News Column

1999 Media Markets Report: More Steady Growth

Page 2 of 1

By Tim Dougherty

Product endorsements by Hispanic celebrities continued apace this year as did the corporate stampede to cash in on the Hispanic consumer market.

All told, Hispanic advertising expenditures are up in every medium. Local TV spending increased the most, jumping 18 percent to a projected $391 million compared to $330.2 last year. Other notable increases include network/national TV expenditures, which are expected to climb to $700 million from $666.53 last year, and local radio spending, which will rise to $370 million from last year's $320 million.

Overall growth in Hispanic advertising expenditures slowed to 11 percent ($1.89 billion this year compared to $1.71 billion in 1998) after hitting 21 percent last year. However, the Top 50 Advertiser total soared to $545.97 million, up 30 percent from last year's $420.25 million.

Still, the bigger story in Hispanic advertising may be what likely lies just ahead - namely, a sea-change wrought by the Internet.

"The Internet and e-commerce are the future. As early as next year, agencies will have whole interactive divisions to serve clients," predicts Manny Flores, co-founder of LatinWorks Marketing Inc. of Austin, Texas.

In fact, his projection is already a reality. Earlier this year, Dieste & Partners of Dallas launched Somba, the Hispanic advertising industry's first interactive division. It already boasts big-name clients such as Procter & Gamble, Pepsi, and Tabasco after starting with an empty slate.

More broadly, industry creatives are beginning to embrace the Internet's interactive capabilities, according to Benito Martinez-Creel, president and CEO of Acento Advertising in Los Angeles. Acknowledging as much, this year's Se Habla Espaņol Hispanic Market and Media Expo featured six Internet workshops where before there were none.

Internet advertising revenue generally continues to surge. It more than doubled last year to $1.92 billion, surpassing the estimated $1.58 billion generated by outdoor advertising, according to a report by PricewaterhouseCoopers for the Internet Advertising Bureau. The figure is all the more staggering considering the Internet's age - just 4 years - as an advertising medium.

That trend, combined with rising Hispanic computer use and a relative scarcity of cable TV and other Hispanic-specific media offerings, likely will elevate the Internet as a Hispanic marketing vehicle, says Dieste & Partners President Tony Dieste.

Even so, he's not ready to declare the start of a golden Internet advertising age just yet. The Internet will change the Hispanic advertising landscape and already has had a significant impact, he says, but the process remains incomplete.

For one thing, the Internet's viability as an advertising medium isn't universally accepted. "We're still having to push the Internet; people aren't coming to us asking about it," says Mr. Dieste, an Association of Hispanic Advertising Agencies (AHAA) board member.

In the short term, he believes the medium's value may lie in its ability to provide Hispanics from different backgrounds with a neutral forum to communicate, creating what he calls "communities of value."

On a practical level, setting up an interactive shop can be prohibitively expensive. There's investing in and updating equipment to consider, as well as attracting and retaining top-notch talent. For the time being, most firms will probably have to content themselves with freelance technical support while devoting in-house staff to creative work, according to Mr. Martinez-Creel.

"The Internet's still green, probably more than it should be, but that's changing fast," he says, adding that proliferating "dot-com" companies are helping drive interest in online Hispanic advertising. Among Acento's latest client acquisitions, for instance, is the Spanish-language travel site

This year's impressive Top 50 Advertiser total may be attributable in part to the underreporting of past budgets. For instance, AT&T and MCI, which are expected to spend $35 million and $34 million, respectively, on Hispanic advertising this year, were estimated to have spent just $19 million and $17 million last year, when in fact the latter figures failed to include the budgets of several subsidiaries.

Similarly, Johnson & Johnson Hispanic advertising expenditures are expected to reach $17 million this year, nearly a threefold increase over 1998's estimate of $6.1 million. However, this year's figure includes expenditures by both Johnson & Johnson and Ortho-McNeil Pharmaceutical Inc., which were previously listed separately.

Nevertheless, Hispanic advertising executives agree that spending by big companies is up, a trend they expect to see continue. Mr. Dieste says ethnic consumers constitute an attractive new market for large companies under increasing investor pressure to grow faster.

"Business has been gradually increasing over the last four years. The difference is now there are more blue-chip clients. My gut feeling is the market is getting too big to ignore," says Mr. Martinez-Creel.

Regional companies also are spending more on Hispanic advertising - particularly those in markets with large Hispanic populations, such as Los Angeles and San Antonio.

As in past years, Los Angeles is the top Hispanic DMA in the nation, with an estimated $396.44 million in Hispanic ad expenditures compared to $387.26 million last year. In fact, this year's DMA rankings are unchanged from 1998's, though the top markets accounted for $1.1 billion compared to $1.06 billion last year. New York was the nation's hottest market in terms of growth, with Hispanic ad spending jumping from $140.4 million last year to a projected $160.03 million in 1999.

"A number of big multinationals have been in the market a long time and have done a good job - the Anheuser-Buschs, the Coca-Colas, the Millers, the Procter & Gambles. Other companies are neophytes just beginning to recognize the challenge and opportunity of the Hispanic market, and they want people with ethnic expertise to help them with their branding efforts," says Mr. Flores, who last year left the plush marketing suites at Anheuser-Busch to form LatinWorks, largely on faith that the Hispanic market would continue to heat up. His partner, Alejandro Ruelas, also is a former Anheuser-Busch marketing executive.

According to Mr. Flores, several demographic forces are fueling corporate interest in Hispanic consumers, among them rising business formation, homeownership, and college graduation rates, the changing roles of Hispanic women, and, perhaps most significantly, the relative youth of the Hispanic population.

The latter is one of the main reasons behind high-profile endorsement deals by the likes of Ricky Martin and Oscar De La Hoya. "The number of Hispanics under age 18 has led to an emphasis on an urban mindset and urban, ethnically diverse icons like Ricky Martin," says Mr. Flores.

Once again, he and others expect more of the same in the future.

"The endorsement trend will continue because it makes sense for big general market firms to take advantage of Hispanics with crossover appeal," says Mr. Martinez-Creel.

There are other indications that Hispanic advertising is rapidly moving toward the mainstream. According to AHAA spokesperson Natalie Judd, more Hispanic shops are doing English-language campaigns in addition to those specifically targeting Hispanics, and others are becoming involved in initial strategic planning.

"It used to be that general market agencies would create a marketing plan and it would filter down to the Hispanic market. Now branding identity and strategic planning are originating with the Hispanic market," she explains.

AHAA's own semi-annual conference held last August in Chicago saw the inaugural presentation of the Hispanic Creative Advertising Awards - proof, says AHAA president Adolfo Aguilar, that co-presenter Advertising Age is embracing the Hispanic advertising industry and its "extraordinary talent."

Looking ahead, the industry's vibrance could lead to a new wave of mergers reminiscent of those in the late '80s and those beginning to affect the African American advertising community, says Ms. Judd.

That likely won't detract from the quality creative that's become the industry trademark.

"There's always been competition. The difference is it's more professional today. The professional level has gone up for everybody, so it's had a positive effect," says Mr. Martinez-Creel.

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