The Big News: The Latin America promise
Exclusive report by Ryan Monceaux, Editor In Chief
MIAMI - Latin America, with all of its potential and all of its problems, presents one of the greatest challenges to the world of Online Advertising. With limited resoures, a small but ever-expanding collection of could-be users and few ISPs in many countries, the industry has struggled to find its niche in many of the Latin America markets. Yet the major players continue to attempt to establish a presence in Latin America, with many setting up offices in Brazil, Columbia or Miami (America's Internet hub for all things south of the border) in hopes of being the first to capture one of the newest online bazaars.
Latin America's challenges are not all unique to the area, but the differences are in stark contrast to those that, for instance, Europe presents. While many companies have always felt a presence was necessary in Europe, few have flocked to Latin America until recently. With the current influx of dot com interest in the region, online advertisers have scuffled with the dynamics of the region - recognizing and effectively dealing with Latin American Internet powers, marketing to the varying peoples of Latin America and the realities of delivering personalized interactive services - which has resulted in the region being behind other non-American areas in receiving the most innovative and entrepreneurial ideas Online Advertising firms can provide.
The most popular and lucrative online ventures in Latin America, to date, have been major portals started in many of the differing countries. The Argentine portal El Sitio and Brazilian portal Universo Online are the largest that are operated in the region. New York's StarMedia, Miami-based Yupi and Spaniard-owned Terra Networks are all fashionable Latin American portals originating from outside of the region. As of now, it has not been a problem for those based outside of the region to command a large percentage of the market-share inside the region.
In the year 2000, 10 to 15 Latin American Internet start-ups are expected to IPO, with the possibility of that number increasing five-fold over the first year if the initial rash of public offerings is deemed a success. U.S. investment firm Advent International, who has had a large stake in funding many of these start-ups, says that activity in the region is on the rise and Latin America could see the fastest Internet growth over the next five years.
Online Advertising and e-commerce revenues are expected to skyrocket in the region, even with the difficulties in delivering goods and services that are expected. Forrester Research says that Online Advertising revenues should grow from $20 million in 1998 to $645 million by 2003, with e-commerce growing from $170 million to $8 billion in the same timeframe.
The difficulties that face the region are not going unnoticed or unchecked. Venture capital firms, non-profit groups and entrepreneurs themselves are going out of their way to pave a smoother road for the New Economy in Latin America. Two of the major obstacles, fulfilling an order after a user clicks the buy button and finding suitable investors with enough venture capital, are the chief concerns of the non-profit group Endeavor, a U.S.-based organization created to support Internet opportunities in Latin America.
"The companies that made history in the United States were supported by venture capitalists. The new economy exists thanks to entrepreneurs. This is the model that we seek to put in place here in Latin America," said Maria Eugenia Estenssoro, Endeavor's managing director in Argentina.
Indeed, the Internet in Latin America is growing by leaps and bounds as investors realize the unrelenting potential of the region. Even with many of the Latin American economies reeling, investors see the Internet and technology boom that helped the U.S. economy as a godsend for those that are hurting. As the Internet grows in Latin America, Online Advertising is certain to continue to expand in the region as many of the industry's major firms set up shop in either Miami or Latin America. Only time will tell just how successful the Web will be in the area, but from all early reports, success will not be a problem.
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