Advertisers' Spanish Lesson
It's a hot Hispanic market, as Madison Avenue is finally learning
By Jean Bergantini Grillo and P.J. Bednarski -- Broadcasting & Cable, 9/12/2004 8:00:00 PM
Hispanic television is where the action is. More than a dozen cable and broadcast networks are competing for the fastest-growing segment of the U.S. population. But even though advertisers are catching on quickly, they are still behind the buying curve.
The stats are overwhelming: Hispanics make up a market of 40 million in the U.S. They have buying power of nearly $570 billion, according to statistics that Univision provides to clients, and that's a staggering 120% more than just a decade ago.
But a recent study by the Association of Hispanic Advertising Agencies (AHAA) notes that advertisers put just 5.1% of their ad dollars into Hispanic television. That's about half the sum AHAA says is needed to reach Latinos.
Some big advertisers have become big spenders. Lexicon, Procter & Gamble, General Motors, Worldvision, Ford and McDonald's are among the top 10.
Although the pace may disappoint Hispanic sales execs, advertisers do seem to be discovering the Hispanic channels. Indeed, of the $1.7 billion spent on Hispanic media in the first six months of 2004, almost all of it, $1.2 billion, went to Spanish-language TV. The lion's share went to Univision, reaching 98% of all Hispanic households and grabbing $602 million, followed by Telemundo ($428 million), TeleFutura ($154 million) and Galavision ($39.7 million), according to the most recent TNS/CMR analysis.
"In this year's upfront, the [Hispanic] broadcast nets dealt with around 300 clients," says Ron Furman, Univision executive vice president for network sales and marketing. "Univision got about half that," he adds. "But seven years ago, we had only 39. We are seeing enormous growth." And some competition. There's now History en Español and Discovery Español for starters, as well as ESPN's and Fox's Hispanic sports networks. Even premium channel Showtime is saluting National Hispanic Heritage Month with highlights from the Los Angeles Latino International Film Festival.
Steve Mandala, Telemundo executive vice president for sales and marketing, considers educating the market a crucial part of his job. "It's been almost evangelical, to be sure, but the Hispanic consumer is incredibly under-researched. Yet more and more marketers want targeted, thoughtful placement of their ad dollars. That's what our presentations are all about," he says, "and it's working."
But there are laggards. As sectors, pharmaceutical manufacturers, apparel manufacturers, financial services and entertainment advertisers don't speak Spanish very often. For example, while retail and direct-marketing advertisers shifted 7.3% of their national spending to Hispanic media in 2003, pharmaceutical companies allocated just 0.8% of their overall advertising, according to AHAA research.
ADVERTISERS AND STEREOTYPES
Univision's Furman cites the pharmaceuticals market. As a category, he notes, drug companies "have been very slow to determine how to interact with the Hispanic consumer. Often, their clinical studies haven't included diverse demographics. They need to know how Hispanics educate themselves about disease. They need to identify the disease entities that most affect Hispanic consumers and learn how Hispanics seek treatment. Then they can develop the most appropriate cultural message." Univision, of course, is anxious to give the tutorial.
Telemundo's Mandala concurs that pharmaceutical and financial clients are "vastly under-represented in Hispanic media." Myths and biases play a role. Some potential clients may believe that most Hispanics work "off the books," are illegal and thus lack medical coverage. Telemundo research shows otherwise, he says, adding that 70% of Hispanics are insured.
But change, when it comes, comes quickly. Raquel Tomasino, executive vice president and media director for Castells & Asociados, says she's responsible for running the first Spanish-language commercial on a mainstream network. She sold McDonald's on the idea of advertising in the CBS presentation of the Latin Grammy Awards five years ago. A few weeks ago, when the Latin Grammys aired on CBS again, as many as 80% of the spots were in Spanish.
Like others, Tomasino points out that, as the market grows, sophisticated advertisers are making their Hispanic buys part of their overall ad budget, not separating them out. That's the good news because it shows assimilation. The bad news, for agencies like hers and others: These companies sometimes use non-Hispanic ad agencies to create or place their Hispanic ads.
She considers it "not appropriate" to show the same commercial dubbed in Spanish instead of tailoring a new pitch. "You would never do that to any other demographic group," she says. "What ends up happening is that you have people making marketing decisions that aren't really thinking it through."
Sometimes, she adds, advertisers treat Hispanic media with logic they'd never use otherwise. She points out that KMEX, a Spanish-language Univision station, dominates Los Angeles media but doesn't always get ad support. "Would you ever not advertise on the No. 1 channel?" she asks.
Castells clients include McDonald's, Toyota and the cable industry itself.
That's because newly arrived Hispanics, in particular, are accustomed to getting TV from satellite dishes, observes Joseph Schramm, whose Schramm Sports & Entertainment does media marketing for Hispanic and other ethnic groups and also works with the cable industry, including Comcast and the History Channel. One of his businesses is packaging soccer events to Hispanics, where the commercials are all in Spanish. But like others, he thinks that to reach some segments of the Hispanic population—mainly the younger, bilingual Latino—English-language commercials can be very effective.
Yet he thinks advertisers don't know how to make those commercials work. He exclaims, "Take your English commercial, do it in Spanish, and pop! goes the weasel! You've got a Hispanic ad, right? Wrong!"
To use an example of a retailer doing it right, Schramm notes a Verizon Wireless commercial in which the advertiser cleverly mixes Spanish with English.
Some other advertisers are learning. Apparel retailers Sears, J.C. Penney and others have been growing their historically low spending. "Target has had a significant Hispanic-network presence since 2003," Furman says, "and Kmart has been focusing on the Hispanic consumer as part of its [bankruptcy] recovery. They understand the growth of Hispanic incomes and the youth of the Hispanic consumer.
"While we've had wonderful success [at Univision]," he adds, "there is still an enormous potential for those advertisers not yet in. This year, Univision is much further along in merging our acquisitions. Univision now represents network TV, local TV, network radio, local radio and online, and we are the ratings leader in all of them."
Telemundo, reaching 93% of all Hispanic households, is equally aggressive. Mandala says the key to growth is getting advertisers to understand the behavior of different product categories as they relate to Hispanic households.
In this year's upfront, NBC-owned Telemundo saw 20%-30% increases in spending from automotive, cellphones, movies and retails. And, he says hopefully, agency researchers are doubling the amount of money they've budgeted in '05 for Hispanic data.
ENGLISH OR SPANISH?
Both executives say the vast majority of Hispanic households prefer their entertainment and news in Spanish.
But that may be changing. Two cable networks—Sí TV, which is all English, and Mun2, which is mostly so—take into account the demographics.
According to the U.S. Census Bureau, more than 80% of Latino youth are U.S.-born, and a majority of them consider English their primary language, as Schramm points out.
Likewise, to Robert G. Rose, president of AIM Tell-A-Vision, which syndicates the English-language magazine and entertainment show American Latino TV, Univision and Telemundo are missing the trend, and so are advertisers. He contends that the young Hispanic wants English-language TV. American Latino (formerly Urban Latino) airs in 75 markets on several CBS O&Os—including WCBS New York, WBBM Chicago and WFOR Miami—and ABC's owned KABC Los Angeles. Rose is taking his English-language show into 20 new markets for this fall. Advertisers include Volkswagen, Anheuser-Busch, Universal Pictures and, indicating how American the Latino population has become, the U.S. Air Force and Army.
His company is launching another English-language show, Latin Fuze, this fall.
Other shows, notably Nickelodeon's popular Dora the Explorer and upcoming PBS series Maya & Miguel, target English-speaking Hispanic youth.
But that doesn't mean there's no room for Spanish-language TV. For instance, Adlink, the Los Angeles-based cable interconnect, which allows advertisers to select the part of that sprawling city their ads will appear in, offers software to help pinpoint ads to particular neighborhoods.
"Our technology offers a powerful way to reach Hispanic households by creating ads that target both the general market and specific Hispanic areas [with a Spanish tag or copy]," says Rick Oster, Adlink vice president and general sales manager. "There's no waste."
There are more than 7 million Hispanics in Los Angeles, and about 52% of them have cable. "We have young, assimilated Hispanics watching our 44 networks," Oster says, "so we recommend advertisers looking to reach that demographic use all of our 80 zones, with English-language spots in 50, Spanish-language in 30."
In a definite blending of the two, Adlink will offer the 2004 World Series in Spanish on Fox en Español, creating new sports division SportLink LA to pitch it.
According to Mark Huey, head of Adlink's Hispanic Ad Sales Division, advertisers targeting spots to the L.A. Hispanic market include Honda, Toyota, Mercedes Benz, McDonald's, Universal Pictures and Universal Studios, as well as area legal, specialty-foods, beverage and health-care businesses.
Univision and Telemundo point out that ads in Spanish are four or five times more persuasive to Hispanic consumers than English-language spots.
Leon Potasinski agrees. The senior vice president of marketing services for La Agencia de Orci & Asociados has more than 24 years of experience in multicultural/Hispanic marketing and advertising.
While most of his agency work has been Spanish-to-Spanish, he also does English campaigns. In fact, this year, working with Honda in its attempt to reach young Hispanic males, Potasinski is placing Honda buys on Animal Planet, Cartoon Network, E!, FX, MTV, TBS, TNT and VH1.
"We do both Spanish-only and English-only, depending on the project and consumer target," he says. "Honda wanted to pitch its Civic to Hispanic males 18-34. These are young men really living in two cultures with two languages. So we did both a Univision and Telemundo Spanish-language buy and an English-language cable buy."
The big thing, Hispanic networks and ad agencies would say, is that Honda no longer can ignore them.
|Where the Money Goes|
|Highlights of Hispanic-consumer spending, 2003|
|Source: Global Insight, "The Hispanic Consumer Market in 2002 and Forecasts to 2022"
|Food & beverages||$108.3|
|Utilities & household services||$36.5|
|Clothing & shoes||$34.4|
|Motor vehicles & parts||$33.2|
|Furniture & consumer electronics||$29.9|
|Gasoline & motor oil||$15.8|
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