Marketing to Hispanics online

Jeremi Karnell, President & Founder | One to One Interactive
June 13, 2005

Introduction

The Hispanic marketplace has been one of the largest and fastest growing ethnic groups in the U.S. and a larger number of companies are finally taking notice. With an estimated 2004 buying power of $686 billion, companies and advertisers are feeling the need to catch up.

Hispanic market profile

"Latino" or "Hispanic", as a description, refers to an origin or ethnicity, not a race. There is no one monolithic "Hispanic market." In fact, the single most important segmentation factor among U.S. Hispanics may be their country of origin. The U.S. Hispanic market is comprised of subcultures from over 20 countries in Central and South America, the Caribbean and Spain, with the majority (63%) of Mexican heritage. The culture, beliefs, opinions, and consumer behavior patterns of U.S. Hispanics are not identical, as a result of differences in their native countries geography, indigenous ancestry and colonial origins. For the most part, the only thing that unifies Hispanics is their language: Spanish.

The United States is home to the largest percentage of Hispanics then any other country in the World. In fact, U.S. Hispanics are the largest and fastest growing ethnic group in the nation. They currently make up about 14% of the population representing approximately 40 million people.

The top 10 markets to reach Hispanics are major metropolitan areas: (rank order, 18+, based on population):

1. Los Angeles
2. New York
3. Miami
4. Chicago
5. Houston
6. San Francisco
7. Dallas
8. San Antonio
9. Phoenix
10. San Diego

U.S. Hispanics are younger, married and more likely to be employed when compared to non-Hispanics.

• 45% are 24 years of age or younger (vs. 31% of non-Hispanics)
• Median age for Hispanics is 26 (vs. 35 years of the general population)

Reaching Hispanics online

Traditionally, Hispanics were perceived by the mainstream as low-paid workers new to the country. The assumption has been that most Hispanics have neither the technological savvy nor the means to afford luxuries like computers with Internet connection. Many advertisers opted to reach in Hispanics via print media, radio and TV. Whatever might have been true in the past, certainly isn't the case today.

A March 2004 study by AOL/Roper ASW shows that 14 million Hispanics in the U.S. are online. While this is already an impressive number, the growth rate is even more impressive. About 20% of online Hispanics had connected their households to the Internet less than six months earlier. More than half who were not yet online expected to connect within the next two years.

Connectivity

While traditionally known to be late adopters, they are no longer laggards. They now own computers and are accessing the Internet:

• 60% have internet access — up from 24% in 2000 and 36% in 2002
• 52% of Hispanic adults own a computer
• 20% of online Hispanics have been online for less than 6 months (vs. 6% of general population); only 42% have been online 3+ years (vs. 74% of the general population)
• Time spent and pages viewed has grown 30+% (vs. 6% in the U.S. general market)
• They are spending 9% more time online then the U.S. general market
• 51% are broadband enabled (vs. 56% of non-Hispanics)
• 53% of online spending power

Profile

Online Hispanics are different than their offline counterparts in that they earn more, are more likely to own a home and are more educated than their offline counterparts. However, they are like their offline counterpart in that they are entertainment enthusiasts — they are more likely than the average general consumer to be purchasing concert or movie tickets, watching video clips, downloading music, listening to streaming radio and purchasing consumer electronics.

Motivations for Internet use

Family: Like the general population, Hispanics are family driven. They too believe the Internet to be a great source of career and family information thus allowing them to be better parents and allow their children more options.

• Directional information indicates online Hispanic parents believe the internet to have had a positive effect on skills effecting a career (79%), homework (71%) and ability to get into college (72%)
• 91% of offline Hispanics believe that helping their children with their schoolwork would be a reason to get online access at home

Communication: Like the general population, they are embracing the internet as a communication tool — keeping in touch with family, sending photos, IM-ing, looking up information, using it for business. However, they seem to be using IM more than the general user with 64% of Hispanics stating the use it frequently/occasionally vs. 48% of the general population.

Information: Online Hispanics consider the internet to be the top source for premier information when making buying decisions. They consider the Internet as a valuable tool to research and learn more about products than any other media.

• Information source utilized most for users purchasing electronic equipment
• 2x more likely than the general population to use the Internet the last time they bought a cell phone/chose a wireless provider

Top Destinations

According to comScore Media Metrix, Hispanics' preferred destinations online are largely the same as everyone else's — they are flocking to sites run by the big three portals (AOL, Yahoo! en Espanol, MSN) while preferring Terra Lycos a little more than average (undoubtedly for its Spanish-language content) and Amazon a little less (which is understandable too, as credit card penetration tends to be somewhat lower among Hispanics compared with the overall population). The top Spanish language sites include:

Top sites (Spanish language)

• Univision | http://www.univision.com
• Star Media | http://www.starmedia.com
• Yahoo en Español | http://espanol.yahoo.com
• AOL Latino
• Migente.com | http:/www.migente.com
• La Opinión | http://www.laopinion.com
• MSN Latino | http://latino.msn.com

Tactics to Consider

To reach Hispanics effectively online the following tactics are suggested:

• Spanish keyword research and tracking
• Search engine optimization (SEO)
• Submissions to all Hispanic search engines
• Media buys on major Hispanic websites
• Pay-per-click (PPC) management
• Affiliate marketing
• E-mail marketing
• Instant Message Advertising
• Social Networks
• Entertainment/Game marketing

Furthermore, it is important to ensure all creative assets are optimized for:

• Search engine-friendly information architecture
• Accurate Spanish-English translations
• Culturally relevant and user-friendly design

Other marketing factors

Acculturation vs. Assimilation

U.S. Latinos tend to "adopt and adapt" to customs and habits in the U.S. without shedding traditions and value systems. Along that line, marketers, and those trying to tap into the Hispanic segment, cannot simply transfer directly to the U.S. Latino market the conceptualizations or marketing strategies that work with more traditional, general market consumers. Latinos are assimilating to prevalent U.S. culture, but they are not, and probably never will be, fully assimilated. Instead, theirs is a path of acculturation. It is a process of integration of native and traditional immigrant cultural values with dominant cultural ones.

¿Habla usted español?

Language is one of the most obvious examples of this phenomenon. Spanish is likely to remain the language of preference among U.S. Latinos. When asked about advertising effectiveness, 65% of Hispanics agree that they get more information about a product when it's advertised in Spanish than when it's advertised in English only. Furthermore, 78% of Hispanics agree there should be ads or commercials directed specifically to Hispanic consumers.

Preferred language online is typically driven by the users comfort level reading in that language.

• 14.1 million U.S. Hispanics are online
• 7.8 million are English preferred
• 4.1 million are Bilingual
• 2.2 million are Spanish preferred

Spend levels

While traditionally overlooked, the increased buying power and overall attractiveness of this market is getting noticed and advertisers are starting to spend. In aggregate top advertisers were allocating 2.4% of their measured media resources towards targeting Hispanics during 1999-2001.

By 2001 spending was at an all time high at 3.2% up from 1.8% in 1999. At this time, telecommunication advertisers were among the leading spenders while computer makers where among the laggards. With the percent of marketing expenditure having increased at such a high rate many advertisers were commended. However, most were falling short of the recommended 8%-10% spend to effectively reach this segment. Now it is no longer about having a presence but about establishing a brand among this audience. This will be increasingly important as without having built the brand, decisions would be made mainly based on price.

An updated 2003 version of a similar study confirmed that momentum continued to build. Advertisers (in aggregate) on average were spending more than 5% of advertising budgets. Progress too was made in effective spending. About one-fifth of product categories were currently spending in alignment with Hispanic consumption behavior for their specific categories.

Top spend was noted in the following categories:

• consumer electronics retailers and manufacturers
• food and drug retailers
• telecommunications companies

Conclusion

With the changing appearance of the U.S. population comes new definitions of the U.S. consumer and new dilemmas for marketers trying to reach those whose tastes, customs and language may differ from what is commonly know as "general market." Culturally relevant marketing plans will become increasingly critical as the population becomes more diverse and the buying power of U.S. Hispanics becomes more significant.

Sourcing

A multitude of sources were utilized in researching this POV. Statistics provided are all relevant but due to the number of sources that were consulted, it should be cautioned that statistics were pulled from many different data sources with different methodologies.

Key data sources include:

• AOL/Roper ASW U.S. Hispanic Cyberstudy 2004
• Arbitron "Power of Hispanic Consumers"
• Association of Hispanic Advertising Agencies
• comScore Media Metrix U.S. Hispanic panel, August 2004
• EPM Communications, July 5, 2003
• Global Insight (DRI) The Hispanic Consumer in 2002 & Projections to 2022 (Released May 2003)
• IAB Winter 2004 "Reaching U.S. Hispanics through Online Marketing"
• Marketing Vox "Cablevision Ads to Target Multicultural Audience" 4/12/05
• Marketing Vox "Hispanic Net Advertising Rising Quickly" 2/21/05
• Media Post Mar 1, 2005
• NHTI — Nielsen NHPM 04/05
• Nielsen 2004 Universe Estimates
• Nielsen Hispanic Television Index
• Nielsen//NetRatings @plan, Spring 2005 Release
• Simmons National Consumer Survey, Fall 2004, unified study
• Simmons, Fall 2004, unified study
• Yankelvich, 2002 Hispanic Monitor

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