The numbers don't lie: online advertising is no longer an afterthought, but an integral part of media planning that year-to-year has seen larger spending increases than any other type of media. Its tremendous growth, ability to strategically target audiences and provide specific ROI analytics are just a few of the reasons online advertising to Hispanics has a strong outlook for 2008.
In the general market, U.S. Internet advertising revenues for the first six months of 2007 totaled nearly $10 billion – a 27 percent increase over the first half of 2006, and a new record – according to research by the Interactive Advertising Bureau (IAB) in conjunction with PricewaterhouseCoopers. Of that, display advertising comprised 32 percent (nearly $3.2 billion).
The trend is also visible in media spending in the U.S. Hispanic market, albeit on a smaller scale, since Hispanic online display ad expenditures represent only 2.81 percent of total U.S. display ad expenditures.
While broadcast and radio still dominate Hispanic ad spending, Internet advertising represents 4.6 percent of the total expenditure in 2007, up from 3.5 percent in 2006.
Hispanic online display ad revenue will reach $179.86 million in 2007, a 36.3 percent increase over 2006 ad revenues, according to HispanTelligence estimates.
The future of the U.S. Hispanic online segment looks even more promising considering the predictions of booming Hispanic purchasing power - surpassing $1 trillion in 2010, or 10.9 percent of total U.S. purchasing power - and the high percentage of U.S. Hispanics that are online.
Research by Pew Hispanic Center earlier this year indicates that 78 percent of English-dominant Hispanics and 76 percent of bilingual Hispanics use the Internet – statistics seconded by a new study from Yahoo! Telemundo and Experian Simmons that shows U.S. Hispanic Internet users consume more media and spend more time with technology than the general U.S. population. Additionally, with nearly 80 percent of online Hispanics using broadband, the study concludes there is significant growth potential for online video advertising.
"Latinos are adopting technology a lot faster in terms of percentage of home access, and the penetration of broadband," says Margot Bradley, co-founder and chief operating officer of Coral Gables, Florida-based Hola Networks, which recently launched the first premium online display-advertising network targeted at U.S. Hispanics. "This industry is going to grow by leaps and bounds, which is why we're here."
During the more than two years it took to develop the network, Hola's founders worked closely with the industry, compiling research and asking agencies for wish lists.
"Hispanic agencies said they wanted a network strictly developed to U.S. Hispanics, not covering Latin America, not covering Europe," says Ms. Bradley, noting that server technology can now filter origin by IP address.
In an effort to further diversify its content offerings for advertisers targeting that audience, Hola Networks put together a platform with an entirely new mix of media: Major international Web sites with critical mass audiences in the U.S., important U.S.-Hispanic sites with niche and hard-to-find audiences; and general market sites that provide content in Spanish. Hola Networks co-founder and president Rafael Monteiro says it will be able to target Latinos online even if they don't visit traditional U.S. Hispanic online media.
Hola also has a strategic alliance with 24/7 Real Media (which owns openEdgestream) for advertising delivery and geotargeting – a first for U.S. Hispanic media.
Another company that's using the Internet to reach the coveted Hispanic market in a way that old media can't is Sprint Nextel.
"The online world is important because it gives a little more context than traditional media – they are not extensive enough," Isaac Mizrahi, Sprint's multicultural marketing director, said at the annual Association of Hispanic Advertising Agencies (AHAA) conference in New York in November. "It's important for things that we cannot explain in a 30-second spot."
The company is utilizing a variety of online strategies to reach U.S. Hispanics.
At Sprint.com, customers can purchase cell phones and services in Spanish, which is an increasingly popular option, Mr. Mizrahi says. In addition, the company taps its millions of Latino customers through e-mail newsletters in English and Spanish (customers choose their preference) to send relevant sales and marketing messages.
For display advertising, Mr. Mizrahi says Sprint looks to the most popular Spanish-language portals such as Univision.com, Terra.com, Batanga, AOL Latino, and Yahoo.com en Espanol, to place ads that drive traffic to Web pages with Hispanic-focused content.
As the exclusive wireless sponsor of Latin entertainer Juanes' 2008 U.S. tour, for example, Sprint recently launched a campaign in which click-throughs send Web visitors to pages on the Sprint site where they can download exclusive ringtones and mobisodes to their Sprint cell phones.
Sprint also ventured into the virtual-reality world of Second Life, launching an online virtual version of its real-life music and events arena "Sprint Center," located in Kansas City. The company launched it first with Spanish content, by converting its television sponsorship with Telemundo for the reality show "Concierto Clandestino." The virtual Sprint Center streamed pre-recorded one-of-a-kind performances from the show, including Latin artists like Paulina Rubio and Tego Calderon, which attracted Hispanic Internet users interested in music and the arts.
As for future online ad buys, Mr. Mizrahi says social networks are "areas of opportunity" and the company may use geotargeting campaigns in concert with English-language media, such as Google or Yahoo.
"Overall, I see an increase in online investment," says Mr. Mizrahi. "Our hope is that we can grow the whole pie; grow the Hispanic investment."
Hispanic marketing expert Stephen Palacios, executive vice-president and Hispanic practice leader for consulting firm Cheskin, sees the Hispanic market's future in the youth segment. "Targeting Hispanic youth will increase online ad spending due to new avenues – Web sites that target them that didn't exist five years ago."
The interesting question, he asks, is what effect the Hispanic youth market will have on the types of ad buys companies make, and how those will converge with the general market youth audience.
"Will the Hispanic youth influence become relevant to non-Hispanic whites?" Mr. Palacios asks. "The shift is: Here's our general market online ad to youth, here's our Hispanic online ad toward youth – hey, wait, our Hispanic ad is attractive to general market, too, so let's use that.
"Marketers will have to look at that with a new perspective and ask: Are Hispanic youths permeating popular culture and shifting the dynamic?" He predicts that what will result is culturally dominated advertising, rather than language focused.
Research shows that U.S. Hispanics favor online content in English.
Of a total U.S. Hispanic Web audience of 17 million unique visitors in 2007, as measured by comScore Media Metrix, 8.8 million users (52 percent) said they prefer English language sites, while 3.6 million prefer Spanish. Another 4.5 million individuals (27 percent) favor bilingual content.
The idea that Hispanic youths will create a foundation for the future of advertising and marketing to Hispanics is not a new one for Bryan Garcia, president and co-Founder of Santa Fe Springs, California-based Plastilina (Spanish for "play dough"). His lifestyle marketing and communications agency focuses on reaching those "New Generation Latinos" – young, bicultural and bilingual – since they are the fastest-growing segment of both the Latino and U.S. youth populations.
"This is the very segment that is leading the charge and setting the trends when it comes to the adoption and usage of new technologies and the Internet," says Mr. Garcia.
"Many advertisers are getting the hint from Latino consumers," Mr. Garcia adds, "that they are sometimes better off reaching them via platforms that provide more opportunities for interaction and social networking than traditional broadcast or print ads."
Adding to the allure of the Hispanic market is the prediction that over the next few years U.S. Hispanics will increase their online spending more than any other ethnic group.
By 2011, according to Jupiter Research, Hispanic online shoppers are expected to lay down $21.6 billion – 13 percent of all online spending – up from an estimated $12.8 billion this year. "If anything is catching the eye of leading advertisers, it's this trend in particular," Mr. Garcia says.
"Marketers can no longer afford to dabble in online advertising to Latinos," he adds. "From a business growth standpoint, this is now a necessity and, more importantly, an intelligent, cost-effective and highly trackable method of growing their brands among Latinos."
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