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This region is the world’s fastest growing advertising market

Thursday, 18 Jul 2013 | 12:00 AM ET
Advertising billboards in Lima, Peru
Karel Navarro | Getty Images
Advertising billboards in Lima, Peru

Advertising spending in Latin America grew faster than in any other region in the first quarter, according to a new report, in stark contrast to Europe, where marketing budgets are still shrinking.

Latin America saw ad spending growth of 11.9 percent year-on-year in the first three months of the year, according to Nielsen's Global AdView Pulse, with every country in the region experiencing growth.

By contrast, advertising in Europe fell by 4.4 percent over the same period. "It's clear that ad spend is still declining under the weight of the region's economic problems," Nielsen said. "It seems unlikely that the region will recover from these challenges in the short term."

(Read More: Watching the Ad Dollars Move to Social Media)

Leika Kawasaki, media analyst at market research firm Strategy Analytics in the U.S., said an online boom in Latin America was driving advertising.

"Broadband household penetration in the region is growing, in turn driving audience growth and the viability of mass market services underpinned by advertising," she told CNBC.

Internet penetration rates in South America are among the highest in the world outside the European Union and United States. Brazil, the region's largest economy, has an internet penetration rate of 42 percent, while Chile and Colombia are at 59 and 56 percent respectively.

"Latin America is one of the leaders in terms of social networking penetration and time spent online," Leika said. "We expect that Latin America's advertising market will continue to grow… driven by strong online video and social networking advertising spending."

(Read More: US Ad Spending Flat, Cable and Hispanic TV Up)

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The World Cup in 2014 and the 2016 Olympics games – both to be hosted in Brazil – would also boost advertising in the region, she said.

In a report published last month, Strategy Analytics forecast that advertising spending in Central and Latin America would grow by 12 percent year-on-year in 2013, with Brazil overtaking the U.K as the fifth largest market in marketing spend this year.

But Nielsen was more cautious about the outlook for the region, pointing to recent economic problems.

"This emerging region does, however, face its own challenges, as some countries, like Argentina, are experiencing rising unemployment and high inflation," it said.

Nielsen also said advertising spending was flat in North America and up by just 2.9 percent in the Middle East and Africa. Asia-Pacific ad spending grew 5.8 percent in the first quarter. In Egypt, ongoing civil unrest weighed heavily on spending which declined by 20 percent in the same period.

(Read More: 'Hand-to-Hand Combat' in Advertising Market: WPP CEO)

-- By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop

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