Market Analysis

The video advertising market in Chile is poised for significant growth, with projected ad
spending reaching US$272.1 million in 2024. This expansion is driven by the increasing
consumption of digital video content, particularly on mobile devices and connected TV
platforms. As brands shift their advertising budgets from traditional media to digital channels,
the Chilean video ad market is expected to show a compound annual growth rate (CAGR) of
5.07% between 2024 and 2028, resulting in a market volume of US$331.6 million by 2028. This
steady growth reflects the broader global trend toward digital video advertising, with advertisers
looking to capitalize on the high engagement rates and audience-targeting capabilities offered by
video platforms.

Although the Chilean market is growing, it remains a smaller player on the global stage
compared to major markets like the United States. The U.S. is projected to generate US$84.61
billion in video advertising revenue in 2024, making it the largest market by a significant margin.
However, the trends driving growth in Chile mirror those in larger markets, particularly the rise
of mobile video consumption and the increasing adoption of connected TV (CTV) as an
advertising medium. These factors are transforming how brands engage with consumers,
especially as they seek to create more personalized, interactive ad experiences.

Mobile advertising is a critical growth area within Chile's video ad market. By 2028, mobile
video ads are expected to generate US$265.5 million in total ad spending, underscoring the
importance of optimizing video content for mobile devices. With a majority of Chileans
accessing the internet through smartphones, mobile-first strategies have become essential for
advertisers aiming to capture consumers' attention in a highly competitive digital landscape.
Short-form videos, in particular, have become a dominant format for mobile consumption,
offering advertisers a quick and engaging way to communicate their message to an increasingly
fast-paced audience.

In terms of per-user ad spending, the average amount in the Chilean video advertising market is
projected to reach US$15.7 per internet user in 2024. This figure reflects the high demand for
video content across multiple platforms, as well as the growing sophistication of video ad
targeting and personalization. As advertisers refine their strategies and leverage data to better
understand consumer behavior, the value of ad spending per user is likely to increase,
contributing to the overall growth of the market.

Another significant area of growth within the video ad market is connected TV (CTV). Ad
spending in this segment is projected to reach US$14.4 million in 2024, with a CAGR of 3.60%
from 2024 to 2028, leading to a projected market volume of US$16.6 million by 2028. As more
Chilean households adopt smart TVs and streaming services, CTV advertising is becoming an
increasingly important channel for brands. CTV allows advertisers to combine the reach and
impact of traditional television with the precision of digital targeting, offering a more immersive
and measurable ad experience.

Short-form video ads are also expected to play a significant role in the future of the Chilean
video advertising market. In 2024, ad spending on short-form videos is projected to reach
US$115.3 million, with a CAGR of 10.44% from 2024 to 2028, resulting in a projected market
volume of US$171.5 million by 2028. The popularity of platforms like TikTok, Instagram Reels,
and YouTube Shorts is driving this rapid growth, as consumers increasingly favor bite-sized,
entertaining content that fits seamlessly into their mobile viewing habits. Advertisers are
investing heavily in short-form video ads to engage younger audiences and leverage the viral
potential of these platforms.
Why are video Ads underperforming in the Chilean Market?

Video ads, despite their popularity and high engagement potential, are underperforming in the
Chilean market for several reasons. These challenges are rooted in market conditions, consumer
behavior, technological limitations, and competitive factors. Here are some of the major reasons
why video ads may be underperforming in Chile.

Ad Blocking and Consumer Resistance

Ad fatigue is becoming a significant challenge in Chile’s video advertising market as consumers

are increasingly overwhelmed by the sheer volume of digital ads they encounter daily. With the
rise of digital platforms like YouTube, Instagram, and TikTok, many Chilean users are exposed
to a constant stream of video ads, often in disruptive formats like pre-roll, mid-roll, and non-
skippable ads. These formats interrupt the user experience and, when overused, contribute to a
negative perception of advertising. The problem is further exacerbated when ads lack creativity
or feel repetitive. Consumers are likely to see the same ads multiple times, which can lead to
frustration and disengagement. Instead of capturing attention, ads that are overly frequent or
irrelevant are more likely to be skipped, ignored, or blocked. In particular, younger audiences
who are more familiar with digital platforms are becoming adept at tuning out or avoiding ads
altogether. This growing resistance has made it more challenging for advertisers to engage their
target audience effectively, as overexposure diminishes the impact of each ad.

Overexposure to Digital Ads

As the digital advertising market in Chile expands, consumers are being bombarded with ads
across various platforms like YouTube, Instagram, and TikTok. The frequency of ads can
interrupt the user’s experience, leading to frustration. When viewers encounter these types of ads
repeatedly, it disrupts their flow of content consumption and often results in a negative
perception of the brands being advertised. Overexposure to ads leads to diminishing returns, as
the effectiveness of each ad diminishes the more frequently it appears. Viewers become
desensitized, and the ads lose their impact, reducing the likelihood of engagement, clicks, or
conversions.

This challenge is compounded by the fact that digital platforms use algorithms to target users
based on their online activity, which often results in the same ads being shown multiple times
within a short period. As a result, younger audiences, who spend the most time on these
platforms, are becoming adept at either skipping ads when possible, using ad-blocking software,
or simply tuning them out. This creates a barrier for advertisers, as reaching their target audience
becomes increasingly difficult amid the clutter.

Lack of Creativity and Repetitiveness

A major issue contributing to ad fatigue is the lack of creativity in many video ads. When ads are
repetitive or follow the same formula without offering anything new or engaging, consumers
quickly lose interest. Ads that fail to innovate or add value are seen as interruptions rather than
experiences, leading users to disengage or skip them entirely. In some cases, ads are poorly
targeted or irrelevant to the viewer, further increasing the likelihood that the ad will be ignored.
In contrast, ads that are creative, personalized, or interactive tend to perform better, as they can
capture and maintain user attention. For example, storytelling in ads, using humor, emotional
appeal, or engaging narratives, can make video ads feel more like content and less like an
intrusion. Additionally, interactive video formats, such as shoppable ads or ads that allow
viewers to make choices or engage directly, offer a more immersive experience and help combat
ad fatigue.
 Competitor analysis

The video ad production industry in Chile is highly competitive, fueled by the growing demand
for digital marketing content across platforms like YouTube, Facebook and TikTok. Leading
companies in the market include a mix of full-service agencies and specialized video production
firms, ranging from boutique studios to larger digital marketing agencies. Key players such as
IMS ( Internet Media Services), Imagina FX, Pejerrey, stand out with their innovative
storytelling, high-quality visuals, and strong focus on digital strategies tailored to specific
audiences. These companies leverage a combination of creative content development and
targeted marketing approaches to dominate the Chilean video ad space, making the industry
dynamic and ever-evolving. Considering that companies mentioned are direct competitors in the
Chilean video ad market, it's essential to analyze their strategies, strengths, and market
positioning to understand how they thrive in this space.

IMS (Internet Media Services) is considered one of the most successful in the Chilean video
advertising market and across Latin America. IMS holds exclusive rights to manage advertising
sales for major global platforms like TikTok, Spotify, Twitter, and Snapchat in Latin America.
Their ability to connect global tech giants with the local market gives them a competitive edge in
managing large-scale video advertising campaigns across diverse platforms.

Exclusive partnerships are a key factor in IMS’s success, as the company has established strong
collaborations with high-demand platforms like TikTok and Spotify. These platforms, which
dominate both the video and audio streaming markets, boast a massive user base in Chile,
providing advertisers with access to a highly engaged audience. By offering advertising
opportunities on these popular platforms, IMS ensures that brands can maximize their reach and
visibility among Chilean consumers who spend significant time on these apps. IMS’s Regional
Expertise is another critical component of its effectiveness. With a deep understanding of the
Latin American market, IMS offers localized solutions that cater to the specific needs and
behaviors of different demographics in Chile. This expertise enables them to craft video ad
campaigns that are not only relevant but also culturally aligned, ensuring that ads resonate with
the target audience. Their ability to navigate local market trends and preferences gives IMS a
distinct advantage in delivering impactful and tailored ad experiences.

Imagina FX is a video production company specializing in high-quality broadcast video, video

production, and advertising. Their core services cater to businesses looking for visually
compelling and innovative video ads. Imagina FX’s strategic approach revolves around three key
aspects: creative storytelling, client-centric solutions, and multi-channel distribution. They
combine storytelling with high production quality to engage viewers on popular platforms like
Facebook and TikTok, helping brands capture and retain attention. Additionally, they work
closely with clients to turn project visions into reality, ensuring that their production process
aligns with client expectations. Imagina FX not only creates high-quality video content but also
assists in distributing it across multiple channels, expanding the content's reach. Their
competitive advantage lies in their ability to produce visually impactful videos that help brands
stand out in a crowded digital landscape.

Pejerrey, a full-service digital marketing and advertising agency, focuses on video production,
digital strategy, and communication. Their strategy emphasizes purposeful branding, digital
innovation, and a strong social media focus. Pejerrey specializes in creating purpose-driven
marketing campaigns that reflect deeper brand values through human-centered storytelling. By
utilizing cutting-edge technology and insights, they create highly customized and targeted video
ads that resonate with specific demographic groups. With a strong emphasis on social media
platforms like Facebook and TikTok, Pejerrey excels in crafting video content that thrives in
these environments. Their competitive edge comes from aligning brand values with consumer
emotions, enabling them to create meaningful ad content that connects with audiences on a
personal level.
Competitive Advantage for Lessy
Lessy will stands out by combining cutting-edge creative production with a data-driven,
audience-centric approach. By leveraging in-depth audience insights and advanced analytics,
Lessy customizes each video ad to ensure maximum relevance and engagement across platforms
like Facebook and TikTok. This personalized strategy, combined with a focus on agile production
processes, will allow us to deliver highly targeted and optimized content that resonates with
specific demographics, helping brands build stronger connections with audiences and drive
measurable results.

Optimizing strategy for Lessy

To successfully thrive and grow Lessy platform through video ad marketing, Lessy will focus on
several key strategies. First and foremost, by leveraging on Programmatic advertising.

What is Programmatic advertising?

Programmatic advertising is an automated method for purchasing online advertising space. It

uses data and algorithms to place ads on the right platforms, enabling campaigns to be launched
quickly and efficiently without manual intervention.
1. Real-Time Bidding (RTB)

RTB is an auction-based system where ad impressions are bought and sold in real time, as a
webpage loads. Advertisers bid for the ad space, and the highest bidder’s ad is displayed to the
user.RTB offers flexibility and scalability, allowing advertisers to reach vast audiences while
maintaining control over budget and targeting. It's highly efficient but can lead to ad placements
on less premium sites if not properly managed. RTB is perfect for campaigns where reaching a
broad audience and quick adjustments are crucial.

2. Preferred Deal

In a preferred deal, advertisers and publishers negotiate directly for ad inventory, but the
transaction isn’t guaranteed. The advertiser gets first-look at available ad space before it goes to
auction, at a set price. Preferred deals provide more control and premium ad placements without
the full commitment of a private marketplace (PMP) or direct deals. This type of arrangement
works well for advertisers looking to secure high-quality inventory with some degree of
flexibility, particularly in cases where specific audiences or premium content are critical to the
campaign.

3. Private Marketplace (PMP)

A PMP is an invitation-only auction where select advertisers are given access to premium ad
space that isn't available in open auctions. Publishers reserve these slots for high-profile
advertisers, offering exclusive, premium inventory. PMPs are beneficial for brands that seek
brand safety and high-quality ad environments, ensuring that ads appear in contexts aligned with
their image. They provide exclusivity and better control over where ads are shown, but at a
higher price compared to RTB, making it suitable for advertisers focused on quality over reach.

4. Programmatic Direct

Programmatic direct involves a one-to-one agreement between an advertiser and a publisher,

bypassing the auction process entirely. Ad space is reserved and bought directly by the advertiser
at a pre-negotiated rate. This model ensures guaranteed ad placement and fixed pricing, offering
predictability and premium ad spots. It’s ideal for advertisers who want to maintain strict control
over where their ads appear and for brands focused on premium inventory. However, the lack of
flexibility in pricing and inventory adjustments means it requires more strategic planning
upfront.

What are the benefits of programmatic advertising?

Precise Targeting: This allows for accurate targeting of audiences with specific interests in the
right locations. Programmatic advertising enables advertisers to drill down into very specific
audience segments, targeting users based on their browsing habits, demographics, interests, and
location. By leveraging vast amounts of data, it ensures that ads are only shown to the most
relevant audiences, reducing wastage and improving ROI. Lessy can adjust their campaigns in
real time to ensure that they are continuously reaching the right individuals, creating more
personalized and effective ads that resonate with the target demographic.

Interactive Creatives

Formats like Rich Media, which include interactive features such as clickable videos, polls, or
games, engage users beyond just viewing the ad. These formats allow consumers to interact with
the brand directly within the ad, leading to a more memorable and immersive experience. This
enhanced engagement often translates into higher click-through rates (CTR) and deeper brand
recall, making interactive creatives a powerful tool for capturing attention in a crowded digital
landscape.

Real-Time Optimization
With real-time data feedback, advertisers can adjust campaigns on the fly, tweaking creatives,
adjusting bids, or refining audience targeting to optimize performance. This agility allows for
continuous improvement in response to user behavior and market conditions, ensuring that
campaigns are always operating at peak efficiency. Real-time optimization can help prevent
budget waste and ensure that advertising dollars are spent on the most effective strategies,
leading to better results and higher ROI.
Variety of Metrics

Programmatic platforms offer a comprehensive set of metrics such as impressions, clicks,

conversions, engagement rates, and viewability. These data points allow advertisers to gain deep
insights into how their campaigns are performing, which ads are resonating, and where
improvements can be made. This granular level of analysis provides the foundation for
continuous optimization and enables brands to make data-driven decisions to improve the
effectiveness of their future campaigns.

How Programmatic Advertising Works

Programmatic advertising automates the buying and selling of digital ad inventory through
technology platforms, enhancing the efficiency and targeting capabilities of ad campaigns. The
process occurs in real-time and involves several key components, such as Demand-Side
Platforms (DSPs) and Supply-Side Platforms (SSPs), which communicate with each other
during an auction process.

Advertiser Setup and Targeting:

Advertisers begin by using DSPs to define their target audience based on specific parameters
such as demographics, behaviors, interests, and geographic location. They can also choose the ad
format (e.g., video, display, or mobile) and set the bidding strategies for their campaign.

Real-Time Auction

Once an ad opportunity becomes available (when a user visits a website or app), an auction takes
place in real-time within milliseconds. The DSP bids on behalf of the advertiser, using the
audience data and budget parameters to compete for ad placements that best match the
advertiser’s goals.

Supply-Side Platform (SSP)

On the other end, publishers (owners of websites or apps) use SSPs to make their ad inventory
available for bidding. The SSP communicates with DSPs and offers the available ad space to the
highest bidder, ensuring that the publisher maximizes their revenue by selling ad space at the
best possible price.

Ad Delivery

Once the auction is complete, the winning ad is delivered to the user’s screen almost instantly.
The decision-making process happens in the background, and users experience no noticeable
delay in page loading times.

Campaign Optimization:

Throughout the campaign, programmatic platforms provide continuous feedback, enabling

advertisers to make real-time adjustments to improve ad performance. They can refine audience
targeting, adjust bids, or modify creative elements based on how the ads are performing. This
allows for greater efficiency and campaign optimization.

Reporting and Insights:

After the campaign ends, the DSP generates a detailed report, providing insights into
performance metrics such as impressions, clicks, conversions, and engagement. This data helps
advertisers evaluate the success of the campaign and informs future strategies.
Now that programmatic advertising is clearer and a possible strategy of optimizing the Lessy
video ads reach, here are some key recommendations for using it effectively:

 Don’t Limit Yourself to One Audience

Understanding your audience is crucial, but don’t focus solely on one group. Identify several
target segments and create personalized campaigns for each.

 Focus on a Long-Term Strategy

Programmatic advertising is particularly effective when aimed at long-term goals. Concentrate

on building brand image and increasing engagement by setting clear success criteria.

Regularly analyze results and adjust your strategy to maximize effectiveness.

 Use a Variety of Formats

Experiment with interactive formats such as Rich Media, Split Screen, and Video Interaction.
These formats enhance engagement and attract attention.