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

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

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

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.

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.

The data points tell the story:
– More people in the US (and globally) have a mobile phone than an Internet-connected PC (Limbo Mobile Advertising Report)
– 71% of U.S. consumers anticipate daily use of the mobile Internet within the next two years (Nielson)
– Mobile Internet is growing rapidly in Latin America (Telecom Mgmt Group)

Both the U.S. Hispanic consumer of today and tomorrow (new immigrants will already be mobile, and increasingly mobile Internet, users before leaving their home countries) are ready.

So who will take the lead in this relatively untapped sector of Hispanic marketing? The question is really who will take the lead in creating mobile content and functionality for the Hispanic market?

Some would argue that Hispanic media companies like Univision, SBS, Impremedia, and Terra are best equipped to take the lead, as they are already in the content business, and would just need to continue to evolve their distribution to include mobile channels (which many of them are already doing). However, there is a long way to go to offering the same level and breadth of content via mobile that these media companies offer over the traditional Web, let alone via TV, radio, and print.

Don’t count out ad agencies, with their clients, taking the lead. While agencies and their clients are not content creators in the traditional sense, the growing importance of social media is changing their business models and imperatives, as companies like General Mills with QueRicaVida.com and Kraft with ComidaKraft.com increasingly becoming content creators. Moreover, I would argue that agencies and the brands they represent have the edge in offering functionality via mobile. Think useful applications, like BestBuy and Chipotle mobile apps that extend their product / service experience to the mobile platform via useful and helpful applications.

Whoever does take the lead will benefit from a huge first mover advantage in a growing and increasingly mobile-connected Hispanic audience.

Being the curious mind I am, I clicked on the ad, and was taken to this Web site:

http://2010.census.gov/espanol

At first, I was excited to see what looked like a very engaging Web site, with a cool Flash tile showing a “snapshot” of America via a nondescript busy urban intersection. However, almost immediately, I was confused to see the first showcased story to be that of “Neme”, an immigrant from Africa. Was that an attempt to showcase the racial diversity of U.S. Hispanics and connect with Caribbean Hispanics?

Then my eye wandered down to the “¿Un Retrato de los Estados Unidos?” box showcasing that horrible ad / inside joke that run during the Super Bowl and I started to suspect that this site might be a literal translation of their main English Web site.

A quick jump over to http://2010.census.gov/ confirmed my suspicions. The Census has well over $340 million, and they didn’t take the time and resources to create a unique, culturally appropriate Web site for the 45 million Hispanics living in the U.S.?

I’m not saying they needed to create that looked radically different from the main Web site. They could’ve very easily extended the IA structure, colors, and branding elements and then incorporated unique content for the Hispanic market. Come on, showcasing that horrible Christopher Guest ad, that even AdAge’s Bob Garfield criticized as an inside joke only relevant to the couple of thousand people that live “between 79th and 110th, between Broadway and Riverside Drive” in Manhattan, to the Hispanic market shows how little time was put into this site.

Again, I’m not saying they needed a $9 million Web site like Recovery.gov, but a little strategic thinking and relevant content would have been a good investment.

Maybe in 2020…

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

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

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

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

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

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

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

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!

AdWeek published an article on their large, integrated, and ambitious social media programs.

Missing from all the buzz is any mention of Hispanic digital media or social media programs. Particularly H&R Block, who is using the Web and social media to answer consumer questions and create an “educational” halo around their service and brand.

Seems like a perfect platform to extend to the Hispanic market through social media, as tax preparation is usually more of a long term relationship based on education and trust in the Hispanic market. Screams social media to me…

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…