Where and When Is Advertising Effective

Where the Ad Market Is Still Booming
It's all about the power of the Latino media.
By Thomas Mucha, November 21, 2002

Look south, dear readers -- or just to major U.S. cities. Ad spending on Spanish-language television topped $1.4 billion for the first three quarters of the year, according to a new study by research firm CMR. That blistering 25.5 percent growth rate makes the Latino market the hottest spot in a tepid U.S. advertising market, where spending is up just about 2 percent overall. To find out who's cashing in on the current sizzle, Business 2.0 spoke with Angela Johnson, editor of the newsletter "Marketing to the Emerging Majorities."

Business 2.0: What's behind the increase?

Angela Johnson: Advertisers are realizing the power of Hispanic media. They've learned that for news and entertainment, Hispanic American consumers turn first to Spanish-language media. In some high-concentration pockets, like L.A., Houston, and Chicago, these networks are outperforming all others. In New York City, for example, the October Nielsen ratings for Spanish-language Univision beat the local and network news broadcasts. That's a pretty significant development.

B2: What about other demographic and economic factors?

Johnson: The last census numbers really opened a lot of eyes. It's projected that, in 2050, Hispanics will make up a quarter of the U.S. population. More immediately, there is the group's increasing buying power. Hispanic Americans today have discretionary spending income of $580 billion. That's expected to grow to nearly $1 trillion by 2007.

B2: So how should advertisers approach this market?

Johnson: What they need to do now is not just advertise, but really get into those communities. For example, if you're in the retail industry, that means looking at what stores you have in these areas and making sure your products fit the needs of the community. So Blockbuster (BBI) is dedicating a thousand of its stores to Latin themes. Kmart is bringing in lots of Hispanic food, music, and other products.

B2: What techniques work?

Johnson: Use advertising that provides lots of product information. Studies show that while African Americans and Caucasians like to be entertained by advertising, Hispanics want data. It's also important for advertising to be culturally relevant. The classic example here is the "Got Milk?" campaign, which when literally translated into Spanish turned into "Are You Lactating?" So that didn't quite translate culturally. They eventually got it right by focusing on the important nurturing role a mother plays in the Hispanic culture.

B2: Which companies are leading the charge here?

Johnson: As companies catch on, you're seeing Hispanic advertising now in almost every product category. But automotive and financial services industries are leaders. Ford (F) and GM (GM) do a lot of it. Toyota (TM) too. In financial services, New York Life and State Farm are effective. Avon (AVP) and L'Oreal are big Hispanic advertisers in the health and beauty category. B2: Who's missing out?

Johnson: I see a big void in consumer electronics. I'm not sure if they don't have a Hispanic strategy, or lack a coherent message, but companies like Sony (SNE) and JVC need to do more. Computer manufacturers too. Gateway (GTW) had a Hispanic marketing campaign a few years back, but we haven't seen much since then. It has to change, and it will.

B2: What does the future hold?

Johnson: As the population numbers grow and as companies seek new consumers, targeted advertising will continue. But advertisers will need to understand the complexities within this growing mass Hispanic market. They'll need to learn the differences between a Mexican American family that's been here for three generations, and a Cuban who's just arrived. That means getting into the communities, showing a real commitment, and saying "We're interested in you."

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