Brazil Special: A Perfect Storm

The World Cup was a wash-out, there are political, fiscal and water-based woes, plus chaos caused by a shifting social order and digital demands. Yet there’s still an awful lot of buzz in Brazilian advertising, with the country ranking No. 2 in Cannes 2014 for the second year running. Carol Cooper heads to São Paulo to meet industry folk bursting with ideas and Latino resilience

São Paulo’s streets sizzle in the 30 degree heat of a rainy season without rain. In an air-conditioned saloon, Deny, my driver for the week, first-gears along a swanky avenida known for its luxury car showrooms. There’s traffic as usual, so I’ve time to gaze at the Porsches, Lamborghinis and Mercedes displayed in their gleaming temples to excess. Suddenly an alternative mode of transport clips along past the Rolls-Royce showroom – a rickety two-wheel cart piled high with bits of wood and cardboard. It’s being pulled, not by a donkey, but a ‘favela man’, who zips along despite the heat and his inadequate footwear. The scene is a neat photo cliché of the urban economic disparity that typifies a BRIC country, but the cardboard dealer is making good progress. Better than us. It’s a metaphor for the rise of the lower classes – one of the many huge changes facing Brazil and its advertising industry.

“Things are shifting. We’re having so many different crises happening at the same time,” says Paulo Henrique Miranda, EP of production company Produtora Associados. “We lack water, the cost of power’s going up massively, there’s corruption. I don’t even know what’s going to happen in the next couple of months. It’s bad for advertising agencies and it’s bad for production companies, too.” 

The corruption scandal – an estimated US$8.9 billion gone awol in deals involving the state-run oil firm Petrobras – is the largest Brazil has seen. President Dilma Rousseff, whose close-call re-election for a second term in October 2014 divided the country, professes ignorance of the affair, but millions of Brazilians are calling for her impeachment. A former Marxist guerilla, Rousseff may have launched welfare reforms that have lifted millions out of poverty, but she’s blamed by many for the country’s slide into recession.

It’s all a far cry from the vibe that greeted shots on our last visit to Brazil in the spring of 2013, when the mot du jour was ‘boom’ and the upcoming World Cup seemed set to further boost Brazil’s business and status on the world’s stage. But, like the smog that often hovers over São Paulo, the events of 2014 have cast a shadow. In the words of Ciro Cesar Silva, EP and partner of production company Rebolucion, last year was a “wet blanket”. Though 2015 has started well for Rebolucion, with its co-founder, filmmaker and former shots cover star Armando Bo winning an Oscar for co-writing Birdman, Silva is saddened by the country’s dashed hopes: “The World Cup should have been a celebration and good for the country, but the wind blew in a different direction.” Following 2013’s mass protests, which were in part fuelled by lavish state spending on the tournament, the country faced a further buzzkill at the Brazil team’s 7-1 semi-final loss against Germany. Then the ad industry faced jittery clients who were holding back, waiting to see what the elections would bring. Clients are still holding back thanks to the election results and other woes, including the falling currency and now a severe water shortage. When Brazil started to boom in 1994, infrastructure was never put in place to cope with the expansion. Thus you have the irony of water rationing in a country blessed with 12 per cent of the world’s freshwater. Much of São Paulo, a city of an estimated 20 million, relies on just one main reservoir, which, during the recent dry rainy season, dropped to six per cent capacity. With the country’s power being 80 per cent hydroelectric, power shortages are now also looming. Add to all this the changing demands of a shifting social structure and the challenges presented by digital, and Brazil and its ad industry look set to face a perfect storm of upheaval and uncertainty.

The steady rise in fortunes of the country’s lower-middle class (known in Brazil as the C class) has been affecting the ad industry in a range of ways. As with the global market, increased use of digital devices means Brazilian marketers must employ new forms of visual language to use on the new platforms. Fabio Fernandes, CEO and creative director of F/Nazca Saatchi & Saatchi, says: “I think the digital world is forcing clients to think more globally in terms of aesthetics. This is because the internet is bringing a greater range of cultural information to Brazilians. They are understanding more codes now, not just codes from their TV shows and soap operas.”

This broadening of cultural appreciation is altering consumer behaviour in a number of ways. “One example of something that didn’t happen about three years ago here is that you now see long queues forming at museums and galleries,” says Fernandes. “Inside exhibitions you hear comments from people admiring art for the first time. It’s so beautiful to hear. It doesn’t matter what it is, from the best stuff to crap art, you have a crowd of people hungry to see it and take part in it.” He relates his astonishment last year at seeing a crowd standing in the searing heat, queuing to see a Salvador Dalí exhibition. “I mean, Dalí!” he exclaims. “And in 2013, São Paulo’s Museum of Image and Sound had an exhibition about Stanley Kubrick. The curator probably thought 5,000 people might come over the month, they had something like 10,000 people per weekend, people who had never heard of Kubrick before.”

Fernandes attributes this change partly to an increase in the C class’s disposable income, but also to the new way information is spread. “New media means you get to see different images and pieces of information, you swipe and see different things, whereas the TV screen feeds you a fixed rectangle of images. It’s a change in the state of mind.”

Brazil has long produced highly creative award-winning advertising – in the last Cannes country rankings it held number two spot for the second year running – and this expansion of aesthetic appreciation among consumers can only be a good thing for agencies and clients daring to launch more sophisticated campaigns. For example, F/Nazca Saatchi’s recent spot for Electrolux, Explosion, has a subtle, enigmatic style that invites the consumer to make obscure connections. Marketing a fridge that aids healthy eating, it presents cinematic slo-mo images of exploding unhealthy foods, such as desserts and sodas, against the soundtrack of a woman singing breathily in French. It’s a classy continental cocktail that is oh-so-aspirational. 

Produtora’s Miranda agrees that aspiration could be the note to hit to reach Brazil’s burgeoning middle class. “The lower classes are earning more money, they’re becoming more educated, so they desire to be on the next level [culturally], we all do, we all want to be a step forward. We still need to produce commercials to sell beer to the masses but now those consumers are more open to something more subtle, that is more of a fantasy.”

But in tough economic times this can present a struggle for producers. “The agencies come to us and they want to do something good for that target audience, but they want to do something with less of a budget. But something good costs more money…” He cites 2014’s Skol spot Underwater Bar, which Produtora Associados and partners PBA Cinema produced out of F/Nazca Saatchi. Referencing the beer’s blue bottle, the surreally beautiful ad interpreted the tagline ‘Blue on the outside, mysterious on the inside’ by staging an otherworldly underwater party. It wasn’t a cheap ad, requiring four months of pre-production, international specialists in underwater lighting and effects – and sharks. “We even had to find the right texture of fabric that would work in the water, “ he recalls. “And then there were the extras and digital content, too.”

Bother with in-house media buying

This extra digital content that’s increasingly obligatory can present a fresh challenge to Brazilian agencies due to their traditional model of in-house media buying, whereby the budget for a campaign is a percentage of the agency’s spend on media. When content is placed on free digital platforms there is no finance generated. “The percentage is usually 20 per cent here,” says Miranda, “so what happens when you go to YouTube or Facebook and don’t pay anything to advertise? Twenty per cent of nothing is nothing. So they have to rearrange that and find this money from somewhere. And usually it’s not enough, some clients even think that because digital content is on a smaller screen it costs less to produce, but of course it doesn’t.” Miranda says shrinking production budgets have knock-on effects. “We may ask a supplier to do us a favour and charge less than normal on a job, so they do it once, maybe twice, but the third time they’ll say, ‘I have to charge full rate.’ Then you put the correct amount to the client and they say, ‘You’re too expensive, we’re going somewhere else.’” 

This environment, where larger production companies with greater overheads are struggling, is fertile ground for the smaller, more nimble outfits. The Kumite, for example, part of the Flag group of companies, is a content production company comprising four directors who have produced content for clients such as Google, Samsung and Axe. Meanwhile, production companies with international offices are looking abroad to bolster business. Karin Stuckenschmidt, executive producer of Home Productions, which was originally founded as Filmplanet, says: “They are predicting a recession in Brazil for the next two years. It’s going to be hard, but thank God we have been busy and the international work we get in means we’re not relying on just local business.”

Design and animation studio Lobo, which created the brilliant D&AD 50th anniversary film Wish You Were Here?, is also focussing efforts on its international business and is about to open a new office in New York. Executive producer Loic Francois Marie Dubois reveals they’ve been feeling the squeeze on the local economy. “We’re doing more content production now for Brazil’s C class and for way lower budgets.”

Paris-born Dubois has been in São Paulo since 2002 and displays plenty of Brazilian buoyancy: “It’s a big creative boom for us, it pushes us to the limits. With smaller budgets we have to think of more inventive ways of doing things.” However, the changes are not just fiscal. He also recognizes that Brazilian marketers must address a new type of consciousness now. “The consumers are more savvy, the way they interact with information is completely different so we have to adapt to that. On a political level it’s brilliant, it means that the country is waking up again,” he enthuses. “I never thought there would be protests here. I thought it’s Brazil; it’s about football and carnival! Sure people have voted, [which is mandatory in Brazil: you don’t vote, you don’t have a passport] but they haven’t been feeling it of late. But in the last two years I’ve seen real changes. The steep increase in internet usage has brought about this revolution.”

The country-wide protests that began in force in June 2013 indeed indicate a reawakening of mass political activism since the protests at the end of the dictatorship in 1985. But an aspect of them also revealed an interesting facet of the Brazilian attitude to advertising when Johnnie Walker’s The Giant Awakes spot and Fiat’s Vem Pra Rua (Come To The Streets) campaign were repurposed by protestors. Where else in the world would images from a whisky ad and a car brand jingle be employed as a viral video and an anthem of anti-government revolt?

Some have attributed this phenomenon to the shallowness of a consumer society, but it says more about the Brazilians’ non-cynical, affectionate relationship with advertising. In Brazil there’s less of the divide between entertainment and advertising that you see in other markets and stars from the hugely popular soap operas, with whom viewers have an intense emotional attachment, also appear in ads. “Brazilians feel very close to their celebrities and every agency uses celebrities in their ads,” says Leo Burnett Tailor Made’s Marcelo Reis. “Often Brazilian stars are more expensive than American stars. We used Dustin Hoffman once and he was cheaper than Ronaldo, the Brazilian footballer. It’s crazy.” This receptive attitude towards advertising can only help the industry and amid the fears of further fiscal woes, there are still reasons to be cheerful in Brazil. Due to it being a multi-cultural, multi-lingual country, plus its linguistic isolation as the only Portuguese-speaking Latin American nation, Brazil has well-developed visual communications and a strong reputation in print. Now its filmmaking is on the up too, with a new breed of Brazilian directors like Vellas  producing cinematic spots – such as the five-Lion-winning Soul for Leica – that are catching global attention.

FilmBrazil, the government-sponsored film promotion body within APRO, the local association of production companies, is organising a roadshow taking 10 production companies, each with two directors, to New York and Chicago to showcase the country’s filmmakers. Marianna Souza, FilmBrazil’s executive manager says: “We have talent here that can compete with Argentina, Chile and Mexico. We want to sell Brazil not as a production services country, as it has been before, but as a talent hub, where you can come and shoot anything. And now, with the Real falling against the US dollar, it’s cheaper to shoot here, so it’s competitive as well.”

Nick Story, a British/Austrian/French filmmaker who moved his London-based Story Productions to São Paulo in 2006, is able to capitalise on running a Brazilian company with European connections and is also optimistic that international business will increasingly boost his adopted country’s film production. “It’s been so expensive to shoot here for a long time, but the Real’s fall means it’s getting much cheaper for the foreign market. We have the talent here and the time difference helps, too – it’s only one hour behind New York and three hours behind London.”

The rock giant could rise again

Next year’s Olympics in Rio could also boost the country’s fortunes, and Home Productions’ Stuckenschmidt predicts the Olympics will bring more production work to Brazil, “Rio is so iconic,” she says, “I mean, it’s Rio! So the Olympics will help. I think there will be a lot of work being shot in the city this year for 2016.”

However Alexandre Gama, founding partner of NEOGAMA/BBH, predicts the Games may cause unrest and be used as another springboard to protests: “Brazilians don’t have the same emotional connection with the Olympic Games as they did with the World Cup so it will be less significant in terms of people’s engagement. And there will be protests for sure. There’s much to complain about and an international media event such as this is a perfect opportunity to express dissatisfaction. The Giant will take to the streets again, I think.”

En route to the airport, Deny speeds me though a quiet Sunday-afternoon São Paulo and I think of Marlene Dietrich’s words: “Rio is a beauty, but São Paulo? São Paulo is a city.” I have to disagree; there is much beauty here. The architecture is stunning – futuristic, modernist, with structures by celebrated Brazilian architect Oscar Niemeyer that seem to have been beamed down from outer space. I was expecting a concrete jungle, but here is actual jungle – São Paulo is dripping with lush foliage, as if the rainforest is trying to reclaim the streets. Along with bright blossom and glossy green leaves, world-class graffiti washes the city in eye-popping colour that’s louder than the traffic. Some of it is by professional street artists and ends up in galleries. As Latin America’s visual arts hub, São Paulo has outstanding galleries, one of which, MASP, boasts the southern hemisphere’s greatest collection of European masters.

So, sorry Marlene, to my mind São Paulo makes Paris look like Basingstoke and reminds me that Brazil is a country that values aesthetics and oozes creativity. It’s also a dynamic, culturally-diverse country full of people who’ve endured ups and downs before, from dictatorships to hyper- inflation. At São Paolo’s swish international airport, something odd happens at passport control. Instead of the usual deadened glance from a face-weary official determined not to interact, I get a warm Brazilian smile and a brief chat. Communication is in their blood. I hope their natural flair for advertising will see the industry weather whatever perfect storms come their way.