Hispanic ad agencies increasingly make tempting takeover targets for international conglomerates.
Hoping to cash in on the growing strength of Spanish-speaking consumers, global conglomerates continue to acquire ownership stakes in Hispanic agencies.
In one of the largest such deals, the U.S. division of Paris-based Publicis Group has purchased 49 percent of Miami-based Sanchez & Levitan and acquired the Dallas and Los Angeles offices of Miami-based Siboney.
The merger illustrates Publicis’ confidence in the Hispanic advertising market, says Robert Bloom, chairman and CEO of Publicis in the United States. “We’re confident that it will turn around. The Spanish-speaking population will become more important to our clients as it grows. That’s why we wanted to enter the market with a bang,” he says.
Publicis has combined the two agencies to form Miami-based Publicis Sanchez & Levitan, the sixth-largest Hispanic advertising firm in the nation. PSL has about 100 employees and billings of about $80 million, nearly double Sanchez & Levitan’s 2000 revenue. The new company’s clients include Nestlé, Coca-Cola, Denny’s, BellSouth, and the Florida Lottery.
Agency cofounders Aida Levitan and Fausto Sanchez will head the new company as co-chairman/CEO and co-chairman/president, respectively. Siboney, which is owned by True North Communications, will retain ownership of its Miami and New York offices.
In another acquisition earlier this year, DDB Worldwide Communications purchased a 49 percent stake in del Rivero Messianu, a Coral Gables, Florida, firm with billings of about $70 million. Also, Havas Advertising and its major network Euro RSCG Worldwide purchased a stake in Premier Maldonado & Associates, Puerto Rico’s leading agency, with offices in Miami and the Dominican Republic. Terms were not disclosed. As part of agreement, PM&A changed its name to Premier Euro RSCG.
These mergers are the latest in a series of partnerships forged between independent Hispanic agencies and general-market firms over the last decade or so. Young & Rubicam owns a stake in the Bravo Group of New York, for example, and Bcom3 Group has 49 percent of San Antonio–based Bromley Communications. Of the approximately 65 member firms of the Association of Hispanic Advertising Agencies, at least 21 are partially or wholly owned by a conglomerate, or have some other type of limited equity arrangement, says Horacio Gomes, president of AHAA. Expect to see more mergers in the future, he says.
The deals represent a growing effort by big agencies to acquire what they need to service Hispanics and other major ethnic groups. Publicis, for example, also owns 49 percent of the Burrell Communications Group, a Chicago agency that specializes in advertising for African-American consumers.
The most recent acquisition activity comes as U.S. Census figures confirm that advertisers can no longer afford to ignore the Spanish-speaking market. “The Census figures showed growth in the Hispanic market that even [Hispanic advertising executives] didn’t anticipate,” says Joe Zubizarreta, COO of Zubi Advertising in Coral Gables.
The U.S. Hispanic population exceeds 35 million and grew by 58 percent over the last decade – nearly five times the nation’s overall growth rate, according to the Census Bureau. In California, Anglos now account for less than half of the population, casting doubt on the very meaning of the word “minority.” Hispanic purchasing power now tops $492 billion (see “Hispanic Purchasing Power Takes Off,” June).
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