Hispanic Market Is Set to Soar

Hispanic Americans continue to grow in number at a rate four times that of the general population, with the 2010 Census expected to show their total rising to nearly 50 million, from 38 million in 2000. And second-generation Hispanics are fast becoming the driver of the group’s growth, with 88 percent of Hispanic children born in America, versus 61 percent of adults.

As a result, agencies that market to this segment are finding themselves in a strong position, armed with the skills and techniques to take on general assignments from big-name clients. Meanwhile, in a tight business environment, general agencies are starting to compete for work previously reserved for specialist shops.

Is an already competitive agency landscape set to become even more so?

“In the 2010 Census, we’ll see confirmation of a shift from Hispanic consumers who are first generation, where Spanish is the dominant language, to second-generation, bilingual, bicultural consumers. It totally transforms how we market,” says Cynthia McFarlane, chair of Publicis Groupe’s Conill, a Latino agency. “These are consumers who are as influenced by American culture as the country of origin of their families. There is a new American culture forming, and these consumers are having a tremendous impact on mainstream America.”

McDonald’s, which sees higher brand loyalty among its Hispanic consumers, has added offerings like breakfast burritos to its national menu. In further evidence of the growing bilingual voice of Hispanic consumers, McDonald’s runs ads with Spanish taglines in general-market media, and earlier this year used “Spanglish” in general-market advertising for the Quarter Pounder.

“We know the general market has become increasingly multicultural, with Hispanic music, Hispanic tastes, the Hispanic palate influencing a lot of general-market initiatives,” says Cristina Vilella, director of marketing at McDonald’s USA. “We lead with Hispanic insights but make sure they appeal to the general market.”

That blurring of distinctions within the Hispanic marketplace hints at the changes ahead for agencies and media firms. Hispanics now have about $863 billion in discretionary annual income, more than any other minority group in the country. (As of the third quarter, Americans overall had disposable income of $10.8 trillion.) Agencies argue that spending power is still underestimated and that upcoming Census findings — expected to be released beginning in early 2011 — will deliver a wake-up call to marketers.

“It will be a huge eye-opener when we see the growing affluence of the Hispanic marketplace, not just in buying power but also in household wealth,” says Conill’s McFarlane.

“We have 15 percent of the market but only 5 percent of the marketing dollars,” says Ingrid Otero-Smart, CEO of Interpublic Group’s Casanova Pendrill. “You’re going to see more general-market agencies pursue Hispanic accounts. They didn’t care when our budgets were $10 million or less, but now that we are dealing with more robust budgets and theirs are being cut, it’s a different story.”

Already, Hispanic agencies are extending their reach beyond Spanish-language media. Casanova Pendrill’s recent California Lottery TV spots were used in the general market, while San Antonio-based independent Creative Civilization is lead agency for the San Antonio Express News and the San Antonio Spurs. In 2006, Toyota liked a Conill TV concept for the Camry so well, it turned it into a Super Bowl spot.

“There are certain categories, geographies, brands where the Hispanic market is now the general market and the Hispanic marketing strategy will be the overriding strategy,” says Alex Lopez Negrete, CCO at independent Lopez Negrete Communications in Houston. “The Census will confirm the cultural pervasiveness of Hispanics. When general-market assignments start going to Hispanic agencies, it will manifest itself regionally first and then move to categories.”

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