There are more Hispanics in the United States than in any Spanish speaking country. So it's perplexing that, out of the eight billion total dollars spent for general marketing and advertising per year in the United States, Hispanic marketing spending doesn't even reach $50 million.
Interestingly, according to TNS Media Intelligence and CMR, the Internet is the second fastest growing medium in 2004 for U.S. ad spending, topped only by Spanish language TV. Still, even the most aggressive and progressive advertisers are spending small fractions of their total media budgets in Hispanic media.
The largest Hispanic media advertisers, including Procter & Gamble, Sears Roebuck, PepsiCo and General Motors, are spending around $10 million each, and all advertisers in Hispanic media spent only $310 million in 2003, barely 1 percent of total media budgets. Meanwhile, with Hispanics accounting for 13 percent to 14 percent of the U.S. population, and a large percentage of Hispanics devouring Hispanic/Spanish language media (either solely, or along with mass English-language media), there is a considerable spending gap.
Carlos Manzano, associate publisher of HispanicOnline.com and HispanicTrends.com believes that Hispanic-based advertising is not catching up as it should. According to Manzano, “If Hispanics hold 8 percent of the buying power of the United States, then why do advertisers and marketers only spend 1.5 percent to 2 percent of ad dollars towards Hispanics? If the buying power is 8 percent, then the ad spend towards Hispanics should be 8 percent.”
Manzano believes Hispanic based advertising is truly a market to understand. “You can’t translate an ad into Spanish and expect it to work,” he states. “I see a little bit of traction in print advertising geared towards Hispanics, but online is well behind. Any ad dollars spent on Hispanic marketing goes straight to Spanish TV.”
That's a mistake. “With more than 14 million U.S. Hispanics online today and more flooding to this medium daily, advertisers can’t afford avoiding this enormous opportunity,” says Peter Blacker, vice president-multi-cultural and international AOL network sales and solutions and chairman of the Internet Advertising Bureau’s (IAB's) Hispanic Committee. Blacker says larger advertisers are just starting to notice this fast-growing demographic. “We have been able to secure major Hispanic campaigns with marketers like Ford, InterContinental and the U.S. Army, and are seeing an increased interest from the automotive industry. However, educating all advertisers and marketers to understand the value the Internet plays in reaching the Hispanic community is certainly our challenge as an industry.”
Factors to consider
The challenge lies in educating advertisers and marketers about the specific variables, such as household income levels and age, that can affect Hispanic marketing plans.
According to Liz Sarachek, director of sales for Yahoo! en Espanol, the 53 percent of U.S. Hispanics who are actively online are a lucrative target. Studies have shown that Internet penetration is highest among affluent U.S. Hispanics; 89 percent of U.S. Hispanics with an income of $150,000 or higher are actively online while lower income U.S. Hispanics tend to be heavy TV watchers. These statistics alone should persuade advertisers to make the shift from television advertising to online.
Age is a very important factor to take into account as well. The Hispanic population is much younger than the general market with a median age of 25 versus 38. According to Alejandro Rodriguez, vice president of sales for Hispanic portal Star Media, the young Hispanic demographic is untapped. “We must focus on young Hispanics -- they are surfing, chatting, downloading music, and instant messaging over watching television. To not target this demographic is a wasted opportunity.”
A little while ago, the Association of Hispanic Advertising Agencies conducted a study that recommended a spend of 8 percent for Hispanic advertising. “If your products appeal to young people or to the over $40,000 income groups, I recommend a 12 percent to 14 percent level for online,” says Michael Saray, president of Michael Saray Hispanic Marketing, a consulting and project management firm dedicated to helping direct marketers with their Hispanic iniatives. “The 12 percent to 14 percent spend should incorporate all facets of online advertising, not just banner ads. Search will play a bigger part as it is almost non-existent now. Try and use a Spanish language query and see where you get.”
Aside from search, email and affiliate marketing should be considered too. “Email will be important as the Hispanic population is very word-of-mouth or viral oriented. Affiliate relationships will continue to grow as new entrants to the Hispanic arena look for a foot in the door,” Saray says.
According to comScore Media Metrix, Hispanics’ preferred destinations online are largely the same as everyone else’s -- they are flocking to sites run by the big three portals (AOL, Yahoo! en Espanol, MSN) while preferring Terra Lycos a little more than average (undoubtedly for its Spanish-language content) and Amazon a little less (which is understandable too, as credit card penetration tends to be somewhat lower among Hispanics compared with the overall population).
Is Hispanic online behavior different?
Now, that leads to a particularly tough question: Are Hispanics just like everyone else when it comes to online behavior?
According to David Berkowitz, editor at eMarketer, the answer is undoubtedly yes and no. “By advertising online on English-language sites such as Yahoo!, Google, and eBay, advertisers will undoubtedly reach a sizeable percentage of Hispanics. Yet it will be particularly important, when targeting this demographic growing both in number and purchasing power, to examine specifically where they are going, what they are searching for, and what they are buying. It is only when advertisers and marketers fully embrace and understand this that marketing towards Hispanics can achieve a strong return on investment.”
Interactive ad companies are starting to accommodate the need for Hispanic-based advertising. ValueClick Media, for example, is carving out a specific Hispanic channel in its network. Email acquisition solutions provider, NetCreations, has expanded its Hispanic file to two million opt-in subscribers. In addition to the online ad companies, top portals and service providers have specifically created Hispanic-focused service offerings.
AOL Latino, for example, is the only ISP in the marketplace to help Spanish-language dominant users get online all in Spanish while offering a full range of content. Blacker says, “We offer services such as Parental Controls in Spanish, a Homework Help function providing tutors in both Spanish and English so parents that only speak Spanish can help their kids with their English language homework, as well as the lowest discounts available for money transfers and prepaid phone cards.”
The IAB recently created a Hispanic Committee whose purpose is to promote the value of online advertising in reaching the Hispanic audience. Members of the committee range from publishers to advertising agencies.
As the Hispanic population grows, both in the United States and online, it is crucial for us marketers to adjust and customize our marketing messages. It is only through education that we can begin to understand the Hispanic market and its impact on how we advertise online. Not adjusting your online marketing messages to the current trends in population, not just for Hispanics but all demographics, will result in a higher return on investment and brand loyalty. Just look at the success of several companies such as Jet Blue and Office Depot that have created Spanish sites. I’ll be discussing that in my next article.
Elizabeth M. Lloyd is currently the Director of Corporate Marketing for a start up online ad company in Silicon Valley. Elizabeth recently moved back to the Bay Area from New York City where she was Director of Marketing for leading opt-in email provider, NetCreations, Inc. Prior to that, Elizabeth was responsible for the Public Relations department of ValueClick, Inc., a leading digital marketing company.
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