The A,B,Sí's of Hispanic Marketing
Join us at Entrepreneur magazine's Growth Conference, Dec. 15 in Long Beach, Calif. for a day of fresh ideas, business mentoring and networking. Register here for exclusive pricing, available only for a limited time.
If they're not on your marketing radar, chances are you're already one step behind your competition. The U.S. Hispanic population is growing exponentially, and so is their purchasing power.
According to HispanTelligence, Hispanic spending power has skyrocketed to $700 billion and is projected to reach as much as $1 trillion by 2010. The latest U.S. Census Bureau figures estimate the total U.S. Hispanic population at 42.7 million, making them the largest minority group in the country. They're also the fastest-growing group: From 2004 to 2005, the Hispanic population grew by 3.3 percent. By 2050, Hispanics are expected to reach 102.6 million and will constitute 24 percent of the nation's total population.
Because of this intense growth, Kagan Research estimates that Hispanic advertising is expected to reach $5.5 billion in gross advertising revenue by 2010. What differentiates Hispanic marketing from traditional forms of marketing? Gerry Rojas, director of Hispanic marketing with the Urban Concepts division of New York City-based US Concepts, says it's all about relevant marketing. "Anyone can do Latino marketing, but to be relevant is the challenge. You use a lot of the same marketing strategies as traditional advertising, but then you fine-tune them to fit your target consumer, and that's the key," says Rojas. "You don't have to reinvent the wheel, but you do have to be cognizant of who you're talking to."
Marketing directly to Hispanic consumers can be a risky move--not only do you risk offending the very group you're trying to target, but you also risk offending groups you aren't targeting. Last month, Bank of America announced a pilot program offering credit cards to customers without Social Security numbers--typically, illegal immigrants. The move was met by opposition in Congress and from critics nationwide. The National Illegal Immigration Boycott Coalition says it's collected more than 11,000 signatures on a petition calling for a boycott of the bank. But Bank of America stands behind its decision and says it plans to continue the program.
Controversy also sparked for pizza-restaurant chain Pizza PatrÃ³n back in January, when founder and owner, Antonio Swad, announced the "Pizza por Pesos" program. The Dallas-based restaurant chain decided to accept pesos in exchange for their pizzas, and was met with a torrent of criticism, including death threats, vicious e-mails and obscene phone calls. "The campaign was immediately tied to the very hot, bubbling issue of immigration, particularly illegal immigration in the U.S., and somehow people wanted to throw that around my neck," says Swad. He explained that his team expected some controversy, but had no idea it would reach such extreme proportions. "We got a lot of brand impressions in those three weeks of media frenzy, I'm certainly not complaining," Swad says.
Though the program was expected to end in February, Swad has decided to continue it for the time being, saying it's still serving his customers. Swad says it's hard to say just how much the "Pizza por Pesos" program has affected his earnings, since their sales were already on the rise in January, right before the launch of the program. "I can tell you that January and February are typically the worst months in the pizza business, but that's not the case this year. In fact, many of our stores are achieving all-time sales records," says Swad.
Traditionalists vs. Second, Third and Fourth Generations
Rojas points out that it's important to differentiate between two very different types of Hispanic consumers: traditionalists and second generation-plus. He refers to recently arrived immigrants as traditionalists because they integrate their traditions from their countries of origin into their lives here in the United States. Rojas, whose father emigrated from Mexico to the United States, mentions his mother and grandmother as examples of this group.
Second generation-plus refers to Latinos who live the Latin lifestyle, but speak English. Rojas says marketers are missing out on this booming key demographic--choosing instead to advertise to the traditionalists in Spanish on Spanish-speaking TV and radio stations. "If you're going to market most of your dollars and spend them within Univision or Telemundo, that's fine for my mother and grandmother, for example, but who's talking to me? What brands are talking to that second generation-plus?" Rojas asks.
Rojas says he's trying to get his clients to grasp this concept because this is where he sees the biggest growth in the Hispanic market. "The third and fourth generations aren't watching novellas in Spanish. They're watching Ugly Betty," says Rojas.
4 Ways to Advertise Authentically, Not Offensively
As Rojas mentioned, understanding your target consumer is vital to a Hispanic marketing campaign. But there's more to it than just that. Both Rojas and Swad offer their advice for what to do and what to avoid when advertising to Hispanic consumers.
1. Know your market. Swad, who is Italian and Lebanese, says you don't necessarily have to be Hispanic to market Hispanic. "I made a conscious decision 21 years ago to work with the Hispanic community and adopt their culture as my own," says Swad, who believes he's so well accepted within the community because of his effort to make a connection at the community level. Pizza PatrÃ³n participates in small community activities that larger chains tend to ignore. For example, in November, Pizza PatrÃ³n showed its commitment to community soccer by sponsoring the Copa Lowes soccer tournament in El Paso. The chain also recently sponsored the Festival Hispano de la Salud in Dallas, a health festival dedicated to teaching families healthy habits for free.
2. Be aware of cultural nuances. "What's good for one Latino can be bad for another. Make sure you really look into the cultural sensitivities of the group you're targeting, be it Mexicans, Puerto Ricans, Spanish-speaking Hispanics, or English-speaking Hispanics," says Rojas. "When I first started, people only thought Latinos should be marketed to in Spanish, but nowadays, marketers are realizing that Latinos speak English, too."
3. Be sincere. "You really have to search your heart and find out why you want to market to this group," advises Swad. "If it's strictly because you want to have a measurable monetary return, it never works that way. You have to build your brand awareness, and it takes time." When Swad opens up a new location, one of the first things he does is post a sign on the door with the words "proudly serving Hispanic communities since 1986."
4. Follow up. "It's important to follow up after planting the original flag in your campaign. Some people are so eager to tap into this market that they expect instant results, but that's not going to happen," Rojas says. According to Rojas, you can't just sell your product and leave. If you're serious about marketing to this demographic, you need to take the time to develop a program, not just a one-time deal. Rojas has helped his client Jose Cuervo succeed by creating a long-term campaign called "CuervotÃ³n." The campaign is actually a U.S.-wide talent search for the next generation of Latino artists in urban music. With this campaign, Rojas says Cuervo is ensuring the longevity of Latinos in the music industry. "It's marketing that shows you really care about this demographic. Cuervo is actually doing something for their target customer, and they'll be rewarded--Latinos are very loyal," says Rojas.