Marketing
to Emerging Majorities
Hispanic-Focused Ad Spending Slowly Growing As Hispanic Consumers
Ask For More
EPM Communications, Inc.
May 1, 2004
U.S. Hispanic consumers want to be marketed
to, but according to two new studies on Hispanic consumer purchase
behavior and Hispanic-focused advertising, the majority of companies
are not giving them what they want.
On average, general marketers allocate 5.2%
of their overall ad budgets to the Hispanic market via Hispanic
TV and print media, reports the Association of Hispanic Advertising
Agencies. The trade group believes that general marketers should
have spent 8.6% of their TV/print budgets to reach the Hispanic
market last year, and it advocates spending at least 8.9% in
2004, and 9.2% in 2005. [If one accepts the 5.2% figure for
2003, a shift of that order of magnitude would seem highly unlikely.—Ed.]
Fewer than 10% of the 671 companies analyzed
for the AHAA report "are spending 9% or more on the Hispanic
marketplace," notes former AHAA President Aida Levitan,
now Vice Chairman of Bromley, a Hispanic ad agency.
Among the top 250 advertisers in the U.S.
in 2003, Procter & Gamble spent the most on Hispanic TV
and print advertising at $169.8 million P&G is followed
by Sears Roebuck ($119 million), General Motors ($93.4 million),
PepsiCo ($85.6 million), and McDonald's ($64 million).
Among the companies allocating more than
the suggested 8.6% of their ad budgets for Hispanic-focused
marketing in 2003 were Sears with an impressive 21%, McDonald's
(13%), the U.S. government (12.4%) and PepsiCo (11%).
Major Spending Differences
One of the most surprising things revealed
by the study, adds Levitan, was that some of the heaviest-spending
industries in the general market rank at the bottom of the Hispanic
ad spending list.
The financial services industry, which is
the fifth leading spender in general-market TV and print advertising
at $3.1 billion, ranks 12th with $67.4 million spent on Hispanic
TV and print advertising. Pharmaceutical manufacturers, which
are seventh in general-market spending at $2.7 billion, come
in 14th, with $23.6 million spent on Hispanic TV and print.
In contrast, consumer electronics retailers
spend $1.2 billion on general market TV and print advertising,
but rank third in Hispanic TV and print advertising at $309
million.
Consumer packaged goods manufacturers top
the list in both categories with $13.2 billion spent in general
market TV and print, and $753.1 million in Hispanic TV and print.
Closer To The Cash Register
Companies that are "closer to the cash
register" are making the greatest progress in spending
on the Hispanic market, says Carlos Santiago of Santiago Solutions
Group, which provided analysis of the study for AHAA.
"Retailers get a better look at what’s
going on and see who is making purchases," Santiago says.
"Manufacturers can’t do this, so progress in Hispanic
ad spending by manufacturers is not occurring as rapidly."
In 2001, retailers allocated 5.5% of their
overall ad budgets to Hispanic TV and print. That percentage
increased to 6.9% in 2002, and 7.3% in 2003.
While manufacturers have increased their
Hispanic ad spending in that time, the increase is only slightly
bigger than one percentage point. In 2001, the manufacturing
industry spent 3.6% of its budget on Hispanic advertising. Spending
increased to 3.8% in 2002, and to 4.8% in 2003.
"I have heard all the excuses in the
book from manufacturers who say it’s too difficult to
measure the success their products have in the Hispanic market,"
Levitan says. "They need to establish performance measures
and tracking studies to compare how well their product does
in an area with a Hispanic population, compared to an area with
no Hispanics. Measuring the effectiveness of anything is hard,
but it can be done."
Direct Marketing
One area where Hispanic-directed advertising
dollars are rising rapidly is in direct marketing, says Levitan.
In its report, "The DMA Survey of Hispanic Consumer Attitudes
& Purchasing Trends Via Direct Marketing," the Direct
Marketing Association (DMA) finds that more than a quarter of
Hispanics (27%) identify themselves as "distance buyers."
Distance buyers are people who purchase items from catalogs,
telemarketing calls and online.
Hispanic consumers are more likely than all
other consumers to purchase a product by telephone or through
a piece of direct mail.
Acculturation Matters
Four in 10 Hispanic distance buyers (41%)
prefer mailings in English, while 32% prefer Spanish. Only 10%
prefer their mailings to be bilingual.
On a scale of one to five, with one being
very likely and five being not likely at all, Hispanics say
they'd be more likely to make a purchase from a Spanish-language
e-mail ad (3.92) than a Spanish-language website (3.71).
Spanish-language mail offers (3.31), television
offers (3.03), and telephone offers (2.90) are also less likely
than e-mail ads to generate a purchase among Hispanic distance
shoppers.
Less than a quarter of Hispanic distance
buyers (23%) review every page and section of the direct mail
pieces they receive. The largest portion (40%) glance or skim
through mailings, while 14% review selected pages, and 15% say
it depends on the company the mailing piece comes from. The
rest discard mailings (4%) or pass them along to others (3%).
Hispanics with higher education and income
are most likely to engage in distance shopping. Nearly three
quarters of Hispanic consumers with incomes of $50,000 or more
(72%) say they’re distance buyers, compared to 37% of
those who have incomes of $50,000 or less.
A majority of Hispanic consumers who have
graduated from college (63%) label themselves distance buyers,
while only 22% of Hispanic consumers with some high school education
or less identify themselves as such.
Hispanic distance shoppers are more likely
to respond to mail advertisements than to television and online
pitches. They are least likely to respond to telemarketing calls.
While Hispanic distance buyers are more likely
to respond to a mailing than to any other form of direct marketing,
there are certain products for which they would rather receive
offers on the Web.
All Hispanic distance buyers (100%) prefer
Web ads for computer hardware and software. Other categories
in which Hispanics prefer Web-based offers over mailings are
health and beauty items (94%), electronics (92%), clothing/apparel/shoes
(83%), books (81%), and CDs/videos/music (65%).
The most popular reason for distance shopping
among Hispanics is the convenience of shopping at home (40%).
This is followed by discounted and reduced prices (27%), saving
time (25%), and the availability of new/unusual/unique items
(18%).
Contacts & Connections
The Direct Marketing Association, Ann Zeller,
VP, Information & Special Projects, 1120 Ave. of the Americas,
New York, NY 10036; phone: 212-768-7255; e-mail: azeller@the-dma.org;
website: http://www.the-dma.org.
Bromley, Aida Levitan, Vice Chairman, 1790
Coral Way, 3rd Fl., Miami, FL 33145; phone: 305-858-9495; fax:
305-858-9461; website: http://www.bromcomm.com
Santiago Solutions Group, Carlos Santiago,
President, 895 Broadway, 5th Fl., New York, NY 10003; phone:
212-420-5948; fax: 212-420-5915; website: http://www.
santiagosolutionsgroup.com
