David G. Natal 19 Nov 2017 // 5:37PM GMT
As global consumers who are increasingly more powered by technology, we have set foot upon an irreversible path toward the organization in communities of interest in which digital aspects take over and old models of socio-demographic organization become obsolete. These communities of interest also have a marked tendency to develop their conversations in sources which are increasingly more closed and neglect the permanence of large content, in contrast to the spontaneity of the ephemeral micro content generated by themselves and other users.
In the case of Latin America, four contextual fields require a specific analysis which allows for a better understanding of the forces which affect the relationship between consumers and brands:
The mobile explosion: According to the most recent IMS Mobile in Latam report, connectivity in the region's countries has reached 56.1% of the total population, with rates that escalate in countries such as Chile, with a total of 71%. However, the most relevant data is regarding the use of smart phones. That same study concluded that 9 out of every 10 citizens connect via their mobile phone for an average of more than 5 hours a day. And that figure rises to up to 12 hours when we look specifically at the 18 to 34 age bracket.
According to emarketer the region's smartphone market will have 245 million users by 2019. This creates an earthquake in terms of marketing strategies, both in terms of the necessity to combine digital strategies and those that are physical in retail (phygital), as well as in terms of the development of platforms of content, with particular relevance to the live narratives and with videos having a strong impact as the dominant format.
Social media engagement: The preference for the video format will only increase over the coming months, as Latin America leads, with a percentage of 55%, above that of every other geographical region, the desire for this type of format in the future, as stated in the Hubspot report. The Q2 2016 Sprout Social Index signaled that Latin Americans spend more time connected to social media than anybody else, with nearly 60% of smartphone users having Twitter accounts and more than 232 million being on Facebook, for more than two thirds of users this directly influences the brand choices they make.
Furthermore, a recent Comscore report mirrored those findings, expressing that Latin Americans are world leaders in terms of social media involvement. In terms of the priority consumption of videos, Facebook has become an important competitor, but YouTube continues to be the preferred site to access this type of content. Instagram is not being left behind either as, according to the IMS Group, more than half of all smartphone and tablet users in Latin America have the famous social network's app installed on their devices.
The consumer confidence index: Consumer confidence is a key element regarding the intention of buying; however it has not always been present within the region. Having said that, the data collected in the latest Nielsen Consumer Confidence rating (which measures the perceptions about local work, personal finances and direct spending intentions) showed a rise of 5 points during 2016, from 78 at the beginning of the year up to 83 points at the end of the period. Cases that truly stand out are that of Colombia, with a score of 90, of Peru with 96 and of Brazil and Mexico which are both above 85.
Consumer confidence is still a far cry from the values of, for example, North America, but distance is being gained against relevant European actors regarding consumption, such as France and Italy. The aspect with the largest margin for improvement continues to be that of job prospects, in which Peru is leading with just 46%.
Unemployment and entrepreneurship in young people: Young adults make up a quarter of the population in Latin America. Just as was stated in the recent ‘Latin report, developed by the United Nations Commission for Latin America and the Caribbean, "the ability to make the most of this demographic dividend of 163 million people aged between 15 and 29 years is fundamental."
In this context, the same document portrayed that 26% of young entrepreneurs' businesses were born out of the need of not having any better options; this is a far larger percentage than the average in other regions. On a similar note, Trend Watching has stated, within its 5 Latin Trends for 2017, that in this area, the increase towards a higher level of autonomy is due to two reasons. First, high unemployment rates affect large areas of the region. The second aspect is directly linked to digital transformation and the expansion of mobile technology, which has allowed numerous young adults to turn "each moment or task into an opportunity to gain value."
The crossroads of this global consumer trends, along with these four phenomena which are particularly relevant in Latin America, places us up against some of the most relevant trends of the coming months, with some consumers focusing on the value that brands can provide them with, and being determined on experiencing them in real time, in the midst of a generalized democratization of content.
THE DAWN OF THE PHYGITAL CONSUMER
As consumers, we are increasingly inclined to look for a unified experience where the infinite potential of the digital world and the tangibility of the physical world converge. The phygital experience, with iconic recent examples such as Amazon Go, brings together the best of both worlds with the aim of meeting the needs of these new consumers we have become; consumers that do not separate based on devices, but based on the needs of the consumption ecosystems.
In this context, the brands that triumph are increasingly those who have a solid, consumer-oriented proposition, helped by a series of technological disruptors that continue to fulfil the function of connecting the physical and the digital world, these include: the mixed reality, artificial intelligence, Smart Data and the IoT.
Today, our experience as consumers does not begin or end in one world or another, but it allows us to move forwards and backwards, like someone travelling between planets, through use of these connectors and many more to come. Touch screens, beacons (devices that function through a Bluetooth signal), RFID cards (that store all the product information), smart changing rooms and Light ID (which uses light to communicate with our mobile devices), will, over the coming years, drive an integrated consumption experience that is oriented more towards service than the mere collection of products.
Companies, not only Amazon, but also textile giants such as DAFITI and Inditex have created shops that epitomize the ROPO effect (Research Offline–Purchase Online), allowing us to touch, see and smell what we are ultimately going to purchase online. In a context of constant and accelerated digital disruption, other aspects, such as driverless cars which are another innovation poised to see our profile shoot as consumers of services, makes it necessary for us to go back to the basis of everything, the proposal that guides proposition to the consumer.
Due to this, over the coming years, we will see the triumph of those brands that understand their relationship with their consumers as an integrated experience in which, above occasional interaction, the development and strengthening of interconnected service platforms where the digital and physicals elements become one.
A NEW MODEL OF INFLUENCERS
The content and conversations created by those users who have a higher level of implication and influence within these communities is becoming more and more important to our cultural fabric. As Henry Jenkins explains, the institutionalization of the participative culture, via platforms such as YouTube and Wikipedia, has contributed to the democratization of the present day trans-media storytelling.
These great narratives are no longer created, rather they are co-created together with fans and, with among them, those who are known as influencers play a key role which is yet to be fully exploited.
The relationship influencers have with brands is more complicated than it may seem, they are often dealt with by brands and agencies in the same way that these work with the media, and they progressively lose their ability to influence in the communities that the reign over. Where is the line drawn for this hen with the golden eggs to continue laying and not end up becoming worthless? To survive among the growing competition, it is crucial for the influencers to maintain their style and play around with creations in real time. This, on occasions, will lead to head-on collisions regarding the interests and responsibility that the brands want to portray.
One of the most relevant challenges will be how to find the balance and understanding, both in terms of the influencers and the brands; this role is new and its spontaneity, the value it adds, and its personality are all of utmost importance.
One of the most recent success stories of using storytelling as a communication and marketing technique was the 2013 Chipotle campaign 'The Scarecrow'. Often referred to as a successful case of trans-media, this campaign placed the company's own corporate narrative on center-stage, in a risky and powerful move towards natural, healthy food within the fast food sector.
A few months ago, the prestigious magazine Fast Company published an extensive investigative report entitled 'Chipotle Eats Itself' in which it analyzed the key elements of the business' downhill spiral and the loss of reputation that it has suffered after the outpouring of cases of e-coli in several of its chain of restaurants in the United States since 2015. Chipotle has thus become one of storytelling's great fallen myths. The company did not know how to fit its publicized identity with the reality of the chain's value. Therefore it became a mirror of how, when submerged in a spiral of frenzy regarding creating content, some companies have run before they knew how to walk.
In other words, it is not a case of not worrying about what we say about the brand and the best way to say it; rather it is about starting to worry about what the brand does. Beyond storytelling, brands have to start to create these stories. This is not anything new, in fact the historic examples of The Creators Project and Red Bull Music Academy are effective examples of storydoing; experiences based on providing value to communities.
THE REVOLUTION OF INMERSIVE CONTENT
Despite the long-standing obsession for generating content in which the spectator plays a central role, the decisive step towards the current outburst was brought about by the appearance of small Go Pro action cameras which do not just allow for greater portability, but above all they provide a new perspective from which spectators can re-live situations which had previously been impossible to do in first person.
From the first person-videos to the virtual immersive proposals by Oculus Rift at the beginning of the decade, and from there its popularization thanks to Google Cardboard, Samsung VR and PlayStation VR, there is a pathway which has not completely overcome all the doubts that current devices, based on the whole on the alienation of levels of reality, propose.
Whilst the devices do not allow us to move with freedom and to integrate levels of reality, the immersive content is not able to unleash all of its potential. In this regard, the most promising development is Microsoft's HoloLens proposal, which works from the perspective in which the digital and physical worlds integrate.
The experiences which increase immersive content on behalf of the brands do not just open doors to the chance to visit new worlds and experiences which are different for the consumers, but they are also the perfect opportunity to respond to the era of transparency, to demonstrate instead of promising, and to tell stories in which the consumers themselves can feel like the protagonists.
Brands will have to work over the coming years to create frameworks which make sense (stories) with the aim of these providing a real value to the content in communities and to develop a comprehensive consumer experience, in which the digital and physical worlds come together to favor the personalization and interactivity through phenomena such as Artificial Intelligence and Smart Data.
David G Natal is director of consumer engagement of LLORENTE & CUENCA.
Listen to our related podcast, as Paul Holmes talks to Llorente & Cuenca's Erich de la Fuente about the findings in the company's new white paper.