Category Archives: Hispanic Marketing

Is Hispanic Marketing Dying Or Maturing?

by , December 3, 2015, 10:21 AM (A MediaPost Op-Ed)

 

All industries go through cycles and evolve. Most follow a common trajectory that begins with rapid growth, then slows down, matures and ultimately faces creative destruction (which J. Schumpeter coined the “ultimate fact of capitalism.”) I’ve been thinking about this in relation to the state of the Hispanic marketing industry, as the industry trade association AHAA recently celebrated its 20thanniversary.

Not a Growth Industry Anymore

The state of the Hispanic ad business generates a lot of emotional responses, as seen in my January 2011 article, “2011: The Year of Creative Destruction.” Ask anyone who works in Hispanic marketing for their perspective and you’re likely to get a gloomy response. You’ll hear, “It’s in decline” or “it’s never been harder” or “the future is uncertain.”

Is Hispanic Marketing Dying? 

A number of indicators point that way.

There has been an appreciable decline in the number and size of Hispanic agencies in the last five years. From the closing of former powerhouse agencies like Bromley, to consolidation of shops like Vidal Partnership and MGSCOMM, the Hispanic ad business seems to be heading in the wrong direction. There are very few mid-sized Hispanic agencies left in some of the biggest Hispanic markets in the U.S. like Los Angeles, New York and Chicago. A simple comparison of the 2007 membership roster of AHAA shows 93 member agencies compared to only 48 in 2015.

Mergers and acquisitions (M&A) are another gauge for the vitality of an industry. M&A in the Hispanic ad business has dropped off a cliff since its peak in the early 2000s. All the big agency holding companies have Hispanic shops and do not appear to be in the market for Hispanic agencies. The only Hispanic ad agency to be purchased by a major network in the last 10 years was La Comunidad by SapientNitro in 2014. The valuation multiples I hear for Hispanic agencies are pretty low – probably the best indicator of the bearish outlook on the business. The situation is similar in the Hispanic media business.

A Growing Market?

Yet the Hispanic population continues to grow and is quickly approaching 60 million and 20% of the total U.S. population. Investment in Hispanic marketing has never been higher. Hispanic ad spend continues to post annual increases, with 12% growth in 2014 following almost continuous year-over-year growth since 2003 (Kantar Media). Hispanic consumers are also generally viewed as one of the most attractive consumer segments in the U.S. with their rising socioeconomic status, large and growing families, and increasing consumer spending.

Maybe it’s Maturity

Hispanic marketing has all the markers of a mature industry whether you look at media or ad agencies.

Most of the largest Hispanic advertising accounts are consolidating with a handful of agencies. Of the top 50 Hispanic ad spenders in 2014, 50% of the ad spend is occurring among 27 companies that are working with just seven Hispanic ad agencies. Hispanic ad agency revenue in 2014 paints a similar picture: the top 10 Hispanic ad agencies represent 48% of the revenue generated by the top 50 Hispanic ad agencies (as reported by Advertising Age).

On the media side, TV represents 76% of all Hispanic ad spend in 2014. That media spend is concentrated within eight companies, with Univision, NBC Universal and 21st Century Fox dominating.

Looking Ahead

Two macro-trends point to further industry maturation:

  • The growing trend towards a Total Market Approach by marketers
  • The net negative immigration trend among Mexican immigrants

The next five years will likely see more consolidation. Instead of new start-up Hispanic agencies or media companies, we’re likely to see something akin to what happened in the African American marketing business – fewer agencies, fewer media companies and the continued move of multicultural marketing out of the silos.

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Elevator Pitch: SoftTech’s Charles Hudson on the next big thing — and the lack of diversity in VC – San Jose Mercury News

charleshudson_20140324__0325epitch~1_300Elevator Pitch: SoftTech’s Charles Hudson on the next big thing — and the lack of diversity in VC – San Jose Mercury News.

 “One of the biggest mistakes entrepreneurs make is failing to heed clear signs from the market that the idea they are pursuing just isn’t working. “

 

 

Image courtesy of SoftTech VC. ( Kathleen Dylan )

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Where Does Multicultural Targeting Fit in a Diverse World?

Much is being discussed regarding President Obama’s campaign strategy in winning the election.  According to news reports, Blacks, Latinos, women and the youth vote propelled President Obama back into the White House.  If this rings true, and it does, then it should re-energize the discussions on how important demographic targeting is versus behavorial targeting.  

I thought I would re-post this piece from Ad Age (May 30, 2011).  Robert Groves, U.S. Census Bureau Director states “The delivering of a message about a product or a service is best done when the advertiser understands the lens through which a consumer is viewing both the culture they’re in … and how their own experiences map onto it”.

Race, Ethnicity Important in Reaching Socially Savvy Consumers, but Not as Much as You Might Think

By: Matt Carmichael Published: May 30, 2011

Advertisers on Facebook can single out profiles of married men who love cats, but what they can’t target is Hispanics. Or blacks. Or Asians.

That’s not to say social networks can’t still arrive at certain conclusions.

When Andrew Speyer got engaged, he and his fiancee didn’t change their relationship statuses on Facebook. But after friends started congratulating them with wall posts, ads began popping up offering the services of rabbis that perform interfaith ceremonies. Somehow, Facebook discerned that, unlike him, his fiancee was Jewish, although that wasn’t explicit in her profile.

Mr. Speyer, VP-head of strategy at Wing, a Hispanic marketing agency owned by Grey Advertising, feels his experience isn’t uncommon. Mention a brand in a status update and watch it appear as a page you might “like.” Facebook enables marketers to reach huge population swaths or a segment of fewer than 50 profiles — about 0.000008% of Facebook users. All planners have to do is toggle through a list of demographic and behavioral variables and watch the pie slice get thinner.

But think about this for a moment: An ad platform created by a millennial originally for other millennials — the most diverse U.S. generation ever — accounts for nearly one in three online ad impressions and spans all demographics, but it doesn’t ask for your race or ethnicity on your profile. It therefore can’t explicitly target in this key way. Nor can MySpace, or LinkedIn or Twitter.

While that might suggest race and ethnicity are no longer important when it comes to targeting a young, socially savvy consumer, that’s not exactly true.

 

 

 

 

Robert Groves

But demographic targeting in general is under renewed assault from several directions. Nielsen and CBS recently partnered on a research project aiming to replace age and gender targeting for TV, claiming higher correlation of purchasing intent using behavioral data.

Meanwhile, JD Power and Associates just released a white paper formalizing an opinion it had held for years: that targeting based on buyer profiles of its 28 vehicle segments was more effective than targeting the demographic profile most likely to buy a certain type of car.

So do demographics still fit into the marketing landscape?

“The delivering of a message about a product or a service is best done when the advertiser understands the lens through which a consumer is viewing both the culture they’re in … and how their own experiences map onto it,” said U.S. Census Bureau Director Robert Groves.

While behavioral targeting can be critical, the more data you have on the consumer, the better picture you can draw. “We tend to want to simplify and specify and people are outstanding at having simultaneous identities,”said Wing’s Mr. Speyer.

In addition, the younger consumers don’t necessarily use the same identity frameworks marketers are used to dealing with. Multiracial children are the fastest-growing youth demographic according to the 2010 Census. “The need to look at demographics might be growing instead of shrinking,” said Kevin Brockenbrough, VP-associate director of account planning at African-American-focused agency Burrell, Chicago. “Unless you look at what’s motivating behavior, I’m not sure you’re taking full advantage of it. And what motivates it might be tied back to demographics.”

So it can be short-sighted to ignore large demographic cohorts. “There’s often a gap between the share of the population and the share held by a brand,” said Gustavo Razzetti, chief strategy and engagement officer at Grupo Gallegos. “If you want to grow your brand, [Hispanics are] the market that is growing.”

But it’s also dangerous to overgeneralize. “Grouping Hispanics together and making statements about them ignores a huge variation on all sorts of attributes,” said Mr. Groves.

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Diversity Matters, MediaPost Publications, July 6, 2012

I came across this interesting piece on marketing to the Millennial segment.  According to this MediaPost blog, Millennials are one of the most ethnically diverse adult population segment.  The article states that “Millennials are more likely than Gen Xers or Baby Boomers to interact with people who have a different ethnic or cultural background than themselves…”

What this is also saying is that Millennials reflect a broader definition of diversity which goes farther than ethnicity and includes gender, sexual orientation, age, religion, political affiliation.  Consequently, they also want to see diversity reflected in the media they consume.

Read more: http://www.mediapost.com/publications/article/178032/diversity-matters.html#reply#ixzz27oNDZQfq

An important component of marketing is understanding that it is a social process, and diversity elements are important in any marketing plan addressing population subgroups.  An important fact to consider in branding and marketing strategies.  This article by Sharalyn Hartwell aptly points this out…check it out…

davedejesus

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Multicultural Marketing Is Very Much Alive

It amazes me to see that in 2011 we continue to debate the value of multicultural marketing!  The September 9, 2011 issue of Advertising Age presents a solid discussion on the relevancy of multicultural advertising in today’s marketing environment.  Key points made include the fact that multicultural ad agencies continue to grow, Hispanic advertising is growing faster than all other sectors of advertising, cultural relevance remains the trump card in marketing, language is and will continue to be a factor, cultural pride, empathy and relating to me are still important factors…read for yourself…Multicultural Marketing Is Very Much Alive

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Where Does Multicultural Targeting Fit in a Diverse World? | News – Advertising Age

Where Does Multicultural Targeting Fit in a Diverse World? | News – Advertising Age.

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