'We're not giving up' – the turbulence and tenacity of Venezuela's ad industry

All of this is understandable. The country’s internet regularly blacks out and web speeds are abysmal by western standards, even in the urban capital of Caracas. A conversation via WhatsApp or Skype rarely lasts more than five minutes without cutting out; a 30-minute phone call from the US costs $64.

But sluggish internet speeds are the least of the country’s problems. The economic crisis that began unraveling as socialist leader Nicolás Maduro took on the executive in 2013 was brought sharply into focus in January this year when leader of the legislature, Juan Guaidó, declared himself acting president. The ensuing tussle for power invited international attention and the world finally bore witness to a country on its knees.

The International Monetary Fund posted Venezuela’s hyperinflation at 1.3m percent in November 2018 and estimated prices were doubling every 19 days toward the end of last year. Despite the country's petro-state status, the consequences of such economic devastation have been classic: the poor cannot afford to eat, imports have ground to a halt, emigration has skyrocketed and the rich have corrupted the system to stay afloat.

Even Caracas, once an urbane, party-loving city basking in the glow of globalization, is now constantly described as a ghost town too dangerous to roam after sunset.

“We used to spend so long in traffic going to school,” remembers one local journalist reporting from the city, who wished to remain anonymous. “Now it is very rare to be in traffic at all. I remember there used to be car ads everywhere. Now it’s impossible to buy a brand-new car in Venezuela – you can only buy a used car.”

Even the consumer packaged goods sector has been upturned in the crisis. Before the collapse, multinational brands filled the supermarkets. Now it’s a pleasant surprise if the shelves are stacked at all. Additionally, most citizens are told when and where to shop by the government, which is attempting to control consumer spending patterns in order to crack down on a burgeoning black market. Those who can shop have had to swap branded goods in favor of the most basic staples: the purchase of cornmeal, pulses and root vegetables are all on the rise and even McDonald’s swapped its potato fries for the cheaper, more obtainable substitute of yuca in 2015.

“There’s also a lot of knock-off brands that copy the brands that used to be on the shelves,” says the journalist. “Colgate, for example, will be ‘Corgate’ – they keep the same design and words but try to sell them as if they were the brand. There’s a copycat for Oreos called Oleos, but they became so expensive they’re now unobtainable.” Other fine examples include ‘Hoed & Shoulders’ shampoo and ‘Aluays’ sanitary towels.

Conversely, luxury items have been shielded by the black and ‘gray’ markets – businesses on the precipice of legality that sell imported branded goods, usually from the US, in dollars. Wealthy professionals can still purchase bottles of champagne in exclusive bars and country clubs, while privately run ‘bodegones’ have been popping up in urban areas to service the middle classes benefiting from steady dollarization – trading with US dollars in order to survive astronomical inflation of the Venezuelan bolívar.

“I went to this little bodega and they were selling Dolce & Gabbana panettone,” recalls the journalist. “It was $400 a box and I saw a guy buy four of them. It was so strange.”

Outside the capital, conditions are worse. Dylan Baddour, a freelance correspondent reporting on the Colombian border (it is now near impossible to enter Venezuela without citizenship), tells unsettling, Dickensian tales of business startups: those that sell simple painkillers at inflated prices, those that flog artwork made of the essentially worthless bolívar currency, those that buy human hair from the poverty-stricken. They prey on desperate Venezuelans who have been living off yuca root and “watching the neighborhood mango trees to see how long they can let the fruit ripen before someone else gives in and picks it”.

It is not just the hungry who are leaving. Baddour has witnessed all walks of life flow through the Colombian border, which is now at breaking point after receiving more than a million Venezuelan migrants in 2018 alone. The reporter’s dispatches from the city of Cúcuta portray some traveling not with garbage bags but with designer suitcases, a telling sign of the middle classes leaving in search of a stable economy.

“Many are convinced that their country is not going to get any better, it’s only going to get worse,” he says. “I met an art director on the border and, while I didn’t talk with him for long, he told me things had got so bad he locked up his house and went looking to find something else to do. He had one of those wheeled trolleys and was carrying all his luggage on it.”

Other marketers have chosen to stay. Venezuela’s agency landscape – revered for its creativity – is smaller than it was five years ago, yet still functioning in spite of decimated consumer spending powers and a lack of operating media platforms.

“I’ve seen a lot of network agencies shrink to the minimum,” says María Gabriela Pulido, managing partner for Latin America at MBLM, which still operates an office in Caracas alongside Bogotá and Mexico City. “Some have merged with local agencies. The problem is, all the big agencies had auto industry or pharma accounts, which have shrunk dramatically.”

Publicis Groupe currently employs 96 staff across Zenith, Starcom, Leo Burnett and the latter’s subsidiary Arc, as well as at the group level. FCB has a staff of “near 50” across three offices, including FCB Caracas.

Omnicom says it has “a limited presence in Venezuela, with only a minority equity-owned interest in BBDO ZEA”. The holding company did not respond to queries on the fate of TBWA\Venezuela, with which it has a “non-equity affiliate relationship”, nor that of ARS DDB. An inquiry email to the latter’s president, Mariana Frias, bounced, although one source close to the agency said it was still open. TBWA\Venezuela’s website no longer hosts any content, yet that is hardly evidence of closure in a country where the internet drops out on a daily basis.

Local clients are harder to come by, particularly as a number of the biggest multinational employers – such as Goodyear, Kellogg’s and Kimberley Clark – have all pulled out of the country. So while agencies still pick up a moderate amount work from the number of Venezuelan brands still in operation, a proportion are relying more and more on international clients.

“We provide cheap labor that’s not only cheap but very good creatively,” Pulido explains. “I have providers with the likes of Louis Vuitton and Sony.”

RG2, part of FCB’s International Alliance, has applied the same strategy, creating local and global content for companies such as Diageo.

“Our vision is to stay in Caracas but forge an international spirit that we believe we can develop all over the world,” says Exequiel Rodriguez, founder and executive creative director of RG2. “Three years ago we had a plan to export our business, but now I truly believe Venezuelans are so good not only in Caracas, but everywhere they go. I have had offers to go to other countries but I decided to stay here and stick with our creativity and our power of strategic thinking. Now we have the clients that only major agencies have had in the past.”

WPP’s J Walter Thompson – soon to be Wunderman Thompson – is one of the biggest networked agencies in the region. Having previously relied heavily on JWT’s internationally referred clients, its portfolio is now mixed and includes one of the country’s biggest spenders – food and beverage giant Alimentos Polar.

JWT employs 68 people in Caracas, primarily creating digital work under the watch of chief executive Roberto Pol, the agency’s former chief financial officer who has worked at WPP for more than 20 years.

“We continue to receive the same support from [WPP’s] other countries in terms of knowledge, training, leadership, etc,” he writes in an email. “They understand the situation in Venezuela – which is not easy – and have the necessary flexibility to manage the business.”

Like many professionals who have chosen to remain in Venezuela, Pol’s view on the current climate is optimistic – although it’s hard to know whether he’s arrived at that mindset via genuine hope or necessity. He writes that he believes the country will boom as it did in the past “if” – not when – “the political climate changes”. He also believes the challenges his agency is facing are simply akin to those experienced by the entire advertising ecosystem. Digital business is more important to its billings now, for instance, and as the cash-rich population shrinks online, retargeting becomes much easier. Above-the-line advertising is not only dubiously effective but also “a very expensive alternative” in Venezuela.

Above-the-line media now plays host to a strange mix of ads. Billboards draw fond criticism from Venezuelans, most displaying yellowing ads that were pasted years ago, with only a handful of emerging sectors appear to be buying new inventory. These include cryptocurrency businesses, vaping brands, currency exchange houses and “a lot of rum brands, one of the last thriving industries in Venezuela,” according to the journalist.

“Ads before the movies are hilarious,” says the source. “It used to be the big brands, now it’s a cement company advertising its cement. I saw a commercial for sliced turkey the other day.”

Pulido agrees: “You used to have the big brands advertising in the big spaces, now you see it has shifted.” She notes that a number of grassroots businesses have sprung up to target the leftover smattering of middle-class consumers by filling the holes left by the multinationals, launching enterprises such as hot sauce brands and chocolatiers that “don’t fulfill 100% of a budget of an agency such as ours, but certainly make us feel good in terms of giving back”.

However, President Maduro’s crackdown on citizens’ use of “imperial” dollars has meant these companies are not allowed to advertise goods and services in US currency. So brands “shift to Facebook Marketplace, and if they’re shut down there they go to Instagram Shopping,” Pulido explains. “It’s very hard to contain.”

Censorship has closed down most of Venezuela’s newspapers. El Nacional is widely considered to be the only anti-Maduro title still surviving the regime and, according to Reuters, it is staffed by just 20 journalists and circulation has dropped by 90% in 10 years due in part to a national paper shortage. Local journalists are constantly harassed and persecuted by the government. And it’s the same story for TV – a medium that is now heavily censored and controlled by the state.

“One aspect that’s still alive is radio,” says Pulido. “You hear advertising from the cryptocurrency or crypto-training companies, but also the ‘made in Venezuela’ type of products – the textiles industry that’s growing with all the excess capacity we have, for example, and other products being developed. The radio is a strong medium because it’s cheap or free and reliable – you have to bear in mind the internet bandwidth is so bad here.”

The internet is arguably the biggest pain point for marketers in Venezuela, particularly for those whose careers accelerated along with dial-up speeds. MBLM runs on three separate systems, including a satellite link, Pulido explains, “because I can’t tell my clients I don’t have any internet – they don’t understand that”.

“I swear we have worse internet than the worst country in Africa,” says Rodriguez. “Say we have to send artwork to a client and it’s 5GB – that would take an hour. But the client doesn’t care about our problems. You cannot say to the client, ‘I’m unable to join the meeting because there is a demonstration taking place outside the office.’ They don’t care.”

Rodriguez and his co-founders Marcelino Madriz and Julio Allende could not have picked a worse time to launch their agency in Caracas. RG2 Venezuela opened its doors in 2014 – just one year after Maduro’s rise to power had tanked the economy. It was the year the protests began, remembers Rodriguez, and demonstrations prevented staff from getting to work on the first day in the job.

“But you know what they say – there’s never a good time to start a business,” says the creative, with only a hint of irony.

The first two years of RG2 were unimpeded by macroeconomics. The team hunkered down on producing great creative work and this strategy paid off when it collected a Cannes Lions for Film. It was, Rodriguez says, the biggest creative achievement the market had ever witnessed – and it happened in the five worst years the country has ever seen.

Is poverty to creativity what necessity is to invention? Perhaps.

“In the old days you had a lot of brands, a lot of competition, you had a local market and you had a baseline consumer with a lot of spending power,” explains Madriz. “Brands invested in brand building and promotion, but they didn’t really put their necks out. They played it safe.

“The crisis basically pushed a lot of brands out of their comfort zone. Historically, a lot of them didn’t bet on the creative side because they were focused on media platforms and production companies. But as money has been running out, these brands have shifted the focus to betting on creative.”

And as brands have grown more creative, agency marketers have kept pace alongside them, according to Pulido. She believes young local talent to be resourceful, creative and, perhaps most importantly, fast – “I have hired from other countries, Ecuador for example, and they would take twice as long to create quality projects.”

Rodriguez explains that senior creatives have been leaving the country. “But even though we have more junior people than ever, the processes are still the same and they are even faster and hungrier than some older creatives. They’re more eager, more aggressive, more impulsive. And it comes from being on the cutting edge – they need to support their families. They ask: ‘How can I make a living and a name for myself?’”

Yet finding good talent is easier than keeping it in Venezuela. Save the Children estimates that the number of Venezuelans emigrating is expected to reach 5.3 million by the end of 2019, and marketing isn’t immune from the effects of the national exodus. Pulido is used to her young employees staying for two years or less.

"Then they come to me and say ‘Gaby, I need to leave next week’ and there’s nothing I can say to them because they have probably received either a visa or an opportunity outside of Venezuela, or they’ve been kidnapped, and they can’t create while they’re so stressed out."

Kidnapped? "Oh yes – there is this thing called express kidnapping where you get kidnapped in the evening and they release you halfway through the next morning for some ransom. It’s just one of the things they’re facing, alongside not getting medicine and not finding food."

Surviving agencies pay their staff in dollars, which makes for as comfortable a life as you could ask for in Venezuela. Many have also implemented comprehensive training programs that act both as an incentive for young people to join and a way to keep the talent pipeline flowing as churn accelerates.

JWT Caracas, for example, has entirely overhauled the way it hires and works to mitigate the deluge of notice letters. It now dedicates a substantial amount of time to searching and selecting new employees, “focusing on young talent with little experience in order to be able to train them within the agency,” according to Pol.

“We understand that this means an effort for the few senior level employees who remain and know that many of this talent will leave the country in a short time,” he says, “but searching and training are part of the JWT culture for obtaining good results.”

Over at RG2, Rodriguez and Madriz have noticed a trend for younger members of staff using the agency as their ticket out of Venezuela. Creatives are gifted an impressive client roster, build their portfolio, then leave for a shop elsewhere in Latin America or Spain. But they understand it would be futile to fight the situation; instead, they nurture the “really key people” who form the foundations of the business while satellite employees circle in and out.

There’s no doubt that Rodriguez, Madriz, Pulido and Pol could all manage an agency in another market – one where ad budgets are higher and the population can afford three meals a day. If anything, the tenacity they’ve developed, the problems they’ve solved and the thick skin they’ve grown all make them even more employable elsewhere.

Yet they choose to stay. They choose to stay because hope still lingers inside their agency walls, in spite of what Pulido calls the “learned helplessness that’s become like cancer” on the streets and in the government. “My message to my team is we’re not giving up. We’re here and this can change, and it will change.”

The story of the advertising class of Venezuela may seem gratuitous: as this issue goes to press, babies are dying of starvation and their mothers scream at Maduro to clear the road blocks preventing aid from reaching the desperate. TV is no longer the same, the streets are no longer the same, supermarkets are no longer the same. But advertising – even in its new, distorted form – endures, a glimmer of normality in a country dizzy from change.

This feature first appeared in the Globalization for Good issue of The Drum magazine, in which we look at how the coming wave of connectivity associated with the fourth industrial revolution is set to impact business and society.

Main image: Jonathan Alvarez. Other images courtesy of MBLM and RG2.