The shockwaves caused by generative AI are creating big ripples in the digital advertising segment, an area considered fertile ground for the technology in Latin America.

Online marketing used algorithms before, but for companies in this field, the new AI tools take them to a new level, automating and improving keyword research and content achievement, or analyzing and predicting user behavior, for example.

Policy and data protection concerns aside, genAI is seen as enabling the creation of advertising content with greater efficiency and with enhanced tracking areas for expansion, reduction or updating of digital campaigns.

“Our core is making predictions. We consume a lot of data to understand the next step in marketing. About four months ago we launched a component of our technology with LLM [large language models] and GPT [generative pre-trained transformer] to gain a better understanding of users' interests based on their preferences and thus generate interest and recommendation groups,” André Dylewski, business development director for Latin America at RTB House, told BNamericas.

Founded in 2012, RTB House is a European advertising-technology company specialized in targeted ads, including retargeting and real-time bidding (RTB). The company is present in over 90 markets, with 30 offices and more than 3,000 campaigns created for clients to date.

In Latin America, it has a team of around 100 specialists, two-thirds of which are in Brazil, with the rest in Mexico and Argentina, and more than 300 campaigns running with clients and brands, according to Dylewski.

RTB has provided personalized marketing campaigns powered by deep learning and is now increasing its use of genAI tools, says the executive, adding that operations in the region are on the rise with new hires and new campaigns.

“Of course, like every technology boom, we're still in the discovery phase of where we can go with the new technology. But the opportunities are immense.”

AI, ADVERTISERS AND LATAM

A September survey by the World Federation of Advertisers (WFA) found that 78% of brand owners were using or planned to use generative AI in their marketing strategies. 

Around 45% of the respondents indicated they are already using AI, while 33% said they planned to do so soon. 

Latin America is considered a fertile, fast-growing market in advertising, even more so in the digital realm.

The countries in the region account for five of the 10 fastest-growing digital ad markets in the world, according to online market specialist eMarketer. 

In 2023, in a growth ranking led by India (projected increase of 25.5% in 2023), Argentina was estimated to be second with a forecast 16% revenue jump, ahead of China (14.8%).

Colombia (4th), Mexico (5th), Brazil (9th) and Chile (10th) were also among the top 10 in online advertising growth in 2023. Global growth was estimated to have reached 9.5%.

“Ongoing uncertainty – including a slowdown in economic growth and persistently high inflation – will add downward pressure on ad budgets this year. Despite this, the region will remain one of the world’s fastest-growing digital ad markets with double-digit gains through 2027,” estimated eMarketer at the time of the report in May.

The region was poised to have transitioned into a predominantly digital advertising market, according to data compiled by Statista.

Last year, online channels' share of Latin American ad expenditure surpassed 52%, up from around 48% two years before, according to the data website.

Panama leads the region on that metric, with an estimated 70.9% share of digital ad spending per internet user, followed by Costa Rica (60.6%), Uruguay (59.8%), Brazil (51.8%) and Chile (48.8%).

“When we consider emerging markets, the most attractive regions are Latin America and Africa. For the digital ads industry, Latin America has the highest percentage of internet users who use social networks regularly. We’re talking about a paradise for global advertising businesses due to its 430mn internet users, of which 9 out of 10 are on social media,” Latin American payment company Ebanx wrote last year.

One of Brazil's unicorns, fintech Ebanx is considered one of the largest payment companies in Latin America.

Chile and Peru are considered two of the countries with the most interesting investment trends in digital ads in Latin America in Dylewski's opinion. 

Brazil is the market leader and Mexico is next, with investments reaching around 55% of those in the Brazilian digital ad market, according to the executive.

Globally, RTB projects that, of the total investments planned for advertising in 2024, more than two-thirds (US$740bn) will be channeled to digital advertising. Within the segment, the biggest amounts are going on search formats (US$307bn), video (US$191bn) and banners (US$174bn).

Additionally, of the total investments directed to digital advertising, around 70% should be allocated outside social networks, which represents around US$518bn, according to RTB, which does not operate in the social media arena.

For 2024, the trend in the region is even better, as several countries look to be easing monetary policy and reducing interest rates with inflation fading.