Latin American advertising world. "I think what's happening is that just as Miami became the Latin American trade capital, it is becoming the advertising capital," says Alan Campbell, an executive vice president with Young & Rubicam.
Three years ago, Young & Rubicam moved its Latin American headquarters from New York to Miami. Campbell says the move has paid off handsomely. Miami is closer to clients, has a Spanish-speaking professional culture and is also the place where many wealthy Latins, and successful Latin companies, keep bank accounts. From Miami, advertisers can buy TV spots, print ads and even billboard space. "It's a thing that's really happened recently. It's exciting for Miami," Campbell says, adding the Latin American region is the fastest growing segment of Young & Rubicam's worldwide business.
Les Margulis, international media director for the advertising agency BBDO, New York, says agencies are following their clients' lead. "Advertising agencies in general tend to follow their clients' business. So as clients have moved their regional marketing groups to Miami, agencies have followed," he says.
Similarly, when Discovery Channel Latin America started in 1994, general manager Dawn McCall says most advertising decisions were made in New York. Now, however, they are increasingly being made in Miami. "There is less and less emphasis put on the New York market and more and more buying being done from Miami," McCall says. Jose Del Cueto, founder and president of TransAmerica Media Group, sees the phenomenon every day. A former advertising executive with both the Univision and Telemundo Spanish-language TV networks, Del Cueto started TransAmerica in 1994 as a firm representing several Latin American television and radio stations. But, he says, so many advertisers and ad agencies asked him for help plotting media strategies for Latin America that he switched his focus to representing ad buyers instead of sellers in 1995.
Del Cueto says his own business "is taking off like a rocket." He now has 15 employees and $10 million in annual billings. He expects billings to double to at least $20 million next year.
"It's really exciting what's taking place because media-buying services as an industry is a new proposition," says Del Cueto.
