As we progressively enter the commoditization era of certain business software applications and consumer technology products, many tech companies and tech entrepreneurs are looking to capitalize on this trend by strategically entering specific emerging growth markets. In particular, Latin America is becoming of increased interest for tech companies and tech entrepreneurs alike, which consider LATAM as an evolving digital market landscape poised for growth.
The region is currently experiencing the right mix of business and consumer needs, population growth, increased private and public sector technology expenditure budgets, as well as an increased technology adoption culture. According to a 2013 Latin America Digital Future report by Comscore, results showed that latin america online population grew faster than any other global region in the past year, rising 12 percent to 147 million visitors. It also concluded in its findings that Brazil leads the way with online advertising.
I recently worked with a Google global premier partner organization and have seen first hand the investments made in Brazil. The digital marketing organization opened its regional LATAM headquarters in Sao Paulo last year to increase market penetration and offset lagging revenues from the over-crowded and hyper competitive North American market. Consumers in Latin America are also embracing mobile technology and social networking platforms at an extremely rapid pace. In fact, half of the Top 10 worldwide markets that spend the most time on social networking sites, such as Facebook and Twitter, are in Latin America. The amount of money spent on online advertising in Latin America is also expected to rise to more than $4 billion in 2014.
These statistics are not too alarming for industry and global economics experts such as IDC, Gartner, and the World Economic Forum, which have been following technology advancements closely in Latin America over the last decade. The increased consumption of mobile devices, laptops and improved infrastructures of high-speed WAN (wide area networks) and WiFi capabilities is allowing for Latin America to quickly adopt new technologies and embed them into different industries and sectors.
It is interesting to note that within the region Brazil and Mexico lead the adoption of enterprise level business applications, such as Database Warehousing, Virtualization Platforms, and Cloud-based CRM and ERP systems. These two countries also lead the digital consumer growth segment of the region. A reaction to the proliferation of mobile and WiFI enabled technologies that are gaining traction in the SMB (small to medium business) digital media space in LATAM, is that many digital media and consumer media organizations are increasing their presence in the region. They are providing digital advertising service platforms to a region due to the influx of penetration and usage data that points to LATAM consumers increasingly becoming digital adopters and or the new wave of digital natives.
For example, online advertising is on the rise in Brazil, growing 97 percent the past year to 130 billion display ad impressions delivered in March 2013. Netflix, Inc. was the largest display advertiser in Brazil and Mexico with 2.7 billion and 463 million ad impressions delivered during the month, respectively. (Source: comScore Ad Metrix)
According to the International Data Corporation (IDC), via Latin Link, smartphone sales across Latin America hit 16.6 million during the first quarter of 2013, which is an increase of 53 percent from the same period during the previous year. For the second quarter of 2013, fellow research firm Gartner reported a 55 percent increase in smartphone sales. The only other region to encounter strong smartphone sales outside of Latin America was the Asia-Pacific block. Specific markets in Latin America contributed to the strong smartphone sales in the region. As Latin Link research shows, Brazil saw an 89 percent smartphone sales increase during the first quarter of 2013 while the same period saw a 61 percent increase for Mexico. Chile saw a smartphone sales increase of 34 percentage points while it was projected Peru saw a staggering 98 percent sales increase for all 2013.
Another trend in Latin America is the Google Android operating system for smartphones and tablets. According to StatsCounter, Android dominated market share figures is Latin America against rivals such as Apple iOS, BlackBerry, Microsoft, and Symbian. Android's strength was shown the most in Argentina with 63 percent of the market share for StatsCounter's data collection between April and June 2013. The rival operating systems accounted for less than 10 percent of the market share, respectively. Elsewhere, Android accounted for 50 percent of the Brazilian market share while Colombia garnered 43 percent. KantarWorldpanel's data show Android topping the mobile operating system ranks in Mexico, notably in June 2013, with 62 percent. ( Source: Latinpost.com)
The other main players in LATAM, are Chile, Colombia, Argentina, Ecuador and Peru whom respectively in terms of investment projects make up alternative consumer and business markets in the región for technology investors . Chile in particular has designed a successful private and public sector technology initiative partnership that is being utilized as a model in LATAM.
The initiative is called Start-Up Chile, and it began in 2010, and was a partnership program created by the Chilean Government, executed by Corfo via InnovaChile, that seeks to attract early stage, high-potential entrepreneurs to bootstrap their startups in Chile, using it as a platform to go global. The end goal of the accelerator program is to convert Chile into the definitive innovation and entrepreneurial hub of Latin America. This is the shared mission by the Government of Chile and is a primary focus of the Ministry of Economy. In 2010, the pilot program brought 22 startups from 14 countries to Chile, providing them with US$40,000 of equity-free seed capital, and a temporary 1-year visa to develop their projects for six months, along with access to the most potent social and capital networks in the country. These selected entrepreneurs were approved by an admission process conducted by Silicon Valley experts and a Chilean Innovation board that focuses ardently on global mindsets and worldwide potential. In 2014 the program has a goal to have 1,000 participants in the accelerator program.
What do all these adoption technology advancements and foreign direct investment opportunities mean to tech-savvy entrepreneurs? Well, one thing that it should mean to a tech-savvy entrepreneur is to begin to seriously consider Latin America as a viable market for their tech venture. The market has not reached saturation, it is nicely positioned for growth and in terms of market entry barriers it has few that warrant to not enter with a solid business strategy.
What is the best recommendation, among many before considering to enter this market. First of all it is important to choose a digital or business intelligence consultancy either in-country or here stateside to launch your LATAM tech venture. A tech venture in Latin America will require that you as the technology company or tech entrepreneur understand thoroughly the region and its business landscape. Doing business in Latin America has cultural and language intricacies and labor laws that are important to consider before creating and executing your business plan into this region.
The article author is Gianni Quintana, MIBA Huizenga School of Business and Entrepreneurship, class of 2001. He can be reached at gquintana2014@gmail.com Sources ( latinpost.com comscore.com, startupchile.org, and spider3m.com ).
