It’s fair to say language preference is probably the most commonly used of these macro segmentation models considering most Hispanic marketing is focused on individuals who speak Spanish. Language has separated Hispanics – a population that would otherwise not be reached in English using English media – and created the scale that made the population so appealing to companies, politicians, and anyone else looking to “tap” into the growing market. It is a disparate group of immigrants from 21 different countries.

From a marketer’s perspective, language is big, serving as the clear and understandable “firewall” between so-called “general market” advertising programs reaching general consumers and niche/targeted “Hispanic” programs designed specifically to resonate with them. Language has driven how most marketers have crafted their marketing messages to the Hispanic market, typically in Spanish.

As with any segmentation model, a core assumption of this language macro segmentation model is most Hispanics fit into one of the following three “language” subgroups:
• Spanish-dominant – prefer to speak Spanish and consume almost exclusively Spanish media. They speak, read and write Spanish well.
• English-dominant – prefer to speak English and consumer English-language media. They speak, read, and write English well.
• Bilingual – go back and forth between English and Spanish easily and naturally and consume English and Spanish language media interchangeably. They speak, read and write English and Spanish well.

I’ve always considered this model to be an accurate representation of an otherwise complex world of U.S. Hispanics – not perfect, but a sound, basic framework to use in any critical analysis of how to approach the market. That is, until recently, when I began working with a new client. A client in the education industry.

As we’ve been digging into the data on their target Hispanic audience, we’ve all been essentially forced to call into question this basic, simple language segmentation model. Specifically, we see growing evidence of the existence of a potentially large segment of Hispanics who don’t fit into any of aforementioned three language groups.

A group of Hispanics without proficient command of English or Spanish. A predominantly younger group – ages 18-44 – born to first generation immigrants mostly from Mexico and Central America. Some are foreign-born and moved to the U.S. as children. Others, however, were born in the U.S., and raised in all Spanish households and neighborhoods, rendering their U.S. upbringing functionally identical to their foreign-born counterparts. They are not second generation but are not first generation in the traditional sense. They are a group functionally, culturally and linguistically in the middle.

A quick academic literature review uncovers that this group of Hispanics has been a topic of debate in the higher education community for five years. We can’t take credit for having discovered this missing “language” segment. There has been a fair amount of scholarly research done on this transition group by the educational community – commonly dubbed “Generation 1.5”

As defined by Oudenhoven (2006), “Generation 1.5 students are immigrant students who move to the United States at the age of 12 or older and enroll in middle school or high school in this country.” Their Generation 1.5 label comes from their special place as first-generation Americans who migrated to the U.S. as children, and have a strong cultural identification as Americans, but were born in another country. Educators, particularly within community colleges, have struggled to address the unique needs of this growing population. Four year colleges are beginning to face this challenge.

While most of the focus of research and analysis on this group has been related to education, the impact of the existence and growth of the “middle” generation of younger Hispanics is profound for marketers. This group’s existence, potentially on a large scale, creates all kinds of problems for the common associations made with the 3-part language segmentation model, including media preference, message impact and absorption. Do you buy Spanish media to reach them or English, or a combination? What language do you message them in? If in Spanish, what level of proficiency and vocabulary do you assume? In a world increasingly driven by search engines and keywords, how these consumers use type in search phrases can be complex. What taxonomy is appropriate on digital platforms like Websites, mobile devices and social apps?

Most important, the existence of a Hispanic Generation 1.5 points to an unmet need by a large segment of U.S. Hispanics – possibly tens of millions of them. This unmet need is manifesting itself in our education system, which is quickly trying to adjust to meet their needs. However, this group will likely have unique needs throughout our commercial economy – financial services, healthcare, and media – just to name a few. And as marketing becomes more about utility and providing value and less about blasting a one-way, self-serving messages, there is potentially a huge opportunity for marketers who provide real value to Generation 1.5.

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on February 2, 2012)

Hispanic digital media spend will surpass print and radio, as in the general market. Digital media spend in the Hispanic market will continue to remain far behind TV, radio and print (approximately 5% in 2011). With all the talk about increased spending on Hispanic digital by agencies and marketers alike, we will look back on 2012 and see digital spend stayed well below double digit territory and is nowhere near surpassing radio or print (as we saw in the general market in 2011).

Hispanic ad spend will stay flat in 2012. If there is one prediction you can take to the bank, it’s this one – Hispanic media ad spend will grow in 2012 (compared to 2011). While there is still concern over a double-dip recession in 2012 (particularly as things unravel in Europe), the 2012 elections and the juggernaut that is Univision will assure growth in the market. Portada recently released a report projecting 4-5% media growth in the Hispanic market based on a survey of Hispanic marketing professionals. I think this is conservative.

Marketers will increase their budget allocations to the Hispanic market. Although the previous prediction would logically lead most to believe that marketers will increase their Hispanic budget allocations (the percentage of their overall marketing budgets directed at the U.S. Hispanic market), the sad reality is that things will remain status quo when it comes to the approach most marketers take to allocating budgets to the Hispanic market. Most of the growth in Hispanic ad spend in 2012 will be driven by new entrants into the space – led by political advertising (not just candidates – but the also super PACs – all of whom are finally paying attention to Hispanic voters). Existing Hispanic advertisers will continue to maintain their Hispanic spend in the same range as in 2010.

Mainstream digital publishers will stop launching English-language “Latino” Websites. The last 2 years have seen major media companies jump into the Hispanic digital space – targeting the oft discussed bicultural and English dominant Latino, including FoxNewsLatino.com. NBCLatino.com, and The Huffington Post Latino Voices. Some might assume the space is now crowded, or that competing with media powerhouses like News Corp, AOL and NBC Universal is futile. Well, I see more of these “Latino” extensions coming in 2012. Why? The barrier to entry is so low. With digital, unlike the offline world of broadcast or print, there is very little capital costs (if any) associated with launching a new publication. Sure, a good Website infrastructure is not cheap, and producing quality content is not easy (or inexpensive), but compared to the printing and infrastructure costs of launching a new Spanish-language daily or the licensing fees associated with launching a new Spanish-language radio station, the costs are marginal and worth the risk. One interesting ramification of this new media growth will be that there will be many more options to reach English-speaking Latinos than ever before.

Mobile will finally become a key part of the Hispanic marketing mix for most advertisers. “2012 will be the year of Hispanic mobile marketing.” I’m sure you’ve heard or read this somewhere. With all the data on Hispanics’ heavy use of mobile and major growth in general market mobile marketing, it stands to reason that Hispanic mobile will come of age in 2012. Unfortunately, this is a major case of all bark and no bite. I see a couple of problems with these naïve predictions. # 1: Where will the money come from? With most mobile media programs funded out of digital media buckets, and Hispanic digital media spending in the 5-6% range, mobile marketing programs will be hard pressed to find funding in an already dry well. #2 With so much of the growth in mobile activity being driven by mobile Web browsing and tablet use, I do not anticipate significant investment on the part of marketers into Hispanic mobile- and tablet-optimized sites (when most hardly keep up their browser-based Hispanic Web and microsites) #3 Hispanic mobile and social media are inextricably intertwined, and Hispanic social media is still in its infancy (see below).

Clients will continue moving their Hispanic advertising to general market shops. As the economy slowly starts improving in 2012 (I’m an optimist), I expect there will be less pressure on marketers to consolidate their general market and Hispanic advertising programs in one ad shop. Equally important, many veteran Hispanic marketers who consolidated will likely miss the attention to detail and specialized resources they got from Hispanic ad agencies compared to the Hispanic divisions of general market shops. Finally, I think general market shops are less excited about investing in Hispanic capabilities and divisions after experiencing how little budget is actually allocated to these programs. 5% of a client’s marketing budget is not too exciting when you already have 95% of it.

Hispanic social media will become a major force in the industry. Again – lots of buzz, but very little substance to back it up. While 2010 and 2011 have seen a lot attention placed on engaging Hispanics in social media, with the establishment of two rival Hispanic social media organizations and countless blog networks touting thousands of influential Hispanic bloggers, the space is still in its infancy and will take a while to catch up to the general market in scale and sophistication. While I applaud the efforts of organizations like LATISM, Hispanicize, and Latina Bloggers Connect among others, large reach and national marketer scale is still missing from the space. Specifically, as more and more Latinos start blogging and building large networks on Facebook, Twitter, and Linkedin, there is a key missing ingredient –an audience of millions of Latinos consuming their content. Until that happens, Hispanic social media will be a niche within a niche.

We won’t see any new Hispanic advertising agencies open their doors in 2012. No matter how challenging or competitive the Hispanic ad industry gets, it always amazes me that new Hispanic ad agencies, PR shops, and other marketing agencies are launched every year. I don’t have an official count, but I know of at least a dozen or so shops launched between 2009 and 2011 (in arguably the most challenging 3 years the industry has faced). It’s quite a testament to the resilience and constant innovation within the industry that optimistic entrepreneurs see opportunities to make a better mousetrap in our business.

I think 2012 will be a good year for our industry – filled it’s fair share of challenges, but more importantly, opportunities to grow and prosper, as Hispanics become a bigger and more integral element of the American corporate and cultural life.

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on January 5, 2012)

Everyone knows that Hispanics are heavy mobile users, but…
We have all seen multiple charts and statistics that show that Hispanics are at the forefront of mobile device adoption and usage. We are aware that they have the highest penetration for mobile phones (eMarketer, 2011), that they over-index on smartphone adoption (Nielsen, 2011), and that they are more likely (vs. the general market) to use their mobile device to download music, play games, and access social networking sites (Scarborough, 2010). Unfortunately, most of the research out there regarding Hispanics and mobile technology focuses on basic penetration and usage data.

While this is great for establishing that an opportunity exists to reach Hispanics via mobile, it does little to provide actionable insights to help marketers leverage this channel to integrate mobile to their marketing mix in order to connect with this segment. So the question remains: how should a CPG brand target Hispanics via mobile? How should a major retailer take advantage of the millions of Hispanic customers with smartphones in hand that enter their stores daily? Other than making sure your existing Hispanic (digital) marketing is mobile-friendly, there is very little to go on.

The reality is that more and deeper data is needed. We would all benefit from insightful, well-conducted field qualitative research, which would provide a better understanding of U.S. Hispanic mobile users’ needs (in terms of information and interaction), as well as of the underlying psychographics.

A good place to start: In-store retail
At any given moment, 45% of Hispanic shoppers at any retail location have their smartphone with them (Nielsen, 2011). A good place to start learning more would be to explore in-store mobile engagement. More specifically, identify opportunities for retailers to connect with Hispanic shoppers through innovative, mobile-driven experiences in stores. Considering the fact that Hispanics’ discretionary spending surpassed $129 billion in 2010 (Experian Simmons, 2011), and that 7 of the top 50 Hispanic advertisers are big box retailers (AdAge Hispanic Fact Pack, 2011), it appears that it would be highly rewarding to better understanding how to engage Hispanic consumers in retail environments.

For example, language aside, what specific opportunities exist for creating an in-store mobile engagement strategy that appropriately reflects the norms and cultural priorities of Hispanic populations? What are the relevant differences between Hispanics and non-Hispanics in their use of smartphones (for shopping purposes) that shed light on their different in-store mobile experiences?

Do differences in ethnicity play any significant role in shaping in-store mobile experiences, or are the commonalities greater than the differences (i.e., Mexican-American vs. Puerto-Rican)?What are new ways to leverage in-store mobile engagement that will have special appeal to Hispanic shoppers?

Conversely, what are the risks in creating an in-store mobile strategy that fails to account for these norms and priorities? Are there any ways, apart from language, in which Hispanics find in-store mobile experiences designed for non-Hispanic audiences deficient?

These are all great initial questions for big box retailers and marketers alike to ask. Nonetheless, looking at in-store mobile engagement opportunities is just the beginning. There is no doubt there are countless opportunities to better understand Hispanic consumers in the context of their advanced use of mobile technology, and to create tailored user experiences that result in loyal customers with a high lifetime value.

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on 12/1/2011)

You may be wondering what the right spend figure is? Well, according to the latest AHAA report the number is 14.2%.

In AHAA’s latest report – “Advertising 2011 Budget Alignment” – AHAA reframes the right spend argument from the perspective of return on investment – performing regression analysis on Nielsen Hispanic media investment data to quantify the correlation with a company’s overall revenue (over a 5 year time period). While I applaud AHAA and Santiago Solutions Group (the research company commissioned for the study) for their analysis and evolving the right spend argument, they still arrive at the same result – a single number (or a range of 6.4-14.2%, if you take their two top spending categories) that is implied by their analysis to be the right investment level for most U.S. companies.

Fundamentally, I think too much emphasis is being placed on this one single right spend number. My biggest concern with the emphasis on the right spend figure is how it’s calculated and what it measures. First of all, right spend, as calculated by AHAA, focuses on paid media spend on largely above-the-line (Cable & Spot TV, local radio, national magazine, and local magazine) Spanish language media tracked by Nielsen. The calculation not only ignores digital and direct response-oriented media (where historically a lot of Hispanic marketing investments are focused), but fails to take into consideration the other 2 pillars of the POEM (Paid, Owned, Earned Media) model – earned (PR, grassroots, events, social media, etc.) and owned media (in-store, POS activations, Websites, content marketing, etc.). It focuses only on paid media, a perspective that I feel is dated and unrepresentative of the entire spectrum of marketing activities taking place in the U.S. Hispanic market. Equally important, the logic for arriving at most of the right spend figures I’ve come across is overly very simplistic and flawed – the idea that advertising expenditure in the Hispanic market should be pegged to Hispanics percentage of the U.S. population (around 14%).

More importantly, I think the right spend figure is being improperly applied to individual firms and the decisions they should make. At its core, right spend is a macro measurement, that attempts to paint a picture of the entire U.S. Hispanic advertising market. Much like the field of economics, applying macro analytical tools to micro firm-level decisions is inappropriate. In a market-driven economy, individual firm decisions are influenced by macro-economic conditions, but not solely driven by them. Therefore, treating a right spend figure as a benchmark to be applied directly by individual firms is inappropriate.

So if economy-wide right spend figures are not to be used by marketers as a direct benchmark, what is a Hispanic marketer to do to determine the right advertising spend in this space? I would argue that individual firms should move beyond right spend and apply a toolbox approach to this very important decision. Below are four options much more appropriate for individual firms to consider:

Budget Allocation Modeling (Demand-based modeling) – As I discussed in a blog post last year, an effective analytical tool for determining Hispanic marketing budgets is to model 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).

Incorporating game theory – Game theory provides a valuable analytical framework for firms to evaluate competitive forces. Basically, it involves thinking through what your competitors will do based on various choices (in this case Hispanic advertising investment levels). Game theory can provide useful input, leveraging competitive investment data, to determine a firm’s potential Hispanic advertising spend.

An agile, option-based strategy – For new entrants into the Hispanic market, I often recommend an iterative, option-based strategy that will guide the right spend decision. This basically involves drawing up a series of incremental investment levels based on the successful achievement of milestones at each decision-point, or option point. The underlying concept is to start with controlled market tests, utilizing highly actionable data to guide success. In a recent article I fleshed out this agile approach in the context of Hispanic social media programs.

A total business approach – Building on the fact that the right spend calculations fail to consider the totality of investments in Hispanic marketing beyond paid media, determining the right Hispanic investment level for a company involves looking well beyond marketing. Particularly for new entrants into the Hispanic market, making sure you take a total business approach, considering product development, customer service, channel strategy, among others, is critical. Therefore, the right spend calculus needs to consider much more than marketing expenditures.

Right spend analysis, as it’s been developed to date, is a good starting point for companies trying to evaluate how they should invest resources in the U.S. Hispanic market. We just have to be careful to move the complex decision making around U.S. Hispanic market investments well beyond this starting point figure.

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on 11/3/2011)

• Hispanics are early adopters of new technology, especially within the social media realm (we’re basically dealing with an “early adopter” consumer segment)
• Traditional Hispanic marketing is fairly predictable with clear steps to execution and predictable outcomes (you create a print ad and if you get it into the publisher before a certain date it will run it in a magazine with a certain circulation and will be viewed by x number of consumers)

So essentially, Hispanic social media marketing, even more than traditional social media marketing, is highly unpredictable. It is realm chock full of unknowns. An experienced social media marketer will tell you that they never know what will work before they’re actually in market, so it’s a game of trial and error. You have to be willing to fail before you succeed.

Unfortunately, the way most marketing programs (including social media programs) are planned, developed, launched, measured and optimized is based on a linear model that depends on the accuracy of numerous assumptions and emphasizes the planning artifacts (usually in the form of documents like “strategic plans”, creative briefs, and media plans). It is “waterfall” sequential process (as its described in the software development world):

By contrast, over the last few years, a new, more flexible approach to marketing, based on the tenets of Agile methodology (again, an approach pioneered in software development), has been evangelized by many organizations that stresses speed to market, rapid iteration, and embraces the notion that marketers don’t know what works before they’re actually in market. Because of the unpredictable nature of the Hispanic consumer and their use of digital media, and the “wild west” nature of social media marketing, an agile approach is critical to success.

So what does this approach look like? It helps to contrast it to the way most of us have gone about developing marketing programs (and ironically, the waterfall method I proposed in last year’s Hispanic Social Media Guide)

So how do you get started with this new agile approach to Hispanic social media? Follow these simple steps:

#1 Assemble a small team and assign roles – Focus on “doers.” If you planning on producing a lot of Spanish content, get a Spanish copywriter on board. If you will be building an app, get a developer on the team. Give everyone clear roles and make sure you have all the resources to execute on your program.

#2 Decide on the duration of the first project (or “sprint”) – Emphasize short cycles, ideally 2-4 weeks. Anything longer than that means you’re overplanning or don’t have the resources you need to build what you want.

#3 Set goals for the first project / sprint – Flesh out your goals from a user perspective in the form of “stories.” E.g. “I want Hispanic moms to visit the Facebook page, ‘fan’ us, and download a printable recipe.”

#4 Set regular project/sprint meetings – Set short (10-30 min) meeting daily or a couple times a week to discuss the stories, review tasks and estimate time requirements.

#5 Project / sprint retrospective – After you’re in market, evaluate and discuss with the team what went well and what went didn’t.

#6 Start project/sprint planning again (for the next project/sprint) – Go back to step #3 and start again.

This approach to Hispanic social media isn’t about discarding all planning, but instead about condensing into short cycles, where documentation and assumptions are replaced with living programs and actual results (and data).

While I wouldn’t suggest this agile approach for all Hispanic marketing programs, particularly those with hard deadlines and highly defined deliverables (like event marketing, direct mail, or print/OOH advertising), it’s perfectly suited to social media marketing. Social media provides near instant feedback – you’ll know within a few days or weeks whether a program is working. Social media is also relatively inexpensive (particularly of the hard costs of media necessary with most traditional advertising), allowing for easy testing and learning.

One final note: agile Hispanic social media marketing is perfect for companies that are just getting started in the Hispanic market. Success in the U.S. Hispanic mark often requires investments and changes in other aspects of a company’s operation – such as customer service, human resources, and product / service development. Trying to predict them all upfront would be difficult if not impossible

If you haven’t read it, give it a once over (it’s re-posted at the end of this blog)

As we near the end of 2011 (isn’t that crazy?), it seems like as good a time as any to reflect on whether any of my predictions panned out.

I could make a pretty strong case that predictions #1-#4 were on point. Not seeing much movement on prediction #5 though.

What do you think?

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I made the bold prediction almost a year ago today that Hispanic marketing was in for big changes in 2011. I have to admit I think I will be proven wrong.

I think 2011 will result in even more changes than I boldly forecast last year. In fact, I think by the time 2012 rolls around, we’re barely going to recognize the Hispanic marketing space that has seen tremendous growth (more people, more media companies, and more agencies) but changed very little since 2000. Here are my revised, emboldened predictions for Hispanic marketing in 2011:

Prediction #1 – The death of the Hispanic advertising agency
2010 was most definitely the year of the full-on assault on Hispanic advertising agencies (starting with the Home Depot controversy in April, Crispin Porter’s absorption of Burger King Hispanic in August, and the ANA Multicultural Conference controversy in September). 2011 will no doubt see a continued push by general market agencies into the Hispanic market. Not only will they continue this push by staffing up on Hispanic advertising talent, but also through acquisitions (I have firsthand knowledge of at least a few such acquisitions plans from some big ad agency players). Moreover, marketers, particularly those in “minority-majority” markets such as Los Angeles, will begin to follow El Pollo Loco’s lead and consolidate their Hispanic and General Market advertising accounts. Add in the fact that Hispanic ad agencies have been painfully slow in building digital capabilities (they’ve made a valiant “too little, too late” effort during the last 12-18 months), and the writing is on the wall – the start of a slow death for the Hispanic advertising agency model as we now know it.

Prediction #2 – Hispanic PR officially becomes Hispanic Social Media
2010 was also the year that Hispanic PR agencies took the plunge and fully embraced social media as the future of their industry. The success of the inaugural Hispanic PR & Social Media Conference and the LATISM Latino2 tour highlighted the coming of age of Hispanic social media. Hispanic bloggers and social media influencers are establishing themselves as the key centers of influence in the Hispanic community. This was coupled with the continued decline in Spanish print media (magazines and newspapers), which has started to feel the decline in readership resulting from consumer’s shift online and the recession. Looking ahead at 2011, I see a continued decline in Hispanic print coupled with an equally sharp rise in niche and “long-tail” Hispanic digital publishers (whether they are bloggers, Facebook influencers, or small Websites) – with what were formerly “Hispanic PR” agencies and professionals positioning themselves as the expert guides of this growing and increasingly prominent Hispanic social media space.

Prediction #3 – Digital leap-frogs “Hispanic”
During the boom years of Hispanic digital (2005-2008), the Hispanic digital media market looked a lot like the Hispanic traditional media landscape – a handful of prominent Spanish-language portals / mega-publishers that owned the market (e.g. Batanga.com, Univision.com, Terra.com, and Starmedia.com), surrounded by a lots of smaller upstart ad networks (e.g. Gorilla Nation, HispanoClick, Consorte Media) and a handful of general market publisher extensions into the Hispanic market (e.g. ESPNDeportes.com, CNNEspanol.com, etc.) that got the scraps. During the last 12-18 months, the Hispanic digital media market has fragmented, led by technology such as behavioral targeting, demand side platforms (DSPs) and ad networks with immense scale and reach. While the Univision.com’s and Terra.com’s of the Hispanic digital media market will not be going away anytime soon, their days as “market makers” are numbered. Looking ahead, as Hispanic digital media consumption becomes more social (Facebook) and personal (mobile), and mirrored Spanish Websites /microsites become a relic of the past (recent AOL research and Best Buy’s well chronicled experience shows that Hispanic consumers have come to view Spanish sites as inherently inferior to “main” English language sites), the Hispanic digital marketing space will be unlike anything veteran Hispanic marketers have grown accustomed to seeing in their analog Hispanic world.

Prediction #4 – The multicultural mainstream becomes a reality
Multicultural consumers already make up 35% of the entire U.S. population. Guess what will happen to that percentage when the 2010 Census numbers come out this spring? Welcome to the new “multicultural mainstream” – a new America where close to 40% of the overall population is multicultural (Hispanic, Black, Asian and multi-racial). DMA’s like Los Angeles, Dallas, Houston, Miami, Atlanta, and Washington, DC are already “minority majority” markets (Hispanics, Blacks and Asians combined make up more than 50% of the total population) – expect cities like New York and Chicago to join the list in 2011. This will only put more pressure on advertisers, particularly regional ones, to re-assess how they allocate marketing resources to ethnic groups like Hispanics. My theory is more of the “El Pollo Loco” phenomenon from Prediction #1 – as advertisers consolidate their Hispanic (and other multicultural marketing efforts) with their general market ad agencies.

Prediction #5 – The birth of the Hispanic Youth Market
The last few years have seen a steady increase in dialogue, events and attention among marketers about the Hispanic youth market (Hispanics under the age of 24). The statistics are already mind-boggling:
• In 13 years, 50% of Americans under 18 will be minorities (Source: U.S. Census Bureau)
• 80% are US-born (Source: University of California, San Francisco)

I predict that the 2010 Census figures regarding Hispanic Youth will be the most unexpected… and growing. Yet the Hispanic youth market represents a conundrum for Hispanic marketers – a growing market that increasingly identifies and shows pride in its Hispanic heritage but consumes very little Spanish-language media and sees the world through color-blind lenses. This will be the toughest nut to crack for marketers and advertising professionals of all stripes – general market, Hispanic, digital, direct response, social media and everything in between. Yet I see Hispanic youth as the biggest marketing opportunity to come out of 2011.

Think of 2011 as the year of creative destruction in Hispanic marketing – some things will die, a lot will change, and brand new opportunities will sprout from the ashes.

The 2000 Census was particularly impactful, with tons of media attention from the cover of Time magazine to lead stories throughout most of the American media. In fact, since the 2000 Census figures ushered in this new level of attention to the Hispanic market, there have been at least:
• 45 new Hispanic ad agencies launched
• 38 new Spanish-language newspapers put into circulation
• 1,250 new Spanish-language and Hispanic-targeted television networks on air
• 100+ new Hispanic-targeted Websites

Most importantly, there was a significant expansion in resources dedicated to the Hispanic market by Corporate America, primarily in the form new marketing hires, new departments and groups focused on the Hispanic market, numerous acquisitions, and countless new product launches.

Naturally, there was a lot of excitement and anticipation in our industry leading towards the unveiling of the 2010 Census results. I think it’s fair to say that most in our industry were expecting the 2010 Hispanic population data to spur at least as much new activity as the 2000 and 1990 Census results did. Many, I would argue, expected even more attention and business activity to have been spurred by the 2010 Census in the year following the unveiling of the results.

Well, it’s been almost 6 months since the 2010 Census results were released, and everyone now knows the Hispanic market has topped 50 million.

And tell me if I’m wrong, but there really hasn’t been that big of a boom in the Hispanic market?

Talking to industry colleagues in the last few months, they corroborate my theory. No Time magazine cover stories. No new Hispanic agency reviews by companies that have yet to jump into the Hispanic market. There have been very few, if any, new Hispanic ad agencies or Hispanic media companies?

A lot of this lack of activity can surely be attributed to the ongoing economic issues facing the country and the fact that a lot of companies are hesitate to invest in new markets and programs.

But I think there is more going on here than just the economy. Here are my theories, in order of magnitude of impact:

1. Most of the low hanging fruit has been picked – Most major marketers in the U.S. are already involved at some level in Hispanic advertising. There really weren’t that many companies left on the sidelines as of April 2011.

2. The Census numbers revealed two Hispanic markets – According to the latest Census figures, a whopping 63% of U.S. Hispanics were born in the U.S. That one statistic has underlined a profound debate in the industry about whether Hispanics, particularly English-speaking more acculturated Hispanics, are still a distinct segment, with distinct media consumption habits that Hispanic-specific marketing programs should or even could effectively reach.

3. The power of expectations – One can argue that 2010 was the first Census when everyone had big expectations regarding the growth of the Hispanic population. I think a lot of people were expecting big numbers, north of 50 million. Bottom line, no one was surprised by the eventual figure, and so it did not lead to new activity, since everyone had already planned for it. Put another way, the effects of the anticipated Census results were already baked into most company’s plans.

4. The trend towards general market consolidation is impacting the industry – Anyone who has ever read my past blogs knows that there has been an undeniable trend towards marketers consolidating their Hispanic marketing and advertising programs with general market agencies. That, in my opinion, has reduced the prominence, role and budgets of many Hispanic marketing initiatives.

5. More Hispanics doesn’t mean more spending – As the economy has struggled, minority groups like Hispanics and African-Americans have borne a bigger negative impact, as revealed by the unemployment figures in the Hispanic market, which are much higher than the overall national averages. So although the population has increased, many marketers are seeing a Hispanic consumer with less disposable income, and therefore a potentially less attractive market than in past years.

Have the 2010 Census figures been as big of a let-down for you as well? Is it too early to call? I’d love to hear your thoughts…

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on 9/1/2011)

However, anyone who has been paying attention to the Hispanic advertising industry in the last 3 years knows that things have started to change, as two forces have emerged:

1) So called “general market” agencies have created Hispanic advertising teams or departments within their agencies to pursue this specialty advertising work

2) Some clients have begun to consolidate their general market and Hispanic assignments with a single agency – usually with general market agencies (but with ethnic shops in a few rare occasions)

The trends are obviously not positive for Hispanic ad agencies, as they see big agencies “crowding” into their space and their role increasingly diminished.

The trends playing out in the Hispanic advertising industry appear similar to those that have taken place more generally in the ad agency business as new disciplines have emerged over the last few decades. Every couple of years, a new discipline has emerged – whether it was direct response in the late 70s / early 80s or digital in the late 90s – that has had a significant impact on the ad business. With the emergence of each new discipline, another cycle has taken place: as the new disciplines emerged, specialist agencies initially arose to address them. However, over time, these new disciplines were “integrated” into larger agency offerings, and the specialist agencies disappeared or were absorbed into larger agencies.

Yet every once in a while, major tectonic shifts have occurred that represented much more than the addition of a new discipline to the ad agency repertoire. The emergence of TV in the 1950’s marked the first big tectonic shift of the modern ad agency age, ushering in the “Mad men” era that focused advertising on the “big idea,” based on emotional advertising broadcast to the masses using network TV. I would argue that the second wave of digital media (the first one came in the late 90′s with the initial “dot com” boom), ushered in by social media in the early 2000’s marked the latest tectonic shift in the ad business – forcing ad agencies to fundamentally change their focus towards two-way, pull-focused marketing, leveraging connected consumers as critical agents in their ad programs.

So is Hispanic advertising, and multicultural advertising more generally, simply a new discipline, like direct response, that larger agencies will simply “bolt-on” to their service offering?

Or is Hispanic and multicultural advertising a tectonic shift that will force agencies to significantly change their approach to advertising?

I would argue the latter.

As the demographics of the U.S. rapidly change (as the Census data clearly show), the model of an ad agency that focuses on some amorphous, non-ethnic “general market” will have to evolve… and rapidly.

And I don’t think “bolting on” a Hispanic team or a multicultural department to a large agency will cut it. That’s a lot like a creating a digital group within a traditional ad agency.

What do you think?

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on 8/4/2011)

Obviously this is a philosophy I have embraced for years, so it’s nice to hear a smart colleague join the growing chorus of voices calling for a sea change in how Hispanic advertising is executed.

While I support David’s thesis, implementing it in practice opens up a whole can of worms that need to be thought through. Among them are:
– If Hispanic advertising moves beyond language, how does that further complicate the dynamic between Hispanic ad agencies and their increasingly antagonistic general market pals?
– Even if agencies started pushing this philosophy (as we have at Sensis), it doesn’t mean that clients are going to buy-in (as we have experienced)
– If Spanish language advertising is wrong, how do we reconcile that with the huge ratings of the Spanish-language broadcast and radio?

One interesting question I’ve thought a lot about is whether this type of philosophy, if implemented, would evolve Hispanic advertising to look a lot more like African American advertising?

Lot’s to think about and much change to come…

The advertisers were many of the usual suspects you would expect to see during a big sporting event – beer companies, automakers and big consumer goods companies.

The spots were generally great – effective, culturally relevant and entertaining. Many of them were developed specifically for the Copa de Oro tournament, or at least soccer themed. So they were even contextually relevant, something rarely seen in TV spots outside of the Super Bowl.

What struck me the most, however, was how heavily they played on and integrated “digital” themes. Most of the ads incorporated elements of the digital lifestyle in their concepts. The ads take for granted that digital media is a big part of the U.S. Hispanic reality, whether it was people using the Internet, connecting on Facebook, or using their smartphones. I would assume the account planners at the agencies that created the spots were looking at the same data we see all the time in writing their creative briefs – the data on Hispanic digital media behavior throughout all the trades showing that Hispanics are heavy users of all kinds of digital media.

Watching all these “digitally” themed Spanish language TV ads reminded me of the 2010 AdAge Hispanic FactPack. I wrote a blog post a year ago about how the annual report on Hispanic advertising was full of ads emphasizing digital media – whether by the Hispanic ad agencies or Hispanic media companies. However, the irony of the Fact Pack was it had statistics showing that only 4.8 percent of all Hispanic media spend went to online media.

Obviously the folks planning and developing all this traditional creative felt digital was an important theme to incorporate into their ad concepts. Yet the overwhelming majority of Hispanic media dollars continue to go to traditional media – 95.2 percent to be exact. That is the irony and contradiction.

A cynical view would be that the key parties involved – i.e. the Hispanic ad agencies and the big Hispanic media companies – have a huge incentive to keep most Hispanic advertising programs going to traditional media, specifically TV. The costs per thousand are much higher for the media companies and the production budgets are many magnitudes larger than they would be for digital ads. Moreover, for most Hispanic ad agencies, big TV productions are still their cash cows, and one they are not interested in “putting to pasture.” Add in the fact that many Hispanic ad agencies still outsource digital creative concept development and production, and it’s clear going “too digital” would hurt their bottom lines.

A less cynical assessment would be that Spanish TV delivers larger U.S. Hispanic audiences, at scale, and without overlap with the general market, than any other medium. Therefore, it makes sense for the bulk of Hispanic media and production budgets to be allocated to this more expensive channel.

However, it’s clear there is some major inefficiency in how most Hispanic advertising is being executed and allocated by channel. Depending on your view of the situation, there is clearly a market opportunity for fresh thinking on the Hispanic ad agency side or for new business models in the media business.

(an edited version of this article originally ran on MediaPost’s Engage Hispanic blog on 7/7/2011)