For those who work in the trenches of Hispanic advertising, you know most Hispanic communications programs are direct response in nature. The biggest ad spenders in the U.S. Hispanic market (auto, retail, telecom and food / beverage) confirm this, as I discussed in greater detail earlier. However, it’s important to keep in mind that while the “goal” of most of Hispanic advertising is direct response in nature, most Hispanic media spending does not go into performance media platforms like Direct Response TV (DRTV), direct mail and telemarketing.

As fellow Engage:Hispanics columnist Marcelino Miyares mentions, while it has been growing substantially, only approximately $50 million was spent on Hispanic DRTV in 2009. Even when Hispanic DRTV spending is combined with the amount spent on other forms of traditional Hispanic direct response media (direct response radio, direct mail, telemarketing, door hangers, etc.), it represents a relatively small percentage of the $4 billion spent in Hispanic media in 2008 (TNS Media).

This will all change because of Hispanic online performance marketing.

First, a little introduction and background in online performance marketing. Online performance marketing, or online lead generation, refers to the creation or generation of prospective consumer inquiry, interest or purchase of products or services online. There are two types of leads in the lead generation market: sales leads and marketing leads. Sales leads are generic leads generated on the basis of demographic criteria such as zip code, FICO score, income, age, HHI, etc. Marketing leads are brand-specific leads generated for a unique advertiser offer.

There are three prevalent pricing models in the online performance industry: cost per click (CPC), cost per lead (CPL) and cost per acquisition (CPA). There are, however, a variety of other performance pricing models, such as cost per call and cost per interaction, that are starting to gain traction. Online performance marketing has had a big impact on online marketing and the traditional advertising industry, providing advertisers with the opportunity to purchase media with guaranteed results. The ripple effect has spread throughout the entire marketing and advertising industry.

During the last three years, online performance marketing has expanded into the U.S. Hispanic market. Starting with a few pioneering lead gen companies in late 2006 / early 2007, Hispanic online performance marketing has expanded to include just about every publisher and media company working in the Hispanic digital market. It will only grow in viability and capabilities with the rapid growth in Hispanic consumer Internet penetration.

The emergence of Hispanic online performance marketing will change and grow Hispanic direct response for three reasons:

1) The availability of Hispanic online performance marketing will allow advertisers that have been hesitant or slow to enter Hispanic direct response to do so by getting their “toes wet” online. Starting a direct response campaign online is quicker and less expensive than testing out TV, radio or direct mail. Creative assets are relatively less expensive and allow for testing of multiple offers, payouts, etc., to more quickly optimize plans.

2) Starting a Hispanic direct response program online provides valuable metrics, particularly highly valuable CPAs and CPLs, that can guide offline direct response plans and negotiations. For instance, advertisers can use online CPLs to negotiate TV and radio per inquiry (PI – the offline equivalent of CPL) programs. If an offer does not perform in the television or radio PI space, it is almost impossible to get the stations to take the commercial again without changing the payout. Being armed with CPL figures gleaned from online performance campaigns can save advertisers a lot of money when extending offline.

3) There are significant benefits of combined online and offline Hispanic performance marketing. As we see with search engine advertising vis-à-vis broad reach media, using mass media outlets like TV and radio will drive a lift in lead generation across all media channels, particularly online. Integrating online and offline lead generation will also provide a nice one-two punch: online will drive volume while offline will drive awareness and quality. As a bonus, CPL and CPA online media buys can generate lots of ad impressions, resulting in branding benefits.

The pump is already primed for Hispanic direct response based on who spends in the Hispanic market and what their goals are. With powerful new online tools, the sky will be the limit.

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

I encourage to read the article by clicking here. The article includes some interesting statistics that I am sure will surprise you!

What kind of radio ad doesn’t give their web address at the end of the ad?

The kind that finishes by saying “You can Google ‘Brandweek’s Superbrands’ for more information.”

I guess if you’re dead solid sure that you’ll be the top search result on Google, you don’t need a URL anymore. Just tell people to Google it.

I did. It worked.

Let’s start with the advertisers and their brands at the top of the food chain. Here are two resolutions for brand managers, directors of multicultural marketing, and their colleagues that manage the Hispanic marketing efforts of corporate America:

Advertiser Resolution 1 – Re-Invest in Research
In times of great change, it will be critical to re-evaluate some of the key assumptions and insights that have driven your past Hispanic marketing efforts. The most basic questions should be re-evaluated, because you might be surprised at the answer. How large is the Hispanic market for my product or service? What does my target Hispanic consumer look like? Where are the largest concentrations of our target Hispanic consumers? Commission Focus Groups to understand perceptions of your brand and competitors. Work with research partners to answer some of the aforementioned questions. If it has been more than a year since you did significant research on the Hispanic market, you might be surprised at the results.

Advertiser Resolution 2 – Take a Fresh Look at Your Approach to Hispanic Marketing
If you and your agency partners don’t do what the military calls “after action reviews” or “post-mortems” on your past Hispanic marketing effort, resolve to do one for your 2008 efforts. Identify what worked – and what didn’t. Establish best practices. Every marketer typically has a “sweet spot” where they always perform well – be it that annual sponsorship of the Fiesta Broadway or local radio. Most importantly, rethink your media mix. Although the Hispanic media landscape has evolved slower than its general market counterparts, there is no denying that things have changed drastically. Changing demographics in the U.S. Hispanic market have been accompanied by distinct changes in media habits – including the adoption of new media (Internet, mobile, etc.), continued proliferation of cable TV, and a shift to digital platforms (digital TV, digital out-of-home, etc.) to name a few.

Jumping over to the Hispanic agencies that develop and steward many of the Hispanic marketing programs, I would like to suggest 2 resolutions:

Agency Resolution 1 – Find and Focus on Your Core Competency
As we move into the 2009, there is no doubt that Hispanic advertising agencies will be challenged like never before to defend their position vis-à-vis increasing competition from general market ad agencies and make a clear value proposition to clients facing budget constraints. As expert marketers, we all preach to our clients the folly of trying to be everything to everyone. The same applies to Hispanic ad agencies. As so elegantly articulated in Tim Williams’ book “Take a Stand for Your Brand,” Hispanic advertising agencies need to identify their core purpose and value proposition. Whether that is Hispanic youth marketing, or grass-roots marketing, an agency without a differentiated core competency will have a hard time in 2009 and beyond. Conversely, Hispanic ad agencies that commit themselves to core competencies and clear, differentiated purpose will thrive.

Agency Resolution 2 – Think about How Digital Will Change How You Do What You Do
It would be a contradiction of Agency Resolution 1 to recommend that every Hispanic advertising agency embrace digital advertising as a core competency. I’m not suggesting you become a digital agency. However, that does not mean that Hispanic agencies can ignore the deep and systemic effect that digital advertising has had on advertising in general. In the general market, digital advertising has ushered in a new paradigm in accountability and measurement that is affecting all aspects of advertising, from broadcast TV to “below-the-line” tactics such as event marketing. With the aforementioned pressure on advertising budgets, direct response programs will only increase in favor vs. their branding brethren. Most importantly, digital platforms have redefined the media discussion from concepts like reach and frequency to engagement and immersion. Any Hispanic agency that plans on thriving, let alone surviving, needs to rethink and retool their approach to align with this new reality.

Finally, as we look at the Hispanic media industry, I offer one broad resolution:

Media Resolution 1 – Invest in Digital
As I’ve pointed out for brands and agencies, digital is changing the advertising game. If you haven’t put serious resources behind digital platforms, now is “do or die” time. Hispanic media companies, from TV broadcasters, to radio stations, to newspapers, have had the luxury of advance notice and the lessons of their general market counterparts. If you think you can put your head in the sand and ignore broad shifts in consumer media habits towards digital and personalized “on-demand” media platforms like the Internet, TIVOs, and iPods, ask the Tribune Company what will happen. Although the Hispanic consumer market traditional lags behind the general market in technology and new media adoption, this only gives you time.

To borrow a tagline from a very successful marketer in 2008, “change is coming.” For those of us in Hispanic marketing, resolve to embrace that change and thrive!

As most of our readers already know, the Hispanic advertising industry has grown into a major sector of the overall U.S. advertising and media marketplace, and therefore a key industry in the U.S. economy. As a direct result of the growth in the population and spending prowess of U.S. Hispanics (see the last post for more info), a cottage industry has grown from a few local agencies in New York during the 1950’s into a $5 billion industry in 2007. If you’re interested in reading more about the history and rise of the U.S. Hispanic advertising industry, I highly recommend you read “Latinos, Inc”.

I see 4 key players that make up the Hispanic advertising sector:
1. Advertisers – these are the companies that spend marketing dollars on Hispanic advertising and marketing services, both nationally and locally. They can be as big as Proctor & Gamble and as small as a local used car dealer in Tucson, AZ.
2. Hispanic advertising agencies – there are approximately 100 Hispanic agencies, based on AHAA’s current active member and associate member list. They are the gatekeepers of the Hispanic ad dollars.
3. Hispanic media companies – mostly Spanish-language, but increasingly English-language TV networks, Cable TV, print (newspaper and magazine), online, radio, outdoor, and new media companies (e.g. HipCricket mobile)
4. Related industries – is a catch-all for companies such as production houses, translation firms, and event marketing specialists that play an important role in delivering Hispanic advertising services along the “last mile.”

To understand the economics of this industry, it’s important to understand the food chain that drives this market. To illustrate this, I’ve put together the following diagram which I’ll refer to as the Hispanic advertising industry food chain:

This diagram represents how the majority of the money flows, from the top to the bottom, and provides an approximation of the relative weight of each sub-sector or component (i.e. Hispanic ad agencies see the bulk, but not all of Hispanic ad spend, some flows directly to Hispanic media companies, particularly at the local/regional level). Also, I will argue that the economics of the Hispanic ad industry is not all that different from the general market ad industry, except for the fact that it is less complex and less fragmented (new media and technology have significantly altered the general market landscape into a much more fragmented industry of specialists agencies, media companies, and technology services firms).

So what should we expect to see in the next year or so as the economy goes into a slowdown? The first trend that has some significant historical precedence is that Hispanic ad budgets at national advertisers will inevitably be trimmed. Anyone who has worked in this business for more than a few months know this age old rule all too well – when ad budgets need to be cut, the Hispanic budgets are the first ones to feel the pain. Does this make sense? No, particularly if you believe my predictions from Monday’s post that Hispanic consumer spending will fair better, in aggregate, than the general market. This will reduce dollars flowing from the top down to the agencies, which will be negative for the entire industry.

Another big trend is the meltdown and consolidation in the financial services market, particularly the disappearance of major consumer-facing banks like WaMu and Wachovia. While the financial services industry has historically underspent in the Hispanic market (as an industry they only spent $167 million in 2007, ranking number 10), their budgets have been growing and the recent events on Wall Street will dramatically hit those budgets in late 2008 and 2009.

Add to these the doldrums affecting auto makers, and the picture looks pretty bleak.

I see two potential silver-linings:
1. Hispanic advertising spending by consumer product companies will probably remain robust, particularly considering the underlying fundamentals of the Hispanic consumer market I discussed on my last post.
2. Local ad spending, which is always hard to gauge, might be bolstered by the democratization of media (which I’ll talk about more on my next post) which will open the market to new, regional advertisers that have not previously invested in Hispanic advertising.
3. Overall Hispanic ad spending has been growing significantly during the last 5 years (at between 4-13% per year), and any slow-down will probably not result in negative growth.

All in all, the outlook is negative for the Hispanic ad industry during the next 15-18 months. I expect that overall Hispanic ad spend growth rate for 2008 will drop below 2%, and will remain mildly positive, but close to flat for 2009.

Check back in on Friday for the last part of this story looking at the Hispanic business market.

“When getting into the mobile marketing realm, start small – well, short.

A short message service (SMS) campaign is a great way to dabble in mobile marketing without taking a huge leap.

Text messaging remains a “must-have” feature for mobile phones, according to a study by Amplitude Research. It is widely used as one of people’s prime communication methods. ”

You can read the rest of the article by clicking here.

While I have only casually been following the controversy, and arguably less affected by it’s ramifications (most of our media and creative work is digitally-focused), today’s decision by Arbitron to roll-out PPM early caught my attention.

Why? Well, in reading one of the articles on Arbitron’s point-of-view I noticed that Arbitron is claiming that the new PPM measurement system will show across-the-board reductions in radio listenership numbers (including mainstream, Urban, and Spanish-language stations). While I understand that the big issue is how much more PPM will affect Urban and Spanish-language stations and their ratings vs. their general market counterparts (and I have no clue what the answer to that question is), an ancillary result of this new system might be a boost to online advertising.

What with radio rating numbers going down across the board, and now a new system sharpening that decline, added to increasing Internet penetration and time spent figures, you would think that PPM’s rollout would accelerate ad budgets shifting to online (from radio in this case). We’ll see what happens.

I think this is a fantastic example of what a lot of forward-thinking professionals in Hispanic advertising have been pushing for many years – truly integrated marketing programs to reach the Hispanic consumer. For too many years, and at too many agencies, Hispanic media strategies have been staid and flat – 360 advertising all too often has meant doing a TV buy coupled with radio and maybe some out-of-home.

Kudos to Zubi and their media team for developing an integrated media buy (albeit only one network/publisher) that includes both traditional (TV, radio) and new media such as online and mobile. I imagine the cost savings they are generating for their clients (such as Ford and American Airlines) will be significant. Hopefully they will continue to pursue additional integrated buys across other media properties.

These types of deals show that the future of Hispanic advertising is bright for agencies and clients willing to push the envelope and the accepted best practices. I hope everyone is taking notes.

Measurability, accountability, and certainty.

Although online advertising is not perfect when it comes to measurement, it is far and away better than whatever is second best.