It’s a simple statistic that illustrates a great deal about the influence of Hispanics on American culture. In the 2010 U.S. Census, one in six Americans identified themselves as Hispanic, making it the fastest growing ethnic segment in the country. That’s 50 million people. It’s no wonder that, on its March 5, 2012 cover, Time boldly proclaimed: “Why Latinos will pick the next President.”
Latinos are also picking the TV shows, music, sports and products that are defining America today. Their influence extends far beyond the so-called “Spanish-speaking” segment into mainstream culture. And there’s little end in sight, as the continued growth and maturation of this segment promises significant growth in the near future.
Market analyst IBISWorld, in a special August 2011 report, estimated that overall Hispanic-American buying power totaled $1.1 trillion in 2011, or about 9.5 percent of the U.S. total. By 2015, Hispanic buying power will hit $1.6 trillion, IBISWorld forecasts, growing at a 48 percent clip, compared to about 27 percent for the entire nation.
“Today in the U.S., Hispanics are fueling the growth of the population, Internet usage, technology sales and pumping more than $1 trillion of spending power into the economy,” says Natalia Borges, VP of marketing for Batanga, Inc., an independent digital media company that serves the U.S. Hispanic and Latin American markets.
According to the Association of Hispanic Advertising Agencies (AHAA), the top 500 U.S. advertisers dedicated $4.3 billion to targeting Hispanics in 2010, the most recent year for which numbers are available. That was 14 percent higher than the previous year and only $163 million below its peak in 2007, before ad spending was slashed during the 2008 recession.
Reaching Hispanics is easier said than done, of course. To help brands connect with Hispanic consumers, let’s debunk five commonly held myths about this population.
Myth: The Hispanic population is homogeneous
Reality: Cultural differences abound—some are fundamental, others subtle
While some may see Hispanics as a single group, that couldn’t be further from the truth. In fact, different segments exhibit separate and distinct tendencies and behaviors, and Hispanics may be one of the most diverse ethnic groups within the U.S.
According to the U.S. Census, the Mexican-origin population is still the largest Latino group, accounting for more than 60 percent of the Hispanic-American population; they represent a dominant cultural segment in California, Texas and Arizona. Go to New York, however, and Hispanics of Puerto Rican or Dominican origin are dominant. In Florida, Cuban Americans are the top segment. Then there are the rising populations of Salvadorans (the largest group in Maryland and the District of Columbia) and Guatemalans, both with populations of over one million. Each of these groups brings its native cultural differences to the population.
As Sonia Benson, SVP and director of global capabilities at Draftfcb, notes, this can require a nuance that not every campaign considers. Spanish, notes Benson (who was born in Colombia and grew up in Brazil and Mexico before coming to the U.S.), “is a rich language that’s different from one culture to the next.” She cites a simple example: in Mexican Spanish, the words for asking a person to lunch are the same as asking someone to dinner in Colombian Spanish. “You have to be sensitive to the cultural nuance,” she says.
Meanwhile, U.S.-born Hispanics exhibit distinctly different behaviors from their immigrant parents in areas such as language preference and cultural identification. Third-generation Hispanics are different still, often not even identifying themselves ethnically. But acculturation doesn’t tell the whole story.
“Marketers attempt to homogenize this population in terms of national origin and language, and are quick to view Hispanics as a monolithic ethnic group,” says Jody Agius Vallejo, author of Barrios to Burbs: The Making of the Mexican-American Middle Class (coming from Stanford University Press in 2012) and an assistant professor in the Sociology department at University of Southern California (USC). “Latinos identify with different racial groups,” says Vallejo, “and hail from many different countries, each with their own unique political and social histories and cultural elements.”
Just as brands customize their campaigns to account for regionalism among American consumers, marketers hoping to reach Hispanics must be aware of their differences, too. Patty Marrero, SVP and director of sales at Hispanic TV network Vme Media, doesn’t understand why more brands don’t get it. “Marketers take time dissecting the general market and use different strategies to successfully reach moms, singles, the youth market and the affluent,” she says. “Why should Hispanics be different?”
Myth: The Hispanic population is urban
Reality: Suburbs, exurbs and working-class cities are seeing the most growth among Hispanics
The Hispanic population certainly still has a major presence in large U.S. cities, but much Hispanic population growth is in suburban and exurban regions and smaller cities that might surprise you.
More than half of the U.S. Hispanic population resides in just three states—California, Texas and Florida—and more than 4 million Hispanics live in New York and Los Angeles. Houston, San Antonio, Chicago, Phoenix, El Paso and Dallas all have more than half a million Hispanics each. But the states with the fastest growing Hispanic populations? South Carolina, Alabama, Tennessee and Kentucky, all of which more than doubled their Hispanic populations in the past decade. Drive down to the county level, and among places with at least 10,000 Hispanic residents in 2010, the greatest growth was in Luzerne, PA, home of Scranton/Wilkes-Barre, where the Hispanic population surged 479 percent.
“City-level concentrations are typical but no longer the norm,” says Jorge Rincon, CEO of RedMas. “We have analyzed our traffic patterns and have been surprised by some of the results in the Midwest and smaller cities.”
This doesn’t surprise Vallejo, who has been looking at the suburbanization of Hispanics. “At a more local level, recent research shows that Latinos are increasingly concentrating in the suburbs. Some live in working- and middle-class suburbs where Latinos are concentrated, and others live in white middle-class suburbs.”
For Alex López Negrete, president, CEO and chief creative officer of Lopez Negrete Communications, the larger point isn’t “Where are we?” but “Where aren’t we?”
“Our influence is felt everywhere today, will be [felt] tomorrow and as far forward as you can possibly see,” he says.
Myth: Upscale brands shouldn’t bother with Hispanics
Reality: The upscale Hispanic household is one of the fastest growing Latino segments
In its report Upscale Latino Consumers in the U.S., the market research firm Packaged Facts reports that, in the past decade, upscale Hispanic households (defined as having an annual income of $75,000 or more) have more than doubled, to roughly three million. Their members account for a quarter of all Hispanic consumers and they generate 51 percent of Hispanic aggregate income. Their buying power will be worth $680 billion by the middle of this decade. Still, according to AHAA, luxury brand advertisers have actually been decreasing their Hispanic spend. AHAA describes them as being “in denial.”
There’s a pervasive myth that Hispanic Americans are not well-off and will remain so for generations. This belief is so widely held that Peter Tardif, director of the U.S. Hispanic market for Direct Holdings Americas, once had to formally debunk the groupthink that Hispanic customers “don’t pay bills or they don’t pay them on time.” The truth, he told the Direct Marketing Club of New York, is that Hispanics actually pay their bills at a much higher rate than the general market.
Rincon of RedMas finds himself fighting this misconception when trying to serve mobile consumers. There’s a question “of whether Hispanics can afford a smartphone,” he says, “and how many actually use it to consume content and apps.” But recent data from eMarketer shows that half of all Hispanic consumers in the U.S. own a smartphone. “The audience is there. It’s a matter of executing the right strategies to get the best results depending on the brand needs.”
Affluent Hispanics should be at the top of any brand’s priority list. But they shouldn’t be lumped in with general affluent populations. “Many marketers mistakenly assume that they are reaching English-dominant, affluent Latinos with their general market campaigns,” says Vme’s Marrero. “While there may be overlap in awareness, this is not an accurate measurement. Brands must consider marketing campaigns regardless of language that are in-culture with relevant messaging and imagery.”
Myth: Spanish-language campaigns are enough
Reality: There’s more to reaching Hispanic consumers than just Español
Right now, it’s common for marketers to take the easy path—run equivalent Spanish-language campaigns alongside their English efforts. There’s even data to back that up. According to the Experian Simmons Summer 2011 National Hispanic Consumer Study, 56 percent of Spanish-dominant Hispanics agree that, “When I hear a company advertise in Spanish, it makes me feel like they respect my heritage and want my business.” Similarly, 54 percent of Spanish-dominant Hispanics are “much more loyal to companies that show appreciation of our culture by advertising in Spanish.”
The problem is, those numbers drop nearly in half for English-dominant Hispanics. And English-dominants may be the future of the American Hispanic population: As new generations of Hispanic consumers feel removed from their forebears’ countries of origins, many no longer speak Spanish.
Many Hispanic marketers, says Christopher Stanley, founder and CEO of San Francisco-based Alcance Media Group, are already thinking about “how to reach those born in the U.S. [who] are English-dominant.”
There’s also the issue of defining what, exactly, “Hispanic” means. Working with colleague Amon Emeka, USC’s Vallejo found that 6 percent of Americans with Latino ancestry do not actually identify themselves ethnically as Latino. That’s a relatively small number—right now. However, Vallejo warns, “The proportion of Americans who do not identify with their Latino roots is likely to increase as Latinos lose the Spanish language.”
Myth: Hispanics are too brand-loyal to convert
Reality: Hispanic consumers are actually more likely to try new brands than their non-Hispanic counterparts
Brands can’t take Hispanic audiences for granted. Certainly they exhibit loyalty to brands that develop some kind of meaningful campaign with relevant content. Still, according to the Experian Simmons study, 26 percent of Hispanic adults “like to change brands often for the sake of variety and novelty.” That’s compared to just 16 percent of non-Hispanic adults who say they like to change brands.
Hispanic marketers contend that Hispanic loyalty is based on cultural relevance. But what does that mean? Draftfcb’s Benson says that brands need to understand that for Hispanics, purchases often extend beyond the individual and may be influenced by the purchase’s impact on the family and the community. “When Latinos buy a TV, they think about how it is a good way to bring people together,” she says. “The purchase may be the same, but the intention is different.”
As with any consumer, establishing a meaningful relationship is crucial to influencing pur¬¬chase decisions. Says Batanga’s Borges, “To understand how your brand is culturally relevant to the Hispanic experience, their passion points, such as music and sports and their realities here in the U.S., are a good start.”
Yet, she adds, “Many brands have yet to begin having these conversations.”