If you’re like me, you’ve probably seen innumerable reports and studies stating that Hispanics are more social.

Most of the data backing up this catchy headline focuses on social media usage. Hispanics are active users of social media platforms, particularly social networks like Facebook, micromedia such as Twitter, and the reading and writing of blogs. Research firms like Forrester have gone further and looked at what type of social media users Hispanics are by understanding where they fit into their well-respected social technographic ladder (“Inactives” vs “Creators”, etc.). Again, the data paints a positive picture that Hispanics over-index the general market in terms of their engagement level. In plain English – there are a lot of Hispanic social media users and they are more active.

All of this quantitative data is sound and the conclusion is pretty straightforward – Hispanics use social media, as much or more than their general market counterparts. That’s great and all, but it doesn’t really help a marketer figure out how to use social media to market to Hispanics.

Why not? Isn’t the data enough to support most brands and companies investing in Hispanic social media?

Unfortunately, the tools aren’t there. Hispanic marketers only have a two-dimensional prism to understand a three-dimensional world. Put another way, all the great data I referenced earlier just confirms that Hispanics are consuming/producing social media, but that isn’t enough information to understand how to engage them in this space Why? Because social media activity cannot be simply filtered as Hispanic unless Hispanics behave differently than non-Hispanics in this environment.

The problem lies in the simple premise at the heart of the multi-billion dollar Hispanic marketing industry – that most Hispanics are culturally and linguistically different from the “general market” and consume different media (i.e. Hispanic media, 90 percent of which is in Spanish). This premise is the reason why two symbiotic sectors exist:
• Hispanic advertising and PR agencies that create culturally and linguistically relevant communications for Hispanic consumers
• Hispanic media that provides Hispanic consumers with linguistically and/or culturally unique content they demand (where Hispanic ad agencies can buy media on and PR firms can “earn” coverage in)

When we talk about reaching Hispanics in social media the aforementioned premise no longer holds true. Specifically, the second part of the premise breaks down – Hispanics are not consuming different media – they are on the same Facebook, Twitter, LinkedIn and other large scale “connected” platforms as everyone else. That is what makes social media so powerful – you can connect 500 million people on the same network, even though they may be in 100 different countries speaking 150 different languages.

The concept of segmenting one ethnic group – either based on language, culture or media consumption – becomes fundamentally more complex when everyone is on the same site, network or platform. You can’t simply cling to differences in the language of media consumption. You can’t look to Facebook “en Español” (ask MySpace how that worked out for them) when the content is no longer asymmetrical – you don’t have a single, centralized content producer (think Univision or SBS) being consumed by large scale masses. The “content-creation-to-content-consumption” continuum is peer-to-peer (with companies/brands mixed in at the same level of peers), so it’s very difficult to depend on only contextual relevance.

What we’re missing is qualitative data about if, and how, Hispanics use social media differently. Do they consume, comment on, or produce social content that is different than the general market?

Language plays a part, but when you are connecting 100s of millions of people on the same platform, there is a lot of cross-language media consumption taking place. More simply, do Hispanics exhibit different behavior on social media? Part of this qualitative question is whether they demand – and therefore consume – different content. But that’s only part of the behavioral equation.

Do they produce different content (e.g. talk about different things)? Do they comment differently (i.e. are they more likely to comment positively than the general market)? Do they exhibit different attitudes towards brands and companies in social media? Do some of the generally excepted models of social media behavior apply “apples-to-apples” to U.S. Hispanic consumers (i.e. does the Hispanic social technographic ladder have different rungs)?

I have anecdotal evidence from client campaigns that they do behave differently, but our industry needs more robust qualitative research and behavioral models to provide the 78 percent of hesitant marketers (according to an Orci report) with the intelligence they need to smartly “go to market” with Hispanics in social media.

Think about this way – no one will argue that the Hispanic consumer isn’t important (there are $6 billion reasons why they are important, ask Univision and Telemundo)

However, is it me, or is there a “Blue Ocean” strategy staring Hispanic marketers in the face?

If you haven’t read Kim and Mauborgne’s popular book “Blue Ocean Strategy,” they posit that tomorrow’s leading companies will succeed not by battling competitors head-on in bloody battles that result in “red ocean” of shrinking profits, but by instead creating “blue oceans” of uncontested market space ripe for growth.

Looking back at the 2009 Hispanic media figures presented in the 2010 Hispanic Fact Pack, $4.3 billion was spent on Hispanic TV (network, spot and cable), representing almost 70% of all media spent reaching Hispanics. That sure looks like a “bloody ‘red ocean’” if I’ve ever seen one.

I understand why TV still gets the lions share of media spend – they pull huge viewership numbers. But TV doesn’t command 70% of Hispanic consumer media consumption. In fact, according to a 2008 Terra/ComScore report, the average Hispanic 12 years or older spent more time online than watching television. This disequilibrium of media demand is also likely driving Hispanic TV media prices (CPMs) higher than they should be.

So it would seem to me that a clear “Blue Ocean” opportunity exists for savvy Hispanic marketers that don’t want to fight in the crowded and “bloody” medium of Hispanic TV.

Instead, they could invest heavily targeting Hispanics online. Imagine a Hispanic marketer investing 50% of their Hispanic ad dollars online? They wouldn’t have much competition, and it’s clear Hispanics are spending as much time there as on TV… who’s ready to sail?

In addition to a solid combination of data and statistics on everything Hispanic advertising, the Fact Pack is full of ads from Hispanic media companies and ad agencies at the center of the industry. I counted a total of 25 ads this year. Of those 25 ads, 8 (about a 1/3) were for digital media companies (3) or focused on digital advertising by the aforementioned Hispanic ad agencies (5). There were even two ads with QR codes!

The irony of this “digital-centricity” comes into focus when you go to the first page of statistics on page 6 – “Hispanic Major Media Ad Spending.”

$6.3 billion of media spent targeting Hispanics in 2009. But wait – only $300 million went online. Yup, that’s a paltry 4.8%.

A lot of talk (and ads) about digital, but no one appears to be putting their money where their mouth is.

B2B advertising has seen increased attention during the last few years, primarily resulting from the growth in digital marketing. Digital media, and specifically search engine marketing, have provided companies that sell products and services to businesses and professionals the opportunity to target their messages and offers to the right audience (usually the decision-maker or buyer) in the right industry (or companies) with a high level of precision.

With the growth in B2B advertising, one segment of the B2B market has been noticeably absent from the discussion: advertising to Hispanic-owned businesses (which I will refer to as simply Hispanic businesses). The topic of Hispanic businesses usually results in more questions than answers:

• Are there really that many Hispanic-owned businesses?
• Are there really that many Hispanic-owned businesses?
• Aren’t most Hispanic businesses small “mom and pop” sole proprietorships like single-location restaurants or dry cleaning businesses?
• Do Hispanic businesses even represent a viable market for my product or service (e.g. we sell CRM software to mid-sized companies)?
• Don’t my existing B2B programs reach Hispanic businesses?
• Even if I wanted to reach Hispanic businesses, aren’t they simply too niche to efficiently target with advertising?
• Do I need to advertise differently to Hispanic businesses?

So should B2B marketers pay more attention to Hispanic businesses? I would argue yes. Let’s start with answers to those common questions, or barriers, about Hispanic businesses.

Are there really that many Hispanic-owned businesses? – There are approximately 2 million Hispanic-owned businesses in the U.S. that generate almost $300 billion in annual gross receipts. By the end of this year, there will be 3.2 million Hispanic firms generating $465 billion (Sources: SBA, HispanicTelligence®). That number is expected to balloon to 4.3 million by 2012. In fact, as of 2007, 1 out of every 10 small businesses in the U.S. is Hispanic-owned (Hispanic Trends).

Aren’t most Hispanic business small “mom and pop” sole proprietorships – More than 50% of Hispanic businesses have 25 or more employees (U.S. Census Survey of Business Owners, 2002).

Do Hispanic businesses even represent a viable market for my product / service? – Hispanic businesses are in a variety of industries and range from the start-ups to large public companies, and therefore consume every imaginable business product or service. However, Hispanic businesses are concentrated in the following industries:

Don’t my existing B2B programs reach Hispanic businesses? – The short answer is yes. The successful Hispanic is bilingual (> 75% of Hispanic business owners / decision makers speak excellent English), and existing general market B2B advertising programs no doubt reach them. The question is do they effectively impact and engage them in meaningful way. I would argue no, and as there is an opportunity to tap into the unique experiences, challenges, perspectives and attitudes of Hispanic businesses with advertising built around unique Hispanic business insights. To put it another way, 44% of Hispanic businesses are owned by individuals of Mexican origin – do you think their experience as a business owner is different from their Anglo counterparts?

Aren’t Hispanic businesses simply too niche to efficiently target with advertising? – There has historically been a very real issue around the lack of viable traditional paid media properties that reach a mass audience of Hispanic businesses. I would argue that there are only 1 or 2 viable traditional publications that effectively reach large numbers of Hispanic businesses (Hispanic Business and Poder/Hispanic). However, digital media, including search engines, display media, performance and behavior platforms and social media have created new ways to effectively reach Hispanic Businesses.

Do I need to advertise differently to Hispanic businesses? – As I mentioned earlier, Hispanic businesses can be reached with general market B2B advertising, but not addressing the unique experiences, perspectives, attitudes, and challenges of decision-makers at these companies is really missing out on an opportunity to engage them in a meaningful way. The last question really gets at the heart of the untapped opportunity to market to Hispanic businesses.

To illustrate this, I’ve put together the following Hispanic business pyramid:

There is generally a direct correlation between the size of a Hispanic-business, who runs them, what their immigrant status, and what their acculturation level is.
So what is a B2B marketer to do? I would suggest the following approach:

1. Do some market research and try to figure out whether Hispanic businesses represent 10% or more of your market? (Some simple Census data will do the trick, especially with the “2010 Census Survey of Business Owners – Hispanic Business Owners” coming out in September). If yes, move on to step 2.
2. Figure out what segment of the Hispanic business pyramid you are targeting
3. Delve deeper into your segment and identify key insights among those Hispanic business decision-makers vis-à-vis your products/services
4. Consider customizing your products / services to address the Hispanic insights you have identified
5. Launch digitally driven, integrated advertising programs that allow you to cost-effectively reach and engage Hispanic businesses.

Unfortunately, most companies that have attempted to enter the Hispanic business market (banks, insurance/benefit providers, software companies, etc.) have done little else than simple extensions of their general B2B marketing in the form of sponsorships of local Hispanic chambers/professional/trade organizations and B2B networking events. I’ve seen firsthand the benefits and first-mover advantage reaped by health insurance providers and banks that have followed this approach and truly invested in the Hispanic business market.

Although the research looked at women both in the U.S. and Mexico, Argentina, and Brazil (where they likely represented higher socio-economic demographics), the data on U.S. Hispanic women was particularly interesting:

The most powerful take-away from the research was that “a majority of respondents across the US and Latin America agreed that they trusted comments on social networks more than ads.”

If you took out the words “social networks” out of that statement you wouldn’t find that claim all that interesting – it is consistent with what we know about Hispanics and their strong and influential offline social networks. What this research does show is what many of us have been preaching for the last few years – that offline Hispanic WOM activity is migrating online thanks to the growing omnipresence of social networks in U.S. Hispanics daily lives.

The Hispanic groundswell has arrived…

Two weeks ago I had the opportunity to attend the Forrester Marketing Forum. There was one particular discussion, run by Forrester Analyst Sean Corcoran, that got me thinking a lot about the future of Hispanic marketing.

Corcoran’s session, entitled “The Role of Agencies in the Adaptive Era” revolved around the future of agency relationships, particularly digital agencies, in a world where people consume multiple media, trust one another more than they do marketers, social media helps them connect, and consumer determine what is relevant. The session, which referred to Forrester’s March 2010 “The Future of Agency Relationship,” actually went further into an evaluation of the relevancy of today’s “Big 5” agency model of traditional advertising agencies, direct marketing agencies, media planning agencies, interactive agencies and communications/PR agencies. The takeaway: none of these 5 dominant agency types are appropriate for this new era that requires agencies to artfully combine branding, communications, channel planning & execution, creative, technology and analytics. Instead, a new holistic agency model, based on holistic 360 consumer strategies, instead of the old “push” strategies of the 20th century must ensue.

Looking at this situation and based on Forrester’s insights I infer that two trends will ensue. With so many choices (as agencies continue to compete with each other), larger marketers will move away from traditional “Agency of Record” relationships to working with multiple agencies, many of whom will have stand-out capabilities either in branding, communications, channel planning, creative, technology or analytics. These agencies will be given opportunities to work across disciplines, and bring fresh thinking to the old big 5 mindsets. Mid-to-smaller sized marketers will continue to consolidate their work with new “agencies of record” that will “re-bundle” media, branding, creative, technology, analytics and PR to be relevant in this adapative era. New specialties will be organized around industry and vertical expertise, as opposed to capabilities. The big question for big 5 agencies types will be whether to “double-down” and focus on a specialist role or re-bundle to pursue lead agency roles?

What does all this mean for Hispanic marketing agencies, who are also organized around the same big 5 model? Are there other dynamics at work, particularly vis-à-vis the relationship between traditional agencies and Hispanic agencies?

Needless to say, Hispanic agencies will not be immune from the effects of this dramatic realignment of the agency model and industry. However, I feel the end results and decisions facing Hispanic shops will be different. At the top the marketer food chain, larger marketers will continue the recent trend we saw with Home Depot’s recent decision to move their Hispanic duties from a specialist to their general market agency. These large marketers, as they move away from AOR commitments in the general market, will likely give non-Hispanic agencies opportunities to develop Hispanic programs, across all of the 5 disciplines. It won’t be strange to see general market interactive agencies executing Hispanic programs!

Looking at mid-to-smaller marketers, the demand for “re-bundling” will also likely include multicultural market capabilities. In a world where marketing is more pull oriented, it’s difficult to imagine marketers separating multicultural and general market programs.

The common thread in both of these segments of the market will be that Hispanic agencies will need to expand beyond Hispanic capabilities to include other audiences, including the general market, to be relevant. While that decision won’t be optional, they will also have to decide whether they going to be specialists or lead agencies, in a new “rebundled” multicultural agency world.

Moore’s law is a commonly referenced maxim in the technology industry that states that the number of transistors that can be placed inexpensively on an integrated circuit doubles approximately every 2 years. While this may sound like a lot of engineering or futuristic jargon, the law has come to be closely linked to the capabilities of many digital electronic devices – commonly expressed in terms of processing speed, memory capacity, or resolution quality. A simple, yet effective application of Moore’s law means that every 2 years MP3 players like the iPod will have double the memory capacity, laptops will have twice the processing speed, and mobile phones will offer two times better viewing resolution at the same or lower cost.

You may be wondering what Moore’s law has to do with Hispanic marketing. Simply put, Moore’s law means that digital media devices, such as MP3 players, netbooks, and mobile phones are getting faster, more robust, easier to use, and cheaper, speeding their adoption by U.S. Hispanics of all ages, income and acculturation levels. Think about how much an iPhone cost when they first came out in June 2007 – around $600 for the 8GB device. Today they are selling for $99 with a 2 year plan (at $70/month). A device that was previously price prohibitive to a large swath of the U.S. Hispanic population is now within reach of most of them. Today, smartphones like the iPhone, Android devices and Blackberry’s are basically mobile broadband computers, allowing users to surf the mobile web, use thousands of apps, and take advantage of a plethora of communications and GPS-enabled tools well beyond simple voice calls.

Moore’s law means that the pace of Hispanic digital technology adoption will increase from one year to the next. The lag between general market adoption (even looking at early adopters) and most U.S. Hispanics will decrease over time. That’s why today more than half of U.S. Hispanics are using mobile broadband. How long before most Hispanics begin using location-based services or downloading mobile apps?

What does this mean for Hispanic marketing in general? Let’s start with the bad news. Historically, Hispanic marketers have had the benefit of a relatively large lag of 3 to 5 years between general market adoption of new digital media technology, whether it was Internet access, broadband Internet access, or use of social media. That kind of lag gives marketers time to see how the technology, many of which are disruptive in nature (think about iPods and radio listenership), will unfold and how general market consumers’ behavior changes. They can then make carefully thought out, data-driven decisions about how, if at all, they will change their Hispanic marketing programs to adjust to the new technology. Looking ahead, that lag will start to shrink down to 1-2 years, and eventually disappear. For instance, with 4G mobile devices beginning to hit the market this summer, how long before Hispanic consumers are also buying them in large numbers? Probably early-to-mid 2011. Not a lot of time for marketers to adapt to potentially significant changes in Hispanic consumer behavior.

The good news with this rapid rate of technological change and adoption by U.S. Hispanic consumers is that it will level the playing field for organizations looking to reach and engage them. Having tens of millions of dollars of Hispanic broadcast media budgets will increasingly become less and less of a barrier to entry to the U.S. Hispanic market. Instead, innovation will rule the day and companies that are willing to take risks and leverage new technology will reap the benefits of the fastest growing consumer segment in the U.S.

I began thinking about the Hispanic digital media industry as a whole, and I started to realize what a funk it’s in. Think about it – when was the last time a major player entered the Hispanic digital market? What was the last major move by a media company into the Hispanic digital space? Long gone are the heady days of 2005-2007, where new players were constantly entering the market, competing with established media companies like Univision, Terra, and Starmedia to push the innovation envelope.

Obviously, the recession has played a big part in this. Most media companies, and the investors that roll the dice in this sector, got hammered in late 2008 and 2009. I’m sure a lot of interesting projects and new ventures were shelved because of the recession.

This worries me as a professional who evangelizes the power of digital Hispanic marketing. I hope entrepreneurs who know and love the Hispanic market take advantage of this lack of competition to build new lucrative businesses, and hopefully bring back the innovation that has been missing the last 24 months.

If you’re looking for a nice overview and intro to the LGBT market, please check out their “Pink is the New Green” post.

As advertising continues to shift away from mass marketing focused on reach and frequency on broad reach platforms like TV that no longer reach everyone, to targeted, niche-driven marketing focused on engagement, it stands to reason that appeal of niches like the LGBT market will increase.

The “Pink is the New Green” piece also addresses how LGBT marketing is evolving from the old days of focusing primarily on events and local print to a more integrated approached leveraging increasingly sophisticated media vehicles like digital media.

One of the principle reasons I decided to enter the world of Hispanic advertising was to bring a more rigorous and data-driven analytical approach to what I viewed as the unsophisticated and heuristic nature of some of the most important decisions made in our industry. While our industry has come a long way, including the omnipresence of account planning and the growing and rich field of Hispanic direct response, there is still one very important process that has managed to move forward, year after year, according to the same simplistic approach: the allocation of Hispanic marketing budgets.

As anyone who has ever worked at an agency or media/publisher will tell you, overall marketing budgets typically come down from the “heavens” (i.e. the C-suite) with little input from outside marketing professionals. However, how those overall marketing budgets are allocated across markets, products/services, and marketing mix elements is typically a joint exercise between the client, their agencies, with some occasional input from select third parties such as consultants, media and publisher partners.

Yet, more often than not, the decision as to how much to invest in Hispanic advertising is made heuristically or worst yet, simply handed down as the “scraps” of what is left after general market and other lead agencies lay their claims. As the AHAA (Association of Hispanic Advertising Agencies) Right Spend report has been chronicling for years, advertisers have failed to allocate the minimum recommendation of 8% (based on Hispanic population and buying power alone) of their advertising budgets to the Hispanic market. While each industry and company will ultimately invest varying allocations to the Hispanic market based on their particularly situation, the aggregate 8% AHAA benchmark indicates that on average companies are under-investing in the Hispanic market.

So how much of an advertiser’s marketing budget should be allocated to the Hispanic market? The more relevant question is how should companies, together with their agencies partners, approach the question of budget allocation? A decision as important as how much to invest in the fastest growing minority group should be based on more than “rules of thumb” or an after-thought exercise of pooling left-over resources. I suggest that budget allocation models should be used, and that marketers gradually use more sophisticated approaches based on increasing availability of data.

As I’ve alluded to so far, most companies use simple heuristics, or rules of thumb, such as allocating marketing budgets based on some arbitrary percentage (e.g. 5% of total marketing resources) or a bottoms-up decision rules approach (e.g. determining desired awareness or reach /frequency levels, and then backwards calculating required marketing spend). Instead, I recommend using the two-part marketing allocation approach described by Harvard Business School’s Gupta and Steenburgh “Allocating Marketing Resources” (2008) paper that initially models demand and then uses those estimates as an input into an optimization model to determine appropriate allocations across the marketing mix. Without getting too academic, Gupta & Steenburgh suggest modeling the demand that will be created, or how much additional Hispanic consumer sales will be generated by an increase in Hispanic marketing resources (i.e.demand elasticity.) There are three ways to model this Hispanic demand:
1. Option 1 – Statistical Models: when historical figures for Hispanic market sales and marketing expenditures are available, the impact of Hispanic marketing activity on sales can be modeled using a demand function. This is the best option, available to companies with recent experience marketing to Hispanics
2. Option 2 – Experiments: When there is a lack of reliable, recent data on Hispanic market sales/marketing activity, companies can undertake experiments to gauge Hispanic consumer response to new marketing activities. This incremental approach allows companies to use small test initiatives to model out expected results from larger-scale initiatives.
3. Option 3 – Expert Judgment: When past data is not available and experiments are not feasible, companies should use the managerial judgment and experience of their Hispanic agencies to forecast Hispanic sales

While the data-based approaches of Options 1 & 2 provide the most accurate models of Hispanic demand, use of any of the 3 approaches will provide companies with an excellent starting point to model Hispanic demand, and therefore determine proper Hispanic marketing budgets. As opposed to taking a passive approach to Hispanic marketing, these models provide companies the basis for a proactive approach to the Hispanic market based on the bottom-line return on investment they will reap from their marketing investments. The next step is to optimize a Hispanic marketing budget among the growing marketing mix of elements ranging from promotions, to direct response, to branding and across vehicles such as TV, digital, radio and out-of-home (a topic for another day!)