Still reeling from a dismal 2001, the Latin American advertising market may be showing some signs of recovery.
But though operators and advertisers are striving to find common ground, old issues such as pricing and low subscriber penetration continue to restrain growth, according to participants on a May 5 National Show industry panel.
Like their U.S. counterparts, Latin American operators and programmers are at odds over high carriage fees, but a cable penetration rate of just 12 percent — compared with 60 percent in the U.S. — has hampered ad gains.
"It's a little hard to be optimistic," Pyramid Research senior analyst Carlos Rodriguez said at the Multichannel News International
Summit here. "There is no way revenue is going to increase without an increase in subscribers.
"There are too many local operators and too many regional operators, and very few of them are making money."
One solution to the problem would be to consolidate those small operators, thus giving the remaining MSOs the necessary scale to make their businesses viable, Rodriguez said.
Rodriguez said he expected 2002 to be another tough year for the Latin American market, but noted that cable operators and programmers may have better luck if they're able to offer new services.
"The triple-play [of voice, video and data services] hasn't worked well in the U.S. or in Europe," Rodriguez said. "But it could be a good solution in Latin America. I think total advertising revenue declines this year, but the share to cable is increasing."
For his part, Star TV Brazil president Paulo Leal said the Latin American ad market has started to show signs of maturity in the last 10 years or so, mainly with respect to how advertising agencies buy ads.
A decade ago, most agencies purchased cable-television ads on a regional basis, via Miami. Today, he said, those same agencies are buying local, regional and national ads from individual companies in their individual systems.
"Today in Brazil, you can buy any cable network — a specific show, primetime coverage, or the entire Brazilian region," Leal said. "What we need in terms of perspective is to offer more value to what we're selling."
While the Latin American economy is stabilizing, Nancy Mullahy — president of Starcom MediaVest Group Mexico, a major media-buying group — said that the region remains in turmoil. And while there is still great opportunity in the region, operators need to be open to different pricing structures to grow penetration, she added.
"Multichannel penetration isn't increasing," Mullahy said. "Programmers have done their job. They have created more in-country content.
"On the operator side, there is the opportunity to take advantage of different pricing structures. When they move from pricing issues, they move penetration."
Several major ad categories — including travel and tourism, automotive and real estate — are showing signs of a comeback, said Columbia TriStar International Advertising Sales Latin America vice president Klaudia Bermudez-Key. But despite the resurgence, the industry must still work harder.
"As an industry, because of what happened in 2001, we have to take more of an active role," Bermudez-Key said. "We're not just selling cable networks, we're selling the industry as a whole."
Some Latin American networks have banded together, forming a group called the Television Association of Programmers, to do just that, Bermudez-Key said.
"The idea is to pitch the strength and value of pan-regional cable without being specifically for specific networks," she said. "TAP is focused strictly on advertising possibilities. This is a major industry initiative for both programmers and operators."