September 9, 2009

A Week in Brazil and a Day in Chicago

Gian M. Fulgoni Gian M. Fulgoni
Chairman Emeritus

It’s been a busy time. Last week on Tuesday morning I landed at O’Hare at 6:00 am following a week in Brazil meeting with clients and speaking at Digital Age 2.0 - a terrific conference in Sao Paulo organized by Now!Digital Business. Thanks to United Airlines being on-time and immigration at O’Hare being deserted, I was then able to get to Navy Pier in time for my panel at ad:tech Chicago late on Tuesday morning.

Here are some observations on Brazil and ad:tech.

Visiting Brazil is always special and so it was for me on this trip. The conference gave me the opportunity to meet some of comScore’s Brazilian clients, either at the conference or in a more private setting. The conference attracted about 800 attendees, which is testament to Brazil’s vibrant and growing Internet economy and to the country’s ability to navigate around the world’s economic meltdown.

It’s fascinating to look at comScore data and realize that Brazil is by far the largest Internet user community in Latin America and now the ninth largest Internet user community in the world, growing at an astounding rate of 54% last year - which also makes Brazil one of the fastest growing Internet populations. In fact, if one includes Internet access from public machines, such as Internet cafes, Brazil’s Internet user population of 58 million people age 15 or older would likely eclipse the top three western European countries – Germany, France and the U.K. – in number of users.

Brazil is also the #1 country in Latin America with a significant e-commerce market that has grown by about 20% this year. And, the Brazilian online ad market (search plus display) represents about 8% of all media spending in Brazil (the same rate as the U.S.) but has experienced growth of more than 20% this year while the U.S. has only grown in the low single digits.

Brazilians are very heavy Internet users, leading the region in terms of total time spent online at about 27 hours per visitor in a month, and outpacing the worldwide average of 22 hours by almost 20%! Brazil’s elevated levels of Internet usage can be traced in part to the popularity of social networking, with 84% of all Brazilian Internet users visiting a social networking site in a month.

Overall, Google Sites is the #1 property in Brazil, followed by Microsoft, UOL, Terra and Globo. Google’s success is driven by the popularity of its Orkut social networking site, which attracts a staggering 74% of all Internet users in a month and dominates the market by a wide margin, and its commanding lead in the search market with 90% of all searches conducted.

Turning to ad:tech, I have to say I was pleased to see that the attendance was almost the same as last year, which is saying something in today’s challenging economic environment. I hope it also says something about the attractiveness of Chicago as a city in which to hold a major industry event.

The focus of my panel was: “Defining the New Media Currency - How to Bring Traditional Media Metrics Online - Or Should We?” Interestingly, there seemed to be general agreement among us that the online ad industry needs to use some of the same key metrics that traditional media have employed successfully for decades: copy effectiveness, reach and frequency. Or, to put it in simpler terms: what we say, to how many people and how often. This should also include a measure of the ability of any given media plan to increase sales of the advertised product, whether the purchase took place online or in a retail store. This approach seemed to be generally accepted by the panel as being necessary if we’re to move more branding ad dollars online.

Agreement among us was shattered, however, when one of the panelists mentioned the importance of “targeting with transparency.” Use of the word “transparency” provoked a reaction on my part because this particular individual’s company had just been identified in a study by UC at Berkeley, which was covered in the recent Wired article “You Deleted Your Cookies? Think Again,” as using Flash cookies to regenerate cookies that a user had deleted from their browser – without informing the user. The violation is fairly egregious under even normal circumstances, but as the Wired article explains, these are not normal times: “The study also comes as Congress and federal regulators are looking at ways of reining in the online tracking and advertising industry, whose attempts at self-regulation have conspicuously failed to make the industry transparent about when, how and why it collects data about internet users.”

It seems to me our industry risks running into a real credibility problem if we’re telling the federal government that we can self-regulate ourselves while some companies are blatantly violating the most basic of privacy practices. It’s akin to throwing a lamb chop in front of a pack of howling wolves. We’re just asking for trouble. And trouble could take the form of laws or regulations that require consumers to give opt-in consent before cookies (even anonymous ones) can be placed on their computers. That’s not good news and it could affect negatively many members of the industry. For example, it would impact marketers’ ability to accurately and anonymously tailor their communications to consumers based on individual consumer interests, making such communications less relevant to the consumer, and more costly for the marketer. Meanwhile, consumers would be bearing the burden of continuously having to opt-in to receive the cookies perhaps multiple times on each web page that they view in order for ordinary events to occur – such as a site “remembering” a registered user and his/her preferences. Such an outcome would defeat the value that consumers derive from cookies which are intended to make the consumer experience more convenient and relevant to the consumer’s interest. As a result, I chose to highlight the issue at ad:tech – and I’m doing so again here – in the hope that this will help bring about a strict and voluntary adherence to privacy requirements by all industry participants.

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