Thought Leadership

Header Bidding: Changing Programmatic in Latin America

March 9, 2018
By Tameka Kee

Header bidding has fundamentally shifted the way our industry works — even down to the nature of the auctions that sit between buyers and sellers.

As the “birthplace” of programmatic, changes like this typically take root in the U.S. before rippling out through the rest of the world. And based on conversations during the first-ever Advertising Week LATAM, the Latin American region is next up on the list for a header bidding transformation.

“LATAM” is a good (but potentially misleading) acronym

With well over 417 million active internet users (a 66 percent penetration rate, in contrast to the world average of 53 percent), extremely high rates of mobile engagement, and a highly-mobile youth population, Latin America is a gold mine for global brands, video-centric and mobile-first publishers, and forward-thinking agencies.

But while “LATAM” is a catchy abbreviation, it would be a mistake to lump all the countries (and the people within them) into a monolithic market segment.

With three primary languages (Spanish, French and Portuguese) across 19 countries, territories and socioeconomic climates, programmatic advertising is one of the best tools available for targeting specific audiences in Latin America with content, messages and campaigns that speak their language.

Shortly after his Advertising Week LATAM workshop, we caught up with Patrizio Zanatta, our SVP and Managing Director of LATAM, for his take on the future of header bidding (and all things programmatic) in the region. Here’s part one of the interview:

Can you describe the state of programmatic in LATAM in 2018? Which countries are most advanced? Which countries are farther behind, and why?

PZ: Although Latin America is a small region in terms of its proportion of global programmatic spend (5 percent), there are signs of tremendous growth.

Digital ad spend in the region overall is projected to grow by nearly 10 percent this year — making it the fastest-growing region compared to other markets around the world. And Magna Global predicted that programmatic penetration — meaning how much of that digital ad spend will be programmatic — will grow from 39 percent this year, to 51 percent in 2021.

The largest share of regional spend comes from Brazil (with nearly half of the market), Mexico, and then Argentina —  mainly due to their larger digital advertising economies when compared with other countries in the region.

Interestingly, right after these 3 countries, we see the U.S., which of course is not a “Latin” country per se, but has a growing Hispanic population that’s pushing local U.S. agencies to target these users with multicultural budgets.

Colombia, Chile and Peru are actually lagging because of market size, less data availability, and a limited acceptance of programmatic transaction methods in general — compared to the traditional “direct” ad sales model.  

Over the past two years, header bidding has transformed programmatic buying and selling in the U.S. Has it changed the way that buyers & sellers interact in Latin American countries? Has it increased CPMs in specific countries, or for specific sellers?

PZ: In Q2 of 2017, we launched our header bidding product in Brazil — our first push into header bidding in the region. As the most receptive and advanced market in terms of programmatic, Brazil had the most buyers (and hence, the most competition for sellers’ inventory), followed by Mexico, and then Argentina.

Much like in the U.S., header bidding is starting to disrupt the digital ad industry in Latin America, because of the way it changes how buyers find and access their audiences through publishers.

Previously, buyers could only access inventory that was not sold by the publisher’s direct sales team. With header bidding, media buyers and DSPs can access a publisher’s entire audience, compete against any demand source — direct or indirect — just by bidding at the right and fair CPM.

In most cases, this increased competition has raised CPMs — reflecting the real value of each impression to an advertiser — something that publishers didn’t see before. Of course, the more advanced the market, the higher the CPMs that publishers will see for their audience.

Speaking of buyers and sellers, which brands and agencies are the most prominent programmatic buyers in the region?

PZ: The most active buyers include a mix of global and regional brands like Unilever, Netflix, Itaú, Net, Claro, American Express, P&G, L’Oreal, Coca-Cola and Johnson & Johnson.

The biggest agencies are Cadreon in Brazil and across most of LATAM, AlmapBBDO in Brazil, and Affiperf and Accuen in Mexico and Argentina.

Stay tuned for our next Q&A with Patrizio where we cover future trends in programmatic (and digital) in the LATAM market.