That was my initial thought after reading the latest headline about another big brand consolidating their Hispanic advertising duties with their general market shop.

Obviously this year has seen a wave of this type of activity, starting with the much publicized Home Depot move, Publix’s recent decision, and now Burger King.

The trend is also popping up on the agency side, with MDC Partners deciding to fold it’s Hispanic agency Adrenalina into one of it’s general market shops (I wonder if what used to be Adrenalina has some connection to the Burger King news, since CPB is also owned by MDC Partners?)

My original question ties back to whether CPB is now offering Hispanic marketing services (via the former Adrenalina team now at KBS+P?). If they are, then the predictions I made on my last AdAge article are coming true faster than even I thought.

If they are not, then the Hispanic market is no longer that important to Burger King.

Either way, this recent trend will force everyone involved in Hispanic marketing – brands, agencies, media companies – to rethink and potentially retool our business strategies.

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?

Hispanics and e-commerce is a fascinating topic. A topic that has been covered in almost every major research report on Hispanic Internet use since 2000, yet it is rarely given more attention than a small section of a larger white paper or a one-off report from some research firm tangentially involved in the retail space. Why is that?

It’s not because it doesn’t represent a viable market opportunity: U.S. Hispanics (according to the limited research on the topic) spend quite a bit online – $12.8 billion in 2008 with projections to reach $21.6 billion next year (JupiterResearch, 2007). That’s 11 percent of all e-commerce purchases (not too far below Hispanics’ percentage of the U.S. population). I think that Hispanic e-commerce doesn’t get the attention it deserves not because it isn’t a large, growing market, but because it is a complex subject, where the opportunity for retailers is amorphous and not very clearly understood. Furthermore, I would posit that there are not a lot of experts with actual experience in the arena of Hispanic online shopping (at least at the large retailer level). That theory is validated when you scour the Internet for case studies on the subject and find only the well publicized Best Buy and Home Depot cases.

Whenever I start looking at Hispanic e-commerce, four big questions continually come up. We can answer the first three fairly quickly:

1. Do Hispanics buy online?

Yes. The JupiterResearch data I reference above shows that Hispanics represent a vibrant component of the growing e-commerce market. While a significant percentage of Hispanics do not shop online due to various obstacles, it’s clear that English-, Spanish-speaking and bilingual Hispanics shop online in varying degrees.

2. Are Hispanics relevant to most Internet retailers?

Yes, particularly the larger Internet retailers offering broad product mixes. While there are thousands of niche Internet retailers that are completely irrelevant to Hispanics, a quick glance at the Internet Retailer 500 list would show that most of these sites have broad appeal that crosses over to the 50 million+ Hispanic market. ComScore data on Hispanic traffic to retail websites validates this – they reach 74 percent of online Hispanics (16 million).

3. Are Internet retailers already effectively reaching / selling to Hispanics online?

The answers to questions 1 and 2 show that a segment of Hispanics are already being reached by Internet retailers. However, an inverse look at the ComScore data reveals that there are potentially 36 million Hispanics that are not being reached by the top Internet retail Web sites. That’s a big chunk.

4. Are there differences between Hispanic online shoppers and their general market counterparts?

This is the million dollar question. This last question is actually at the core of how retailers should approach the Hispanic e-commerce opportunity.

Most of the focus of the Hispanic e-commerce debate has revolved around the language of the shopping platform and experience. I would posit that the fundamental question and opportunity regarding Hispanic e-commerce lies in understanding Hispanic online behavior.

There is some data out there that supports my theory:
• Hispanics that are comfortable buying online but will typically go to English versions of e-commerce sites (Internet Retailer/Omni Direct, 2010)
• Online Hispanics generally perceive English language Web sites as more comprehensive, detailed and useful than Spanish-language versions (AOL Cheskin Hispanic Cyberstudy, 2010)
• Concerns about providing personal information online (32 percent) and the desire to touch and feel products before making a purchase (30 percent) were the two leading reasons why Hispanic Internet users refrained from buying online (Forrester, 2008)
• Less than 20 percent of visitors to Best Buy’s Spanish Web site toggle back and forth between the English and Spanish sites (Best Buy Survey, 2008)

Maybe translating an online store and offering a mirrored English-Spanish e-commerce environment isn’t the answer? As someone who has been helping clients large and small build Spanish Web sites for 12+ years, I can tell you I’ve never been a big fan of wholesale Spanish translations of Web sites. Not only are Spanish Web site translations expensive and difficult to maintain, they are usually a strategic “cop-out.” Instead of spending the time and effort to understand exactly what online Hispanic consumers are demanding and focus on addressing those needs, you take a “shotgun” approach to just translate everything to Spanish. I’ve rarely seen this approach work.

Let me suggest that the real Hispanic e-commerce opportunity lies in understanding and addressing other aspects of e-commerce:
• Personalization
• Product offering / Product mix
• User experience / Visual design
• Emphasizing product research over product sales

Furthermore, as technology advances, and Hispanics continue to show a propensity towards early adoption of digital technology and devices, mobile commerce and kiosks might represent interesting new “channels” to sell to Hispanics electronically.

Everything he says is right on, but I have a different perspective on this.

Maybe the problem isn’t (just) diminishing Spanish TV viewership, but diminishing TV viewership overall resulting from the collosal shift in media consumption.

Think about it – one of the biggest threats to the traditional TV model of captive consumers are options and personalization.

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.

The findings from the study reinforce what those of us who work in multicultural marketing have known for some time – if you engage in culture-specific marketing clumsily or with no forethought, you’re more likely to offend your target audience than to engage them. Or in academic speak, “verbal and visual ‘cues’ in advertising that are incongruent with a consumer’s ethnic identity can negatively influence buying decisions.”

Another interesting point from the article was the insight that the United States is not the only country with multicultural marketing challenges. Other countries, particularly European countries, are experiencing an influx of immigrants from other countries and cultures. Examples in the article included “Asians to the U.K., North Africans to France and Arabs
to Germany.” The data on which the paper was based was in fact taken from a study of Chinese immigrants in the Netherlands, yet their conclusions were very similar to other data and anecdotal evidence seen in the U.S. Hispanic market.

As the U.S. multicultural marketing industry continues to grow and mature, it seems that there is an opportunity to begin to export some of that learning to these other multicultural markets and also learn from them.

Please share your comments on the new look and architecture of the site. There are a few more changes to come, as we continue to grow and evolve ThinkMulticultural.com

Saludos,

Jose Villa

I’d like to take this opportunity to clarify and further explain the point of my post, which seems to have been lost on the example I used.

I recently read somewhere that there are 75,000 different ad agencies in the U.S. Most of them were started before 2007 (a key “dividing line” in my mind between when digital was considered just merely a vehicle (pre-2007) and a disruptive technology that upended everything we know about marketing and communications (post-2007)). Therefore most agencies are not what I would call “digital natives” – firms that inherently understand and have integrated digital communications into their “DNA” (to use a hackneyed agency term). This lack of digital focus / DNA is particularly acute among ethnic ad agencies, especially Hispanic ad agencies.

Now my post was meant to start a discussion around this very important issue – are ad agencies, and Hispanic ad agencies specifically, truly ready to embrace the new central role of digital in what they do for their clients? I recently wrote an AdAge article claiming that they are not, and the Web site example that prompted my original post was simply meant as living example of this gap between where agencies need to be and where they currently are.

Don’t get me wrong – I believe deeply in the importance and increasingly important role that Hispanic ad agencies play and will continue to play in the ad industry. I want to see our industry evolve, grow, and prosper. Understanding and truly embracing digital is no longer a nice bullet point to include in a new business pitch – it’s the difference between thriving and being left behind in this rapidly evolving industry. I want to see my Hispanic marketing colleagues thrive!

The L.A. Times just ran an interesting article citing the results of a Johns Hopkins University School of Medicine study comparing the TV consumption habits of children of Spanish-speaking Hispanic moms with those of English-speaking Hispanic moms. Interestingly, the study found that after the first year, children of Spanish-speaking moms watch less TV than their counterparts with Hispanic English-speaking moms during their 2nd and 3rd years of life.

Here is a link to the abstract published by the Archives of Pediatrics & Adolescent Medicine.

The report explicitly states it’s purpose upfront: “Excessive television viewing in early childhood is associated with a multitude of negative health outcomes, including obesity, attention problems, and sleep troubles.”

The report speculates that TV viewing might be less important to Spanish-speaking moms. They also speculate that their may be a supply issue – not a lot of Spanish-language kids programming.

My take is that Spanish-speaking moms, who are by nature less acculturated and probably immigrants from Latin America, bring with them more traditional values. I bet more of them are also stay-at-home moms than their more acculturated English-speaking counterparts.

I also agree that there is a dearth of quality, Spanish language toddler programming. As the Spanish-speaking parent of a 1 and 2 year-old, there are only a few hours of children’s programming on Univision and Telemundo on a weekly basis. Digital TV has increased options exponentially, with Spanish-language versions of popular children’s stations such as PBS’ Noggin and Nick Jr. (my daughter loves watching inverted “Dora the Explorer” where Dora speaks in Spanish with English words mixed in). However, I would assume that most unacculturated Spanish-speaking households do not have access to digital cable / fiber yet.

These findings also seem to reinforce the traditional Hispanic acculturation segmentation model – showing how different Hispanics of different acculturation levels are.

The long-term implications for children of English-speaking Hispanic moms is also obviously disconcerting…

Most lists that come out this time of year take a stab at prognosticating what will happen in various industries during the next 12 months. I’m sure you thought that the title of this article was a typo – why would anyone be writing about trends in Hispanic marketing 12-24 months out?

Well, frankly, while I no doubt realize that 2010 will bring numerous evolutionary changes to the Hispanic advertising and media world, I feel that 2011 will result in far more disruptive and revolutionary change. Why?

First, Hispanic marketing trends usually follow trends in the general market. While these changes historically lag by 3-5 years, media and marketing technology has shortened that gap to 1-3 years, so that the transformational changes that have affected mainstream advertising and media will bear their full brunt on our industry by 2011. In addition, by the end of 2010, U.S. Hispanic Internet penetration is on pace to reach almost 70%, once and for all ending the debate over whether the Internet is a Hispanic mass marketing medium. Finally, the 2010 Census results will be out in early 2011, and will no doubt bring increased attention to the Hispanic market because the numbers will be big. This attention will not all be good, as I addressed in a blog a few months back, because in addition to more advertiser activity, it will translate into more competition from general market agencies attempting to service the market.

Before I jump into my list, it’s important to note and take into consideration some fundamental differences that exist between the Hispanic and mainstream marketing industries:
1. The continued pre-eminence and market power of the Spanish language broadcast duopoly of Univision and Telemundo, that control a vast majority of the almost 63% of Hispanic media spending that goes towards TV
2. The continued, albeit potentially slowing, trend of Latin American immigrants (mostly from Mexico and Central America) moving into the U.S.
3. The existence of roughly 80 specialist Hispanic ad agencies that are key agents to any change that occurs in this industry (among which there are only a handful of interactive agencies, the remainder of which have been slow to adopt digital, hampered partially by the fact that media-only shops like Tapestry and MV42 purchase most of the Hispanic digital media)

Trends

Erosion of Spanish TV’s Prominence – Although Spanish-language TV has managed to avoid the fate of their general market counterparts, trends such as online video (note the popularity of novelas on YouTube), the trend towards “on-demand” and DVR time-adjusted consumption will eventually impact Spanish TV. More importantly, the value of the big two’s content will begin to be “crowded out” by competition from Cable options, mobile and Internet video options, and cheaper access to home country content on all three of the aforementioned platforms.

Polarization of the Hispanic Acculturation Model – Most Hispanic marketing strategies are built on the foundation of the familiar 3-part Hispanic acculturation model (Unacculturated, Partially Acculturated, Acculturated). While this model will continue to be valid, it will become increasingly polarized as the difference between the 3 segments increases, particularly in relation to demographics and media preference. The coming “tsunami” of U.S.-born young Hispanics (in 10 years 62% of all teens will be Hispanic) will only exacerbate the differences that will exist between the various segments.

Shift in Emphasis from Traditional to Digital Channels – Ultimately clients make the decision as to where budgets will be spent, and their increasing preference to go digital in the general market will also carry-over to their Hispanic advertising efforts. I’m already starting to see Hispanic digital reviews, especially as clients focus on targeting specific Hispanic segments, trading reach for deeper engagement. Hispanic Direct Response activity will also migrate to the Web, particularly as Hispanic digital performance channels eat away at traditional options (DRTV, Direct Mail, etc.)

Mobile Marketing – Although mobile marketing’s arrival has been prematurely announced for the last 5 years, its undeniable growth in 2010 will finally reveal the full potential for using mobile to reach Hispanics in 2011. In fact, mobile will likely start to replace local print media consumption (newspaper readership), and opportunities with couponing, QR codes, and apps will make Hispanic mobile marketing the fastest growing segment in Hispanic media by the end of 2011.

The “Second Offensive” of the General Market Agencies – As mentioned above, the 2010 Census results will help to drive a new wave of interest in Hispanic advertising, both among marketers and general market ad ad agencies looking to continue to grow. Just like the lines between traditional and digital agencies were beginning to blur in 2009, by 2011, the lines between general market and multicultural marketing will become hazy, much to the dismay of specialist Hispanic shops.

Social Media Takes Center Stage – to borrow a phrase from AdWeek, social media will “be like air,” or everywhere and a part of all things advertising. This will be the case in Hispanic advertising, as the over-indexing of Hispanics on social media should provide the “writing on the wall.” However, like in the general market, clients will start to take social media programs “in-house,” especially those focused on creating and managing communities, including Hispanic communities.

Other Hispanic Media Will Experience Differing Fates – While Hispanic TV and print (newspapers and magazines) will suffer as a result of trends towards digital, Radio and OOH have an opportunity to emerge stronger than ever and evolve with changes in technology.

Arrival of New Media Platforms – Once gaming companies (gaming networks, online games, game developers, etc.) adopt more sophisticated demographic tracking capabilities, they will introduce a promising new media channel to reach Hispanic gamers of all ages and types. GPS enabled marketing, which should also come of age in mainstream marketing in 2010, and will be poised to open new doors to reaching Hispanics in 2011.

People will Talk about the “Good Old Days” of 2008 and before – As with the general market advertising industry, overall ad spending will take a long time to return to its pre-recession peaks. In the case of Hispanic media spending, those 2008 numbers won’t be seen again for a long time.

The Winners and Losers

As with any big disruptive changes, there are always winners and losers. I actually think there will be more winners than losers, assuming key player adapt to this big changes.

The Winners:
• New (and existing) mobile players that take on the Hispanic market
• General market traditional and digital agencies who will get more business opening multicultural or Hispanic practices
• Hispanic digital media companies
• Gaming companies that take on the Hispanic market
• Hispanic marketing professional who’ll be more in demand than ever before
• The Hispanic consumer that will begin to enjoy the same media and technology options of the general market

The Losers
• Hispanic ad agencies, as there will be fewer of them
• Spanish TV networks and their 60%+ market share duopoly