SÃO PAULO: At $3.4bn, digital ad spending in Brazil accounts for half the region's total expenditure but the sector is facing challenges including recession, assessing effectiveness and blocking.

The country's economic and political woes are well documented, with the central bank recently predicting a 3.6% decline in the economy this year and a 2.8% decline in 2016 while leading politicians have been implicated in a corruption scandal around Petrobras, the state-owned oil company.

Consumer confidence has plummeted as a result. On one index, this averaged 107.71 from 1996 until 2015; by December 2015 it stood at 96.3.

Within the more limited sphere of digital advertising, Ana Nubié, chief strategy officer at Moma Propaganda, a São Paulo-based ad agency, told eMarketer that "the biggest challenge is the doubt about the effectiveness of digital compared to traditional media, particularly with TV and sometimes radio".

She also highlighted the smartphone as one of the areas of greatest opportunity – almost two thirds of the population will have a mobile phone in 2016 – along with investment in geolocation and the use of third-party or customer data for media optimisation results.

Ad blocking, too, appears to be creeping up the agenda. When the Instituto Verificador de Comunicação (IVC), the media measurement institution, partnered with the American Alliance for Audited Media (AAM) to explore this issue recently, they estimated that 10% of Brazilian internet users had some kind of ad blocker installed in their browsers.

For some sites, the proportion of the audience using ad blockers had risen as high as 30%, Exchange Wire reported.

Overall, it was estimated that 15% of Brazilian publishers have ad campaigns that were not shown because of such software.

CPG advertisers are most likely to have been affected, simply because the category is a major user of digital advertising.

According to Nubié, "companies in this sector can invest up to 25% or even more of their ad budget on internet advertising, since they sell mass-consumption products that already have a large online audience".

Data sourced from eMarketer, Exchange Wire, Financial Times, Trading Economics; additional content by Warc staff