October 2005 - On Air in Latin America

What are the trends in Latin American production and media buying? High-quality productions and tighter restrictions on broadcasting lead the way.

By David Lustig

The global fragmentation of the communications and entertainment market has led to increased competition, smaller slices of the profit pie and, in some areas, intense scrutiny by governmental “watchdog” regulating agencies. This has resulted in more than just the strongest surviving. Around the world, the winners are those that understand their evolving markets and their roles in it. It is not just in North America. It is everywhere. But no where more evident than in the Latin American markets, long erroneously perceived by outsiders as just a quick dumping ground for re-dubbed infomercials hawking hair tonic vying for airtime with wrestling matches.

This may have been the case once, but not now. Today, the climate to create and the technical ability to produce in-country productions has escalated sharply in both quality and quantity.

“We’ve seen a tremendous upsurge in the number of local productions, long and short form, to come directly out of Latin America,” says Stan Bruckheim, president of Laguna Hills, Calif.-based PanLatinoTV/PanEuropeanTV. “For example, PanLatinoTV is expecting to have no less than six infomercials produced in Latin America on our pan-regional cable media by November 1. In 2004, we had just one.”

Alejandra Markeiwicz, president and owner of TV Ofertas-Mexico agrees.

“There is a lot more production coming from Latin American countries,” she says, “including Mexico, Ecuador, Argentina and Columbia. And they are a lot more sophisticated than they used to be.

“Once it was just following the trends as in the United States. Today, the production companies know better. Ten years ago, the only ones trying to do infomercials were famous actors and actresses. Producers didn’t know how to hire the right people. We didn’t know about direct response.”

Years ago, Markeiwicz says, an infomercial might feature an actress on a set of videos demonstrating how to lose weight by dancing. You could tell she was trying her best to do it, but she says it just didn’t come across very well. Now, she says, Latin American infomercial production is done by people who not only know how to make them and produce them, but how to do so in a sophisticated manner that will not only draw in an audience, but keep them watching, as well.

In Argentina, Guido Michanie of Sprayette-Argentina says most DRTV shows still come from Europe or the United States with actors and other celebrities doing subtitles, but as far as local shows are concerned, the productions done in-country are completed in “neutral” Spanish to broaden the appeal of the product beyond national borders.

Michanie, in the business for five years, says a number of suppliers come to Argentina to do their filming due to a combination of low budget costs and excellent state-of-the-art facilities.

Saadin Solah, CEO of Ecuador’s TVentas believes his country is also in the midst of a trend to local productions.

“A few years back, all spot and infomercials were produced in the United States or Europe and translated and dubbed for our market,” he says. “Now, companies in Mexico, Ecuador, Argentina and others are producing high-quality infomercials and developments with a local twist, resulting in better sales and a more dynamic market. Today, the quality of media production has become quite good and you can find infomercials that have superb quality.”

More importantly, adds Michanie, “We now have our own base and adopt it to our market according to our necessities. We get to try new techniques every day.”

This point is echoed by Markeiwicz, who agrees that local production is becoming increasingly more sophisticated as well as independent—rather than just following trends from elsewhere.

Another factor, brought up Bruckheim, is that costs have come down to the point that several major Latin DRTV marketers have created in-house editing facilities, and some even have in-house production capabilities.

With all of these improvements in both local production techniques and the overall increased sophistication of the final product; however, local and federal watchdog agencies in many countries have stepped up their presence with increased regulations.

In Mexico, Markeiwicz says that country’s Customer Affairs Bureau has been bearing down on direct response marketing. On-air claims have to be substantiated, she says, and if they can’t be, the government has the right to pull programs off the air.

“Some weight-loss products that were being aired were claiming the user would lose lots of weight in just a few days,” Markeiwicz says, giving an example. “But so many customers began complaining and demanding to see the laboratory reports that the federal government had to step in.”

“The challenge,” says Solah, “lies in the fact that there are specific differences in regulations in each country.”

“For example,” he says, “in Columbia, you simply cannot air certain infomercials, while in Mexico there is a government agency devoted to studying and approving each infomercial for airing. But in other countries, regulations are lax and almost anything can air. As a rule of thumb, if an infomercial has been produced with appropriate ethical standards, it will not have a problem airing in the region.”

“Regulations,” sums up Michanie, “can change from year to year.”

While working with each country’s local and national regulations can be a bit challenging, and production companies certainly have to remember what country they are dealing with before going ahead with infomercials, one area doesn’t seem to change much at all; the product being presented.

Carlos Mercenari, president of Inova Directra SA de CV in Mexico, is a little more blunt about the regulations.

“The problems are not the regulations themselves,” he says, “but the excessive discretional powers of the authorities who many times tend to generalize and prejudge everyone’s performance independently of the efforts that some of us do to comply with, and stay within, the rules.”

By the way, just as in the United States, give or take a geographical region or two, the contenders for the top five spots in infomercial production are usually weight loss, exercise equipment, health aids, beauty aids and home appliances. Sound familiar?

Many of the industry experts interviewed applaud the fact that while most Latin American countries possess high quality, sophisticated production facilities, for the most part, talking about actual production costs was a horse of a different color. Not that there was anything to hide, except sometimes it’s best not to let competitors, even friendly competitors, know your costs.

Averaging out information from a variety of sources, everyone did agree that it was almost always less expensive to create infomercials in a Latin American country rather than in the United States, usually ranging from $8,000 to $50,000 per shoot depending on subject, special effects and intricacy of production.

The benefit of short form versus long form, or a combination of both, depends on whom you speak with.

Solah contends long form is preferred because it generates better results and airtime is more available. Short form has its place, he says, but it’s usually used when only more expensive airtime is the only answer.

Markeiwicz, who says she is sometimes referred to as the “Queen of the 10-minute Spot,” says it depends on the product if the short or long form is the way to go, adding that products that are easy to sell can effectively utilize the 10-minute format (although she admits sometimes they need the longer 30-minute format).

“National TV in Mexico doesn’t sell 10-minute spots,” she says, “only 30 seconds or 30 minutes.” So a lot of Markeiwicz’s products run on cable networks, 19 networks to be exact.

Michanie, who produces material for satellite, regional, cable and local TV networks says he has found greater success in the 30-minute format and almost all, 90 percent, are in that form, with only 10 percent in short.

“Long form is still the preferred length,” says Bruckheim, “but we see more short form working than ever before. PLTV airs more than 16,000 120-second spots per month pan-regionally.” Some of the more successful ones he says are aired in as many as 18 companies, three times more than just two years ago.

“Generally,” he says, “products sell better with a longer length, but short form, especially a 120-second spot edited from an infomercial that is also running, can be effective.”

Mercenari contends that the decision to use short or long form depends basically on the complexity of the product.

“There are products that you can explain in a short period of time and products that, because of their complexity and/or novelty, take much more time to demonstrate,” he says. “The availability of media could also affect the decision to go either way.”

“The media landscape has been very stable; more has stayed the same than changed,” says Bruckheim. “It’s largely the same networks that provide most of the DRTV time, the same reps and agencies working with the distributors to maximize that tie, and a very similar core group of distributors.

“Our challenge,” he says, “is to find new networks and new media approaches.”

But Judith Gorinstein, co-founder of Premiere Exclusives SA de CV in Mexico, feels the media landscape has become increasingly complex.

“The stations that have pan-regional or Latin feeds have reduced the amount of infomercial times available. Consequently, media has become more expensive. Given that several countries have experienced economic political difficulties, such as Argentina, Venezuela, Columbia and Brazil, some TV stations have now enabled independent feeds.”

Luis Salaverria, president and CEO of Grupo TVOffer/Central America in El Salvador, also feels that the media landscape has definitely changed in the past few years.

“More powerful non-direct response companies have recognized that this method of selling (DRTV) works well and sells well, so they have begun to produce their own DR spots or 10- to 15-minute infomercials,” he says.

“Secondly, I believe that TV networks have become stricter on what they air and where and when they air it, since they are more closely watching anything that affects their ratings.”

Gorinstein believes that local media has become more expensive, the result being that more DRTV is being programmed during the night, usually from midnight to 6 a.m. The local market, however, is also feeling the pinch from governments.

“The government of Columbia has taken very drastic measures and has eliminated the possibility of airing infomercials all together,” she says. “Venezuela, in turn, has also taken stringent measures by limiting airtime available for DRTV activities, and Mexico’s government has finally decided to take a more serious attitude towards the content and claims contained in infomercials.”
Bruckheim agrees.

“Local broadcast media seems to be getting a bit more restrictive, and certainly pricier,” he says. “It’s becoming more unaffordable and/or less available in key countries such as Chile, Columbia and Venezuela.”

Michanie believes the future lies in long-term contracts with the networks.

“We try and have an excellent relationship with them and see ourselves as the network’s partners,” he explains. “We see ourselves as their partners, giving them a solution to the time they can sell well.

“Our biggest challenge is to increase market share. Even though we are the No. 1 DRTV company in Argentina, there is still a big market to gain.”
Mercenari feels that Mexican networks are heavily influenced by U.S. trends, which puts a bit of a crimp into airtime that could be devoted to DRTV.

“Now we have a good number of reality and talk shows that broadcast into the late hours,” he says, “which reduces the available media for us.”

But “coming of age” in any medium today doesn’t necessarily mean a guarantee of longevity. What about tomorrow?

“The industry has made great strides toward working together to develop ideas and meet challenges,” says Bruckheim. I would imagine Latin America is the most unified region in the DRTV industry.

“At the same time, we need to recognize and respond to the growing challenge from Latin governments with production claims that are supported by real research, with efficient operations and professional customer service.”

“As in the rest of the world, the fundamental equation in the DRTV industry is media and product,” says Mercenari. “And you have to be very careful to keep it in balance. The purchasing of media involves a heavy and long-term commitment with the networks that have to be supported with a continuous flow of successful products. Otherwise, you will very quickly disappear. Like a comet, it suddenly appears very brightly and then goes away from rapidly.”
Salaverria says that Latin America is different than some of the more industrialized countries, since many times, negotiations are done through personal relationships inside the network.

“I’d suggest DR marketers who want to enter the Latin American market do it through local distributors that already are doing business in each country,” he says Gorinstein says there may be a very good product-show combination working in one country that will not necessary perform in a like manner in another.

“There may even be significant variations among what one might think as ‘similar’ markets, such as two Latin American countries, but with consumption patterns differing from one to another,” she explains.

“The key challenges for marketers and suppliers who want to sell into Latin America are a slower speed-to-market, smaller orders from some of the smaller countries, and a difficult product clearance process for each country for ingestibles, topicals and electricals,” explains Bruckheim. “But with the right strategy, they can be overcome.” Mercenari is optimistic about the Latin market, as well.

“As in any business, be prepared to find all kinds of evils along your way to success,” he says. “But be sure that honesty and perseverance will shield you from all of them.”

David Lustig is a contributing writer to Electronic Retailer magazine. We would appreciate your feedback. To submit comments, please point your browser to latinmarketoct.marketing-era.com.

Want to learn more about ERA’s Latin America Committee? Please visit www.retailing.org

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