By Mark Dolliver (CMO.com)
Pick the true statement: (1) There are more than 50 million Hispanics in the U.S., or (2) The Hispanic market in the U.S. now totals more than 50 million people. Marketers who pick Statement 2 have misinterpreted the 2010 Census. Yes, more than 50 million Hispanics live in this country, but marketers can’t afford to be mesmerized into imagining these millions of people cohere neatly into one, big market. Behind the number lays crucial differences in demographics (such as immigrant vs. U.S.-born), language preferences, technology usage, and residential patterns—all of it roiled by an economy that has been especially brutal for Hispanics. Marketers need to be alert to such nuances if they’re to successfully navigate the markets that compose the headlined 50 million total.
“When I go into a meeting and a client asks me, ‘So how should we reach the Hispanic consumer?’ right there I know they haven’t even taken Hispanic Marketing 101,” said Leylha Ahuile, senior multicultural analyst at market-intelligence firm Mintel, in an interview with CMO.com. “If they were to tell me, ‘I want to reach Hispanic males 18 to 24,’ then they get it. They understand there is a segment. If you were to tell me females are a single market—of course not! You would never treat the female population or the male population as one market. Why would you do the same for Hispanics?”
In some instances, what people think they know about the country’s Hispanic population happens not to be true. Hispanics’ usage of the Internet and other new technologies is, for marketers, a key case in point. Years of talk about a “digital divide” between non-Hispanic whites and ethnic minorities might have left a lingering impression that Hispanics are not engaged by the Internet. But while some disparities do persist (in home broadband access, for example), a majority of Hispanics are online. And in usage of some new technologies, they significantly outpace the general population.
A report earlier this year from Nielsen said that, as of 2010, 62 percent of U.S. Hispanics had Internet access at home. Add in those who go online from other venues, noted Nielsen, “and Internet penetration rises to about 88 percent.” Moreover, plenty of Hispanics are using the Internet to guide their behaviors as consumers. One indication: Polling last summer by the Pew Research Center’s Internet & American Life Project found 76 percent of wired Hispanics have used the Internet to research products; 34 percent have posted their own product reviews online.
Mobile technology is particularly important to Hispanics—and, as such, to any marketer who hopes to connect with them. A study this past April and May by Pew found that 44 percent of Hispanic adults have a smartphone, far exceeding the 30 percent of non-Hispanic whites who do so. And 74 percent of Hispanic smartphone owners use the device on “a typical day” to access the Internet or e-mail. Similarly, Pew found Hispanics twice as likely as non-Hispanic whites (15 percent vs. 7 percent) to own a tablet computer. Wrapping up its own bulletin in April on Hispanics’ mobile and tablet usage (under the headline “Hispanics More Digitally Engaged Than General Population”), BIGresearch offered this counsel to marketers: “With a market that is more digitally engaged than the general population, Hispanic mobile initiatives should be allocated more ad dollars for increased ROI.”
However, there are indications that marketers have been falling down on the job. In discussing Hispanic consumers and “la vida digital” (including mobile and social media), a report in May from Porter Novelli made the point that “78 percent of companies haven’t used these emerging technologies to connect with this market.”
When marketers do awaken to the opportunity that Hispanics’ online presence gives them, this general neglect actually works to their advantage—a point stressed by Ahuile. “There are tons of Hispanic females who are blogging, and marketers are starting to take notice,” she said. “And they’re doing product sampling and product reviews. Marketers who’ve tapped into this seem to be getting quite a positive response because the Hispanic consumers feel like, ‘OK, finally brands are paying attention to us. Finally they realize our dollars also count, and we have a voice.’ And it’s not as crowded as the general market. For example, in the personal-care category, you might have one or two brands talking to Hispanics via social media. So when you’ve only got a couple brands talking, it’s not as crowded, and it’s easier for you to get market share.”
A report last fall by comScore supports the idea that online Hispanic consumers respond well to advertising. Thirty-one percent of Hispanics (vs. 19 percent of non-Hispanics) said they “enjoy watching advertisements,” and 35 percent of Hispanics (vs. 22 percent of non-Hispanics) said they “remember advertised products when shopping.” The same report shed light on online Hispanics’ preferences in the language ads use: “When asked about Hispanic-themed advertising, approximately 50 percent of Hispanic online consumers prefer the advertisement to be in English, while 28 percent have no language preference.”
As it happens, language is something of a dividing line in the likelihood that any given Hispanic consumer will be online. Pew’s research last summer found that 47 percent of Spanish-dominant Hispanics were using the Internet, vs. 74 percent of the bilingual and 81 percent of the English-dominant segments. This dovetails with Pew’s finding that U.S.-born Hispanics are more likely than their immigrant counterparts to have a home Internet connection (71 percent vs. 45 percent)—and, for that matter, to have home broadband (60 percent vs. 35 percent).
In this context, marketers should note that the Hispanic population consists increasingly of people who were born in the U.S. The political headlines might be about immigration policy, but the real demographic action is happening within the country’s borders. This trend is conspicuous among Mexican-Americans, who constitute a majority of the total U.S. Hispanic population (63 percent, according to the 2010 Census). Tabulations by the Pew Hispanic Center for the years 2000 to 2010 found the Mexican-American population rising 4.2 million due to the arrival of new immigrants but by 7.2 million due to births in this country, a reversal from the pattern of the previous two decades. As of 2009, Pew put the U.S.-born component of the total U.S. Hispanic population at 63 percent.
In the long run, this demographic shift could bring a commensurate shift in the balance between Hispanics’ usage of Spanish and English. But marketers should be aware that Spanish isn’t about to disappear, even among Hispanics who are perfectly conversant with English. Nielsen made this point in its report: “While 77 percent of U.S. Hispanics speak English well, according to current American Community Survey estimates, 61 percent of Hispanics aged 18-plus tell Nielsen they prefer to speak Spanish in their homes, vs. only 17 percent who say they speak only English. Spanish language remains a core component of the Hispanic home long after English proficiency is gained.” As the report added, this has important implications for TV-viewing habits: “Language spoken at home rather than English ability tends to be a better indicator of TV viewing behavior.” Thus, Nielsen noted further that “multi-language homes viewed about 50 percent Spanish-language TV.”
More specifically, Nielsen said that a brand advertised on all English-language national broadcast networks in prime time “would only reach about 40 percent of all Hispanics aged 18-49, while a Spanish-language broadcast would reach 53 percent.” Nielsen’s listing of the 10 top-ranked shows on broadcast TV and the 10 top-ranked on cable TV lend credence to this view: Seventeen of the 20 were Spanish-language offerings.
Laura Sonderup, director of Denver-based ad agency Hispanidad, told CMO.com that she has noticed a factor that makes Hispanic viewers more receptive to Spanish-language news broadcasts. “In my experience,” she said, “many Hispanics see Spanish-language news coverage as more ‘balanced.’”
Such preferences in program content are mirrored in Hispanic viewers’ reactions to commercials, according to Nielsen. “Besides providing access to a unique audience, Spanish-language advertising is generally more effective than English-language advertising for Hispanics,” said the Nielsen report. One reason is that the Spanish-language ads “create a deeper personal connection.”
Little wonder, then, that Nielsen characterized as “myth” the thinking that said, “I can reach Hispanics through my general-market campaigns; Spanish-language advertising is an expendable part of my budget.” But myths about the Hispanic population are by no means confined to their media behavior. These extend to something as basic as where Hispanics live. One sees evidence of this in the number of Hispanic-targeted ad campaigns that depict their audience as invariably inhabiting the urban barrio. In fact, as a recent Brookings Institution report notes in its analysis of 2010 Census data, 59 percent of Hispanics in large metro areas live in the suburbs.
Put another way, Hispanics now account for 17 percent of the country’s total suburban population. And, of course, that number is growing. “Nearly half [49 percent] of growth in suburbs in the 2000s was attributable to Hispanics, compared to just 9 percent for [non-Hispanic] whites,” said the Brookings report. While Hispanic-suburbanite growth in raw numbers has been greatest in places like New York, Los Angeles, and Miami, in percentage terms it has been strongest in Southeastern metro areas like Nashville, Tenn., and Charlotte, N.C.
Big companies have been spotty in catching onto the suburbanization of Hispanics. “Grocery stores were the first to notice this, I’d say a while back, because they started changing their product offerings,” Ahuile said. “Same with drug stores. We have to think about the personal-care items.” But she added that big national brands have been slower to notice Hispanics’ increasingly suburban skew. “Some of the brands were surprised by the findings when the Census came out,” she said, “whereas a lot of the grocery-store retailers said, ‘That’s old news to us.’”
Marketers are accustomed to finding most Hispanics in a few immigrant-gateway locations. And for now, it remains the case that (as a Census bulletin notes) more than half the U.S. Hispanic population lives in just three states: California, Texas, and Florida. But Hispanics are dispersing throughout the U.S. For instance, the past decade saw their numbers grow by 49 percent in the Midwest, outpacing the 43 percent increase for the U.S. as a whole. And their population more than doubled in states as varied as North Carolina, Arkansas, and South Dakota.
“Where I see the biggest opportunity is in the U.S. heartland,” Sonderup said. “For the guy in Des Moines or Boise, being asked to market to Hispanics may be like being asked to market to Indonesians, or to Martians, for that matter. Up to now, heartlanders facing this conundrum drew a simple, if fatal, conclusion: ‘I don’t know what to do, so maybe I just won’t do anything, rather than risk doing it wrong.’ And from the heartland point of view, it may not be as easy to access the research and resources so readily available in major markets. Nor is it easy to spend huge sums of money to compensate for gaps in knowledge.” But, she added, in an era when Hispanics account for so much of the population’s total growth, “‘doing nothing’ is the surest way to drive a company into insolvency.”
Speaking of insolvency, while the number of Hispanic consumers has been rising, it must be noted that the miserable economy has taken a toll on this cohort’s buying power. Because of the localities where many live and the years when many bought their residences, Hispanic homeowners have been hit especially hard. One telling statistic: A Pew Social and Demographic Trends report in April found 33 percent of Hispanic homeowners saying they’re under water on their mortgages, vs. 13 percent of non-Hispanic whites. Another recent Pew report found that median net worth of Hispanic households fell from an already modest $18, 359 in 2005 to just $6,325 as of 2009. Worse still, 31 percent of Hispanic household in that latter year had “zero or negative net worth.”
Under the circumstances, it’s a given that Hispanic consumers (along with consumers of every other possible ethnicity) are being careful these days about how they spend their money. But this doesn’t necessarily mean they’ve forsaken the brand loyalty that has characterized their community in the past. Counterintuitively, the tough economy reinforces the inclination many lower-income, Spanish-dominant Hispanics have to stick with well-known brand names rather than defect to cheaper private-label goods. As Ahuile explained, these consumers are wary of taking a chance on a lower-priced product that might not pan out. “If you throw out a detergent that didn’t work for you, that’s $7 down the drain,” she noted.
Beyond such pragmatic considerations, there’s an emotional component, as well. “When you come to this country, you give up so much for the opportunity that hopefully this country holds for you,” Ahuile said. “Within those opportunities is the opportunity to be able to give your family the best that you can afford to give them. And part of that best is buying that brand-name laundry detergent. If I’m here struggling, working three jobs, damn it, I’m going to give my family the best I can. And that might mean buying the Tide laundry detergent that costs more than the private label.”
Marketers who secretly hope that assimilation will make the whole Hispanic-marketing issue go away had better think again. As Sonderup put it, “You can’t just wait for ‘it’ to go away because ‘they’ are not going to go away.” Nor is their allegiance to their cultural roots. If anything, sustaining a distinct cultural identity is more important to many U.S.-born Hispanics than it was to their immigrant parents.
“People who are second- or third-generation in this country want to reconnect with their parents’ or grandparents’ or great-grandparents’ roots,” Ahuile said. “Twenty years ago, all Hispanic parents wanted their children to do was learn English and forget Spanish. Now that whole generation who grew up barely speaking any Spanish is now teaching their kids Spanish. They want their children to be bilingual because they’re seeing in the workplace that being bilingual is an asset.” But it’s not just a practical matter. “There’s that sense of pride in being Hispanic,” Ahuile said. “Now, being Hispanic is cool, it’s trendy, whereas 20 years ago it wasn’t.”
Sonderup is in accord with that view. “Not unlike other diverse communities, cultural identity is more important to some segments of the Hispanic population than others,” she said. “However, I think the Latino ‘cool factor’ that is so evident within the teen/young-adult segments virtually ensures that young Latinos will stay in touch with their roots and eventually pass elements of this very rich cultural heritage to their children, as well.”
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