The Hard Sell
Despite growing numbers and better data, the ethnic advertising price gap is still wide
By Kevin Downey -- Broadcasting & Cable, 2/5/2006 7:00:00 PM
Not all television ratings are equal. It may sound like a broken record, but when it comes to the prices that advertisers pay to reach ethnic viewers—notably Hispanics, Asians and African-Americans—the cost is often far less than it is for a comparably sized audience in the general market.
What's surprising is that, while this cost disparity has been commonplace for years, it is growing more pronounced in some cases, even as the nation's Hispanics, African-Americans and Asians develop distinct media outlets and markets.
Hispanics, for instance, now account for more than 14% of the population and 9% of disposable income, according to a study released in November by the Association of Hispanic Advertising Agencies. But Spanish-language media accounted for only 2.9% of ad spending in the first nine months of 2005, based on data from ad-tracking firm TNS Media Intelligence.
“One reason this disparity still exits is that only about 170 of the top 300 advertisers have figured out how to market to U.S. Hispanics,” explains David Joyce, a media analyst with New York-based institutional trading firm Miller Tabak. “That is why the ad 'spend' is much less. Since there is less demand for this advertising, there is more supply than demand on the TV side. Which is why it costs less to approach this market.”
Joyce estimates that the gap in Hispanic advertising is barely closing, despite significant increases in ad spending over the past several years. Ad budgets are simply not growing as fast as the Hispanic population.
“If you look at the general-market numbers, I estimate about $200 billion [in advertising], versus $3.2 billion in Hispanic [media]. That is 1.6% of the total,” he says. “It was 1.64% in 2004, and it was 1.6% in 2003.”
But this year the cost disparity and advertising gap in the Hispanic market may begin to close because advertisers, media planners and buyers now have access to more Spanish-language television ratings than ever before.
Nielsen Media Research, which for years has separately measured Spanish-language and English-language networks, this year began measuring Univision and Telemundo in its national study, providing these ratings alongside those for English-language networks.
But it's a slow learning curve. Robert G. Rose, founder and CEO of Aim Tell-A- Vision, which produces and syndicates English- language programs geared to U.S.-born Hispanics, such as American Latino, says the advertising gap in the Hispanic market is immediately apparent on any of the Spanish-language networks. Here's a dead giveaway: There are relatively few commercials.
“Usually Spanish-language stations are scratching to get in on a buy. Instead, you see back-to-back promotional spots,” says Rose. Because there is so much inventory and relatively few advertisers, ad prices are kept low.
Most media buyers note that prices on Spanish-language television fluctuate depending on the advertiser and conditions in the marketplace, as it does with other TV outlets. As a result, it's difficult to estimate precisely how much it costs advertisers to reach one Hispanic rating point compared with a rating point in the general market.
But most buyers say the cost is roughly 60%-70% the price of a general-market rating point. For newer networks, the cost disparity is far more pronounced. Advertisers also pay less for one Hispanic rating point in local markets than for a rating point in the general market.
In New York, for instance, the cost per point on Spanish-language stations on an all-day basis is only 13% the cost for a general-market rating point, based on fourth-quarter estimates from SQAD (Service Quality Analytics Data). In Los Angeles, the cost is 26% the general market's CPM.
While Hispanics may hope advances in ratings measurement will close the ad gap, that hasn't been the case in the African-American market, where Nielsen has for many years tracked viewership. Still, ad revenue is a fraction of what it should be.
Only a Few Targeted Outlets
The reason for this is that many advertisers simply target African-Americans with general-market media. African-Americans tend to watch more TV than other ethnic groups, so the thinking is that just about any television advertising will effectively reach this demographic.
At the same time, there have been only a few TV outlets specifically geared to African-American consumers, outside cable network BET and, in recent years, UPN.
“The cost structure [to reach African-Americans] is based on the general market,” explains Deborah Gray-Young at Chicago-based ad agency E. Morris Communications. “When you use those same rates and cost structure to reach a smaller universe, it makes the cost per point higher.”
Ad rates are generally lower on African-American–targeted cable networks, which, in addition to BET, now include TV One and the Black Family Channel.
Despite the additional outlets for African-American–targeted ad campaigns, the advertising gap remains significant, as it does in the Hispanic- and Asian-media markets, says Keith Bowen, executive VP of advertising sales and marketing at TV One.
“Of all the challenges we face looking forward, the biggest is closing the gap,” he says. “African-Americans are currently 13% of the population, but they are receiving less than 1% of national broadcast dollars. That, to me, is a gross disparity, but it's also an opportunity for us.”
Asian-media outlets also work hard for the money. Bill Imada, chairman/CEO of advertising and PR for agency IW Group and president of the Asian American Advertising Federation, says the prices that advertisers pay to reach Asians are only a tiny fraction of the costs to reach the general market. And, while difficult to pin down because of few reliable statistics, the advertising gap is wide.
“It's significantly less than 1% of marketing budgets,” Imada says, noting that Asians account for more than 4% of the population. “We're talking about only 20-25 companies out of the Fortune 500 that are actively marketing to Asians.”
Imada says that advertisers simply feel overwhelmed by the Asian population, which includes dozens of distinct cultures and languages.
But he is also optimistic that advertisers are beginning to better understand Asian consumers, including the fact that, according to Imada, more than 80% speak English. Asian media is becoming easier to navigate. That's especially true with the emergence of cable channels like ImaginAsian and AZN, which are partly programmed in English.
Among the most significant steps toward closing this Asian ad gap is that some Asian-TV stations last year began subscribing to Nielsen, too.
Michael Sherman, general manager of KTSF San Francisco, the first station to sign up for Nielsen's Asian data, expects that advertisers will see these new ratings and gradually develop Asian-targeted campaigns.
“Just having Nielsen ratings doesn't automatically create budgets,” he says. “But it's an eye-opener when clients or prospective clients see it. We are getting in more doors.”
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