Think Multicultural

I just read an interesting, and refreshingly critical Wired piece on how much money major brands are wasting on Second Life initiatives.

How Madison Avenue Is Wasting Millions on a Deserted Second Life

It is interesting because it follows Coca-Cola’s decision to invest in a Second Life “island” called the Virtual Thirst Pavillion, and shows how little return on investment it is generating. This is refreshng because all that anyone in our business talks about these days is how Second Life is the next big thing - how Virtual Worlds will revolutionize the advertising world much like mySpace and YouTube have over the last few years (I would actually question this assertion as well). In fact, the article shows how little activity and “traffic”, in Web analytics terms, Second Life gets. Yet major brands are pouring millions into Second Life programs.

The article got me thinking about how crazy this is in relation to most marketers hesitancy to invest appropriately in multicultural marketing, whether traditional or online, targeting Hispanics, African-Americans, Asians-Americans, and/or GLBT.

To put it in perspective, the article mentioned that some brands are spending upwards of $500,000 a year on building and managing Second Life programs that are reaching maybe 100,000 people in the U.S. In stark contrast, the most recent 2007 AdAge Hispanic Fact Pack shows that the #8 Hispanic Web site in terms of revenue, Terra Networks, only generated $852,000 in ad revenue in 2006, even though it had 1.3 million unique visitors per month and 38% reach among the 14-16 million online U.S. Hispanics.

If I was Coke, I might consider building a virtual “Mundo Coca-Cola” on Terra.com…

The Houston Business Journal last Friday did an interview with Alex López Negrete, founder of the eponymous* López Negrete Communications. The HBJ seems to be of the opinion that López Negrete is the AOR for Miller Brewing, and they talked to him, so we’ll take that as fact until proven otherwise.

There is a lot in the article that’s just a local press puff piece being nice to a local businessman, but there’s also some interesting stuff in there. At one point in the article, López Negrete mentions that eight percent is the right amount of spending for health and beauty products companies to be directing toward the Hispanic market. I had not heard that number before. Is that the right amount for CPG companies? For everybody? If Hispanics are currently 14% of the US population, do you pick up 60 percent of them with Hispanic advertising and the rest with general market ads? I’m not disputing that figure, I just don’t know where it came from.

The interview then goes on to discuss a release that the Association of Hispanic Advertising Agencies did in conjunction with the announcement of its fall conference asking the question “Are Hispanic Agencies Dying?” This is a particularly pertinent question for López Negrete because on the one hand they lost Wal-Mart’s media buying duties to a general market media shop, but on the other, they’re apparently Miller Brewing’s AOR, so they symbolize evidence both for both sides of the argument.

His response was, in part, that the Hispanic ad agencies are an “industry under siege,” presumably from the general market agencies. He also noted that Hispanic agencies are going to have to “get beyond the Spanish vs. English barrier and pay more attention to the sophistication of the Latino consumer” in order to prove their value. This echoes the point that as the Hispanic market becomes more desirable and more mainstream, Hispanic agencies can’t rely on simply speaking Spanish to protect their market, but are going to have to prove their value on a cultural and expertise level.

* Blogger-showing-off alert. I learned that word the same place everybody else my age did, from REM’s first greatest hits album.

Following up on the Hispanic social networking post, social networking site Hi5 raised about $20 million in its first round of real VC funding. One of the reasons that Hi5 is so attractive to investors and potential acquirers is because of its strength in Latin America and because of its deep non-English language content.