Stepping down from her recent 18-month stint as the Association of Hispanic Advertising Agencies (AHAA) chairwoman, Gisela Girard, COO at Creative Civilization in San Antonio, reviewed with HispanicBusiness a multifaceted big picture of another year of recession and the potential for recovery.
Ms. Girard has more than 20 years of experience in the advertising and research marketing business. She co-founded Creative Civilization, a full-service advertising and public relations agency, with her partner, who also happens to be her husband, Al Aguilar.
Ms. Girard took some time away from her busy schedule and gave an overall positive outlook about the advertising industry.
"The ad agency industry is one which I am proud to be a part of. I am proud to have had the opportunity to work alongside many of the best marketers in the business as a board member of AHAA, and I am honored to have served as its chairman for the past 18 months," she said.
In her comments ahead, Ms. Girard talks about the challenges ad agencies face, in particular with regards to the recession and immigration.
She also touches upon the recent situation in which The Home Depot left its Hispanic-specialized agency for a general market agency.
Ms. Girard also offers an interesting perspective on advertising agencies and reviews how AHAA is an integral component of the industry's success.
What's the biggest challenge for ad agencies as a whole?
The biggest challenge for ad agencies currently is how to adapt to change. In 2008, at the onset of the economic slowdown and eventual downturn, advertisers began to examine overall marketing efforts in their attempt to address a slowing economy. By then, advertisers had already begun to implement different nontraditional forms of agency compensation, including value-based compensation and other creative "skin in the game" models.
These financial opportunities sounded intriguing, but the reality is that few advertisers actually agreed to such creative compensation models. It was quite a departure from the days of agency fees being based on media commissions or markups, and the optimal scenario of monthly retainer fees. It could have been revolutionary, but instead, it has simply eroded the agency compensation model.
How about those agencies marketing to the U.S. Hispanic market?
Their challenges are compounded by the fact general-market agencies are professing to being able to do Hispanic marketing.
One may ask, how? And the answer is quite simple. As general market agencies saw their budgets being reduced, they also saw how clients were paying attention to opportunities in the Hispanic marketplace. This is the challenge. In an effort to boost their value with the clients, they offer their clients the ability to do Hispanic marketing and media--free. Well, as the saying goes, "Nothing in life is free."
They are doing this at the expense of our largest and best Hispanic ad agencies, and this is where we need to draw the line. AHAA earlier this year publicly denounced the tactics of The Home Depot and Burger King, as well as others.
In regards to the ongoing recession, is the Hispanic advertising industry staying afloat, suffering, or coming up on top?
During the economic slowdown, it was the Hispanic consumer market that helped to sustain many categories of advertisers. Our Hispanic marketing industry across the country is on the minds of many advertisers, as it should be. The real question is what are they doing about it in proportion to general market budgets?
AHAA has made it a priority for the past eight years to study and analyze spending trends across categories and across major advertisers. It is called the "Hispanic Marketing Investment Trends" report, formerly known as the "Right Spend Study." This study provides spending trends of the top 500 advertisers and categorizes them as Best-in-Class, Leaders, Followers, Laggards and Don't Get It.
Companies with the best understanding of the Hispanic market's contribution to profitable revenue growth will be in the best position to thrive postrecession and long-term. This is where the dialogue must and should begin--in the corporate boardrooms.
Is the recession affecting independently owned ad agencies more so than mainstream agencies?
The recession has affected all advertising agencies, whether they are independently owned, affiliates of a holding company, or wholly owned by a holding company. I will say that as entrepreneurs, and as a Hispanic- and woman-owned business enterprise, we have to be smart, focused, and have learned to be lean and resourceful.
What message conveyed at the annual AHAA conference as far as the success rate of Hispanic agencies to retain business, as well as accrue more?
At our recent annual AHAA conference held in Miami, the key take away was one that reinforced the strength of the Hispanic consumer market, and the influence that Hispanic advertising agencies need to assert.
Any other notable topics come up at the AHAA that are worth elaborating?
Our AHAA conferences have historically raised issues--tough issues that our industry and our agencies are facing. This conference was no exception. For example, topics discussed were: what impacts will the 2010 Census have, and how will advertisers, corporate America and its presidents and chairmen, as well as our agencies and our clients react or respond. This is an issue on which AHAA will be at the forefront.
What are the biggest complaints that ad agencies/individuals voiced at the AHAA conference?
Our AHAA agencies voiced serious concerns about the recent actions of advertisers, under the auspices of cost efficiencies and consolidation, moving the Hispanic advertising accounts to their general market agencies. This threat is not new.
Hispanic agencies that were affiliated with or wholly owned by large holding companies have experienced a continuous eroding of their clients' business. These agencies have seen the general market agencies gain control over the media planning and buying function.
Hispanic ad agencies have enjoyed robust relationships with broadcast, print and out-of-home media companies creating partnerships and developing programs and promotional events for Hispanic consumers that, rewarded the advertiser with increased sales.
How is the issue of immigration affecting the industry, considering many Hispanics are going back to their native countries?
The issue of immigration is one that is also affecting our advertising industry. One cannot help but think that, in states such as Arizona, advertisers are realizing a slow down due to Hispanics not going out as much, shopping as much, or in some cases moving out of the state entirely.
AHAA embarked on a study in June, titled "U.S. Latinos' Perceptions & Actions Around Immigration Debate--Consumer Behavioral Changes & Potential Economic Impact on Brands/Businesses From Arizona Senate Bill 1070 Type Laws." Co-sponsored by AHAA, the Hispanic Federation/LULAC and LatinoMetrics, the study focused on the impact on marketing, engagement and communications, and shopping behavior, among other factors. The findings indicated that Hispanic consumer reaction to a perceived hostile environment is causing a recession within a recession for advertisers and brands that are investing in the Hispanic market. Based on the findings, AHAA's Hispanic ad agency members will be able to counsel clients through these uncertain times and beyond.
Why is the AHAA an important organization?
AHAA is the authority on the Hispanic consumer market. It's just that simple.
Through the last 18 months, AHAA has begun to address some obvious challenges like the economy, and other new challenges that have emerged as a threat to our industry--such as general market agencies wanting our business. AHAA will be strategic and relentless in response, and I'm confident we will succeed as an industry, and as Hispanic advertising agencies.
AHAA and member agencies have continued to demonstrate the value of the Hispanic market with the Hispanic Marketing Investment Trends Report. AHAA also dedicated itself to the industry's need for effective radio measurement along with other media measurement providers to ensure Hispanics are represented accurately.
When I assumed the chair of AHAA in April 2009, I committed that we would forge stronger relationships with other Hispanic organizations, and we have. Today, our organization enjoys a collaborative relationship with the United States Hispanic Chamber of Commerce and the Hispanic Association of Corporate Responsibility and they as well as others are actively engaged with us in addressing our industry issues.
What advice do you have for ad agencies, whether independent, mainstream or a subsidiary, trying to gain a Hispanic audience?
Independently owned: Be tenacious, and always do business with the utmost honesty and integrity.
Mainstream agencies: Leave the specialized marketing to Hispanics to those agencies that are dedicated to identifying the cultural insights in marketing to this segment of the market.
Mainstream agencies that opened subdepartments to target Hispanic businesses/audiences: The Hispanic consumer market is too important to be relegated to a division or department within your general market agency. It cannot be an afterthought and, if it is, then you are doing a tremendous disservice to advertisers and their shareholders. We hope to prove this point with an ROI study that proves Hispanic agencies "grow" a client's business versus a general-market resource.
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