Especially for younger generations, it is hard to imagine life without internet access, using smartphones or other digital devices. This is why the number of internet users is constantly increasing worldwide, with about 1 million new users per day. According to global statistics, China, India, and the U.S. are among the top three countries with the highest number of internet users.

But did you know that Brazil already ranks right behind them, in 5th place, ahead of any European country? The Brazilian population is becoming increasingly connected to the internet. According to a recent survey, three out of four Brazilians regularly access the world wide web. This equates to 134 million people.

Certainly, this has a significant impact on the national online advertising market. As stated in the ADSpend 2019 report, investment in online advertising in Brazil experienced a 10% increase in 2018 compared to the previous year. For the period between 2019 and 2023, market experts estimate steady growth in the national market of about 13% per year.

How the Online Advertising Market Has Changed Over the Years

The digital advertising system has become increasingly complex over the past decades. Historically, the sales process was customized for traditional media between an advertiser, an agency, and a publisher, who offered their advertising spaces for specific campaigns at a fixed price and for a pre-defined time frame.

Today, due to the constant increase in online advertising space as well as new data collection and processing technologies, new players have entered the market, and this is changing. These players have brought solutions to automate the online advertising media sales process. Consequently, the market has adapted to new technologies, focusing on the so-called Ad Exchange.

The term describes online marketplaces where publishers and merchants trade advertising space. Publishers are, for example, operators of a website, blog, or online magazine and offer their available advertising space. Merchants, on the other hand, are advertisers or individual marketers who want to place their advertising material in the available spaces. Prices are calculated through an automated process based on supply and demand.

The Brazilian Online Advertising Market

In Brazil, a large part of the online advertising industry comes from e-commerce businesses across many different categories, ranging from retail to electronics and automotive accessories. Despite the economic instability in Brazil, Brazilian e-commerce grew nearly 23% in 2019 to R$ 75.1 billion compared to 2018, according to the NeoTrust 2nd edition report.

The leading region is the Southeast, with more than 66% of purchases made nationwide. The region has the population with the highest purchasing power in Brazil. Additionally, the vast majority use their smartphones for online shopping. Statistically, 85% of Brazilians who own a smartphone shop online.

Thus, the online advertising industry has recently focused its investments primarily on mobile devices (67%) more than on desktops or tablets (33%). “Geolocation targeting, type and quality of connection, consumption habits, and the ability to reach the user at any time of day are some possibilities for creating unique strategies on mobile and combining them with other devices, whether they are online or offline,” says IAB Brazil consultant Alexandre Grynberg.

Growing Relevance of Video in Brazil

Analyzing online advertising formats, video (38%) and display (34%) recorded the highest investments in 2018. The term “display advertising” encompasses all types of static or animated image ads. “The highlight in the breakdown by format is the relevance of video in Brazil. In 2018, it accounted for 38% of digital investment in the country, much higher than the 15% recorded in the same period in the U.S.,” says Fabio Coelho, vice president of Google Inc and president of Google Brazil.

Its success is directly linked to the accelerated pace of online video consumption in Brazil, Coelho adds. “Content attracts a new generation of Brazilians who watch what they want, when they want, on their smartphones. Online video has secured its place in the daily lives of many Brazilians and should represent a significant part of marketing investments.”

The 2019 AdSpend report also shows the importance and distribution of investments regarding social media channels. Following the analysis by platform, Facebook and YouTube are the most important social media platforms for online advertising in Brazil, absorbing 47% and 26% of investments, respectively. Instagram ranks third with 19%.