News Column

Savvy Companies Are Looking to the Surging Hispanic Market for Growth

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A year ago, it was rare to see or hear Spanish-language ads in Las Vegas' mainstream media. Finding authentic Latino garb was nearly impossible in the valley. The Hispanic cuisine that grocery stores carried amounted to canned refried beans and packaged taco shells.

"There's a lack of understanding here of the size and depth of the Latino market," Miguel Barrientos, a Hispanic marketing specialist who hosts a show on KRLV 1340-AM, told VEGAS INC in June 2011. "They often view us as $8.50-an-hour laborers with no purchasing power. The Anglo market has seen Mexicans as the workforce but not the consumers."

That is beginning to change. As the country slowly creeps out of the recession, businesses are looking to invest in areas that promise growth, and the Hispanic community tops the list.

So stores have begun to stock items of interest to Hispanic consumers. English-language media companies have announced new Spanish-language ventures, while Spanish-language outlets have started to venture into English-language markets. Advertisers are starting to pay attention to the demographic.

The change over the past year has been dramatic, Barrientos said.

"I go to Smith's, Vons, Wal-Mart, and they have all been doing different products and more products to cater to Hispanics," Barrientos said. "It's a good time to look for new ways to bring consumers in. One way to get new customers is to target a market that has not been served. There is a big pool of immigrants, and in general, businesses are not catering to their needs."

Historically, the amount of money U.S. companies have spent marketing to Latinos has fallen short of the population's buying power. But that gap is starting to narrow. Companies are beginning to see the value in investing in Hispanic customers.

"Companies have started to reinvest and get back in the market after spending the last three years surviving the recession," said Jeremy Aguero, principal analyst at Applied Analysis. "Now is the time to take advantage of the recovery, and I've seen more marketing campaigns toward Hispanics in the past six months than in the last six years. A third of the population speaks a language other than English at home. So if you're only marketing in English, you're leaving a relatively large group out."

Growing influence

It's no coincidence that the marketing surge toward Hispanics has followed the 2010 Census. The country's most recent demographic survey quantifies the incredible growth of the demographic.

The U.S. Hispanic population now stands at approximately 50 million, and members spend upwards of $1 trillion a year, which would place the community among the top 20 economies in the world, according to a recent Nielsen report on Hispanic consumers. By 2015, Hispanic buying power is estimated to reach $1.5 trillion annually.

In Nevada, Hispanics account for a quarter of the population and make up half of all Clark County elementary school students. At $12 billion, the Southern Nevada market ranks 23rd in the nation for Hispanic purchasing power, according to market research firm Vision Advertising & Marketing. The Pew Hispanic Center estimates that nearly half of Nevada's Hispanic households own their homes.

The median age of Nevada's Hispanic population is 26, with a median income of $24,849, compared with $35,644 for non-Hispanic whites and $27,497 for non-Hispanic blacks, according to the Pew Research Center. Despite the down economy, U.S. Hispanic households that earn $50,000 or more annually are growing at a faster rate than total households, and even with drops in immigration, the Hispanic population is expected to grow 162 percent by 2050. The total population is anticipated to grow only 42 percent.

And while American Hispanics buy about 9 percent of all goods and services sold each year, advertisers spend only 5.4 percent of their total advertising budgets targeting them, said Jim Gentleman, senior vice president at marketing and advertising firm SK+G.

"Advertising spending is beginning to match the purchasing power of the Hispanic market, but it's still trailing behind," Gentleman said. "It's a combination of factors. The 2010 census plays a roll as companies got a good look at the market. Coming out of the recession, even though it has been a slow recovery, marketers are looking for new segments to grow business."

New products, new audience

New consumer groups offer companies the most fertile ground as they pull out of the recession with lean marketing budgets and a renewed focus on efficiency.

The shift already can be seen in local and national marketing strategies. Taco Bell recently announced new "gourmet Mexican" menu items, while Subway introduced a carnitas sandwich. In Nevada, some casinos have bet their future on winning over Hispanics.

Buffalo Bill's in Primm, for example, in February opened Ramon Ayala's Cantina, a restaurant playing off the cache of the Mexican music legend and the latest move in its strategy to attract Hispanics. A few years ago, Buffalo Bill's started catering more to Hispanics, especially those from Southern California, by introducing bus services, Spanish-language playing felts and bilingual dealers.

"Hotels and casinos are now evaluating the way a limited-English consumer can navigate their property, and I've never seen that before," Aguero said. "How easily can I check in? How easily can I sit down at a restaurant? There are also financial institutions creating units focused on Hispanic markets, and grocery stores that are founded by more mainstream stores that are bringing in new lines to better serve Hispanics. It's about crafting a more comfortable buying experience for Hispanic customers, or even Asian customers."

Las Vegas' Asian population is skyrocketing as well, almost doubling over the past decade. Asians now account for 9 percent of Clark County's residents.

Barrientos advised businesses to adapt quickly in expanding marketing campaigns to minority groups because companies that have traditionally served them also are trying to expand their customer base.

"Look at Cardenas, the supermarket," Barrientos said. "They started reaching out to English-speakers and doing better marketing. In a competitive marketplace during a recession, people will look at the bottom line. If Vons is charging twice as much for tomatoes, Cardenas will start to get those customers."

Businesses that fail to make an effort to expand their reach will be left behind, Barrientos said.

"They have to realize that the demographics are changing in the valley," he said. "The Asian and Latino population is growing, and if they're not paying attention to the numbers, they will lose out in the long run."

Media in the game

At the same time companies are enhancing their Hispanic marketing campaigns, options for placing those ads have grown more robust over the past year.

U.S. and foreign media companies are moving fast to capture the Hispanic market and are racing to create new networks and websites to cater to the population.

Not all of the offerings are in Spanish, either. Media companies have taken note of research showing that a sizeable portion of the U.S. Hispanic market -- 40 percent of Hispanic adults, according to Nielsen -- prefers English.

In January, Fox announced the launch of MundoFox, a Spanish-language network scheduled to hit airwaves this year in markets across the nation, including Las Vegas. Fox says it has secured affiliates in enough cities to cover 40 percent of all Hispanic households. The company's foray into the Hispanic market started in 2010 when it launched Fox News Latino, an English-language website.

ABC and Univision are teaming up on a 24-hour English-language network targeting Hispanics, and National Geographic, ESPN, Discovery and Fox Sports all have Spanish-language cousins.

"There are a number of companies coming in at the same time," said Giovanni Rodriguez, a social technology and marketing expert who covers the Latino media market for Deloitte Consulting. "The market has actually been looking at this for a while. Fox woke up the marketplace with Fox News Latino in 2010, and it took a while for the other companies to respond."

"If you look at the general market, it's very much saturated," Gentleman said. "It's difficult for brands to get noticed. Businesses have the opportunity to take their budgets and get a better return on investment by targeting a new demographic. I think that's why you see developments like MundoFox and Univision partnering with ABC. ESPN has done a great job with its ESPN Deportes brand."

The pitfalls of persuasion

Going after Hispanic consumers offers the potential for growth, but also for public stumbles.

When the American Dairy Association tried to bring its "Got Milk?" campaign to a Hispanic audience, it faltered. Instead of "Got Milk?", the association plastered billboards with a phrase that translated as, "Are you lactating?"

Several other companies -- Coors, Perdue Chicken, Pepsi -- have made similar mistakes.

To prevent such foibles, marketing experts say it is best to craft separate campaigns for Hispanic markets rather than translate English-language campaigns. Hispanics generally respond better to marketing that's geared specifically toward them.

Campaigns should feel "authentic, not slapped together," Gentleman said.

It's also important for companies to remember that Hispanics are not a monolithic population with singular traditions, cultures and norms.

"There is no single Hispanic market," Rodriguez said. "It's an incredibly diverse population. It includes people like me. I grew up in the Bronx, but have an incredible attachment to the homeland of my parents, Puerto Rico. I just got back from Puerto Rico and have gone before, but my Spanish is terrible."

But even despite potential pitfalls, marketing to Hispanics is an undeniably smart move, as the population records higher brand loyalty and a greater use of social media. Nielsen found that U.S. Hispanics spent 68 percent more time watching video online and 20 percent more time watching video on mobile phones than non-Hispanic whites.

"Latinos right now are the No. 1 group as a percentage of the whole when it comes to social media usage," Rodriguez said. "They're overrepresented on Facebook and Twitter and other social networks. They use mobile phones and love technology more than the general population. So, large companies that can reach customers on multiple channels are in a pretty good position."

Hispanics also have been shown to exhibit strong brand loyalty, especially in categories such as health, beauty and baby products.

Companies that make the effort to reach out to the Hispanic audience and craft thoughtful campaigns for them, can snag faithful, tech-savvy customers.

"You have to do your research," Barrientos said. "Because once you get them, they are in and they will bring their family, cousins, everybody. Latinos can be very loyal consumers, especially if you stand up in the community. More corporations are coming to cultural events and conventions to show they want to be part of the community, and that kind of marketing is providing excellent results."