Companies face the challenge of measuring the return on digital advertising in LATAM.

In the current context, where digital has become the undisputed protagonist of advertising, companies face a crucial challenge: to adequately measure the return on their investment in this area. According to a report from the Interactive Advertising Bureau (IAB), in Latin America, around 60% of advertising investment is allocated to the digital environment, a figure that is constantly increasing. However, the lingering question is whether companies have the necessary tools and knowledge to assess the effectiveness of their digital campaigns. Gabriel Richaud, general director of IAB Mexico, emphasizes that the landscape has changed drastically in recent years. In the United States, digital advertising investment increased from 50% to 70% in just five years, while in markets like China, this percentage is expected to reach an impressive 85% by 2024. This trend is also reflected in Latin American countries, where nations like Chile, Peru, and Colombia are increasingly close to matching these figures. In Mexico, advertising investment reached $7.59 billion in 2023, of which nearly 60% was allocated to digital formats. Within this segment, digital video has taken the lead with 50% of the investment, followed by search at 28% and display at 22%. This growth in Mexico highlights a significant difference compared to other Spanish-speaking markets, where the ratio can be as much as 10 to 1, according to Richaud. Despite this surge in digital investment, there are still areas that require attention. For example, investment in influencers and content creators is growing, but so far IAB has not established clear indicators to measure this segment. Nevertheless, it is estimated that brands in the food, beverage, and lifestyle sectors are significantly investing to reach their consumers in a more direct and personal manner. An aspect that is gaining relevance is the concept of omnichannel, which seeks to combine physical and digital experiences to offer more enriching interactions for the consumer. Richaud emphasizes that data collection is essential in this strategy. However, this task becomes complicated in markets like Peru, where distrust towards the exchange of personal information prevails. Only just over 20% of consumers feel comfortable sharing their data, thus limiting opportunities for companies looking to personalize their offerings. The measurement of results has also evolved. Richaud warns that it is no longer enough to count the reach and frequency of campaigns. Nowadays, companies must evaluate more complex metrics that include user acquisition costs, the profitability of interactions, and the return on investment timeframe. This more sophisticated approach allows companies to adjust their strategies and maximize their advertising investment in such a dynamic environment. David Cohen, global CEO of IAB, reinforces this idea by pointing out that the advertising landscape is in constant transformation. Content creators, streaming, artificial intelligence, and digital commerce are four areas that are redefining how brands connect with consumers. The pandemic, according to Cohen, has accelerated this change, enabling any company with a direct relationship with its customers to act as a media outlet. However, regulatory uncertainty is a challenge that cannot be overlooked. Cohen warns that new regulations in Europe could jeopardize the value of personalized advertising, which could disproportionately impact smaller companies that lack the resources to adapt. While giant platforms may be able to face these challenges, smaller players could encounter significant difficulties. Despite these concerns, the growth of digital commerce and online advertising seems unstoppable. The sectors that have led this advance include packaged consumer goods, technology, financial services, and luxury. While the metaverse has generated interest, Cohen is skeptical about its mass adoption, suggesting that the future of digital advertising will focus more on immersive experiences than on heavy virtual reality tools. In conclusion, companies must adapt to this new advertising reality and use data effectively to measure their investments. The digitization of advertising not only represents an opportunity to reach new audiences but also raises the need for more sophisticated measurement tools that allow brands to understand their results in an increasingly competitive environment.