Digital Advertising Industry in emerging markets: what are the challenges and key trends?
Discover the immense growth potential of the digital advertising industry in Latin America and Africa, and explore the key trends and challenges for global advertising companies expanding into these regions.
João Paulo NotiniJune 06, 2023
The digital advertising industry is experiencing unprecedented growth globally, with emerging markets presenting significant opportunities for global digital ad companies. However, expanding into these markets comes with its own set of challenges, particularly when it comes to billing and payment processing.
In this blog post, we will explore the opportunities and trends for digital advertising companies in emerging markets, delve into the key challenges they face regarding payments, and discuss potential solutions to overcome these obstacles.
The Digital Advertising Market in Emerging Markets
When we consider emerging markets, the most attractive regions are Latin America and Africa. For the digital ads industry, LatAm 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 430 million internet users, of which 9 out of 10 are on social media.
Africa, on the other hand, due to its rapid smartphone adoption, improved internet infrastructure, and growing middle class, is set to increase ad spending by more than 10% in 2023. Moreover, the continent has the third-largest number of social media users. Highlights the Northern and Southern regions, with 56% and 45% social media penetration, respectively.
What are the trends for Digital Advertising in Latin America and Africa?
As we have seen, Latin America and Africa are considered the most prominent emerging markets for the digital ads industry. Global businesses willing to gain digital advertising market share by expanding there should definitely watch out for the following trends:
- Video Ads on the rise: Video advertising is experiencing significant growth worldwide. In Latin America, for example, it was set to reach $3.63 billion in 2022, as shown by an eMarketer study. The popularity of platforms like YouTube and the increasing consumption of online video content contributes to this trend.
- Mobile advertising as a must: According to Statista, while in Latin America, mobile advertising has surpassed desktop advertising since 2021, Africa will have this shift occurring by 2025. Both regions are also known for having the highest smartphone rates in the world.
- Personalization and localized content: Advertisers increasingly focus on tailoring their messages to resonate with their target audiences’ specific cultural nuances and language preferences in emerging markets.
- Innovative payment solutions: As digital advertising continues to evolve in emerging markets, innovative payment solutions will be critical to sustain growth. Integration with digital wallets, instant and contactless payments, and biometric authentication will be normative. Along with blockchain and cryptocurrency technologies, digital ad companies are forced to adapt.
The main challenges of selling digital ads in emerging markets
For several reasons, global brands from the digital advertising industry often need help selling in emerging markets. When it comes to Latin America and Africa, the main challenges are:
- Limited access to traditional payment methods: Credit card penetration and banking infrastructure in emerging markets may be limited, hindering smooth payment processing for digital ad companies that only offer these payment options.
- Unbanked population: A significant portion of the people in emerging markets remain unbanked, making exploring alternative payment solutions crucial.
- Currency exchange and volatility: Emerging markets often have multiple currencies and varying exchange rates, complicating the billing process. Ad platforms must account for these factors since they impact the cost of services and introduce uncertainties for them and their customers.
- Manual processing and invoicing: Due to the challenges mentioned above, many digital ads prefer to manually invoice their customers, often in physical form, and rely on cards or cash deposits. This process can be time-consuming, prone to errors, and lacking the automation and scalability that digital platforms typically offer.
- Regulatory and compliance issues: Operating in emerging markets requires digital ad platforms to deal with local tax laws, regulations, and compliance standards that are usually more complex than in developed regions. These complexities can slow down payment processing and create hurdles for billing customers accurately.
What can a global digital ads business do to sell better?
Despite the challenges posed by payment processing in emerging markets, digital ad platforms that localize their customer and payment experience will improve their sales. Here are some of the best actions that they can take:
- Localize the website and checkout experience: Ad companies should optimize their customer experience by translating their website and check out to the local language of where their audience is located. Moreover, displaying the price in local currency and clearly showing all taxes and fees applied to their customers will help leverage customer satisfaction.
- Offer Alternative payment methods: Advertisers can incorporate local and alternative payment methods such as mobile money solutions, instant payments, digital wallets, and cash-voucher that helps cater to a more extensive customer base.
- Automatize payment processes: Implementing automated billing and payment systems streamlines financial operations, reduces administrative costs, and enhances efficiency. This includes automatic invoice generation and processing, ensuring accuracy and compliance.
- Partnering with a local payment service provider: Collaborating with a top-performance local payment service provider is the best way to have the suggestions mentioned above. Moreover, it can reduce the cost of dealing with currency volatility due to better exchange rates and helps deal with taxes and the local regulatory framework.
The all-in-one payment platform for cross-border digital ad sales in Latin America and Africa
You are now aware that the digital advertising industry in emerging markets holds immense growth potential. Latin America and Africa, in particular, are witnessing a surge in digital ad spending as internet penetration and smartphone adoption rise.
By staying abreast of the latest trends and focusing on localizing the payments and customer experience, advertisers can successfully navigate emerging markets and seize the opportunities they present.
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