News Column

Online Rivals' Market Plays

January/February 2003, HISPANIC BUSINESS Magazine

Romona Paden


For Internet companies looking to cultivate promising new markets, Hispanic demographics present a host of intriguing possibilities.

While Hispanics constitute a relatively small online contingent, at around 10 million users, their Internet adoption rate is three times that of the general population, according to comScore Networks, a Reston, Virginia–based firm specializing in marketing data. Thus, most Hispanics will be online in the coming years, says Richard Israel, comScore's vice-president of Hispanic marketing.

In addition, Hispanics tend to use the Internet for much more than text e-mail transmission. The industry's transition from dial-up connections to high-speed broadband – enabling larger e-mail attachments, applications such as video conferencing, and faster download times for music and other files – is in line with how Hispanics are likely to use the Internet, says Mr. Israel.

According to the Pew Internet & American Life Project, a nonprofit initiative of the Pew Research Center for People and the Press, the online Hispanic population is younger than its African-American and Anglo counterparts. The report found that Hispanics under the age of 30 are drawn to Internet entertainment and online activities generally. On the other hand, older Hispanics, like the older Anglo and African-American population, are more likely than younger users to have gone to a government Web site, booked a trip online, or sought information about health and medical issues, according to the Pew data.

There is widespread disagreement among the major Internet players about how best to capitalize on this sizable and potential-rich niche. The primary competitors, at least when it comes to dollars spent in the Hispanic Internet marketplace – America Online,, Yahoo en Español, and YupiMSN – all claim to be the segment's dominant force and to be developing compelling content. While executives at these companies are predictably tight-lipped about such operational details as budgets, personnel, and technology, all are eager to demonstrate a keen interest in and an affinity for the Hispanic market.

For Rafael Fernandez-MacGregor, president and CEO of T1msn, the Mexico component of YupiMSN (the Hispanic Internet arm of Microsoft Corp.), the importance of the U.S. Hispanic population comes down to numbers. He points to studies indicating that U.S. Hispanics will number 52 million in 2010 and 74 million in 2020. He says Yupi is in prime position to capitalize on that market, in part because it has access to the $4 billion R&D budget available to groups under the Microsoft umbrella. With projected revenues of $12.61 million (see "Media Markets Report," December 2002), YupiMSN is betting that Hispanics prefer Spanish-language media over English-language media, says Mr. Fernandez-MacGregor.

Abel Magaña, manager of, disagrees.

"It has been our experience that the vast majority of business-savvy and professional U.S. Hispanics prefer English- to Spanish-language content," he says. "Beyond language, our users have expressed an overwhelming desire for culturally meaningful content – that is, content that's either specific to or significant for the U.S. Hispanic community."

In fact, in a study by Cultural Access Group titled A Tale of Two Cultures: L.A.'s Latino Youth, Hispanics expressed an overwhelming preference for English-language Web sites. And in a report titled The Digital World of the U.S. Hispanic, Cheskin Research asserted that "Hispanic Internet users seem to prefer English-language sites" (see "Language and Markets in the U.S.," December 2002).

Manuel Bellod, CEO of, which provides content in Spanish, says the key to gaining and retaining audience share is "not so much the language, but the culture."

Mr. Bellod says his site provides content that is central to users' needs. For example, Terra has offered information on long-distance providers – information that Mr. Bellod himself claims to have benefited from.

Terra, which is part of the Terra Lycos global multi-brand network, also has pursued a range of strategies including programming tie-ins with Hispanic television. Most recently, Terra announced an agreement with Fox Sports en Español to create, a site both companies hope will present more avenues to develop and sell integrated media and sponsorship packages, subscription services, direct marketing programs, and special-events promotions.

With the backing of corporate parent Yahoo! Inc., Yahoo en Español has entered into a partnership with San Antonio–based SBC Communications Corp., which provides Internet connectivity in 13 states. The partnership enables Yahoo to offer direct ISP access to users in such Hispanic-dominant states as California, Texas, and Illinois.

Launched in 1998, Yahoo en Español caters to Hispanics who value the ability to communicate with friends and family both in the United States and throughout Latin America. According to Jorge Consuegra, general manager of Yahoo en Español for the past three years, relevant content for Hispanics also includes Yahoo's sponsorship of sports, such as Major League Soccer, and its celebration of Hispanic Heritage Month.

For America Online, U.S. Hispanics are "right there at the top" of niche markets, says Peter Blacker, vice president of AOL's U.S. Hispanic team, which works out of offices in Miami, New York, and Dulles, Virginia. The team was developed in 1998 but operated as part of the company's Latin American division until the summer of 2002.

Unlike their competitors, Mr. Blacker and his team say marketing to U.S. Hispanics requires reaching out both to Hispanics who prefer Spanish-language content – usually first-generation immigrants – and to those who are bilingual.

Exemplifying this approach is AOL's Latino Channel, which contains both Spanish- and English-language content, including news and features from Hispanic Business magazine.

Mr. Blacker says the language mix reflects the realities of U.S. Hispanics, who are routinely asked to navigate between two cultures. By offering some content in English, says Mr. Blacker, AOL does not "ghettoize" users but simply acknowledges that online Latinos cross over the Anglo/Hispanic line every day.

According to HispanTelligence®, U.S. Hispanic purchasing power reached $540 billion in 2002, so there are some significant dollars up for grabs in the Internet space. The winning companies will be those that can produce culturally meaningful content for U.S. Hispanics, regardless of language.


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