Changing times call for changing methods… and no other industry is more keenly aware of this than Hispanic advertising agencies. Agency and media executives gathered for the Association of Hispanic Advertising Agencies’ (AHAA) annual conference last week in Miami explored the need for new creative vehicles, the role of social media and how to attract new advertisers to the Latino marketplace.
Amidst a rapidly changing market and an evolving Hispanic marketplace, agencies must think and act differently to deliver successful campaigns for clients, to draw new accounts to their roster and to use the broad scope of media outlets now available to connect with consumers.
And most experts agree that more changes will occur over the next five years.
“The trends are moving against a language imperative reason for Hispanic marketing,” said Robb High, CEO of Robb High Associates, a new business consulting firm for agencies. “The importance and value of in-culture marketing is less understood by clients and that equals opportunities and challenges for Hispanic agencies.”
High points out that multicultural marketing is increasingly vulnerable because many chief financial officers on the client side – those responsible for keeping a tight control on expenditures – are forcing reductions in U.S. budgets and don’t see multicultural as vital.
Also affecting the landscape are the declines in usage and advertising experienced by many traditional media outlets. And while Hispanic media is bucking the trend or experiencing smaller declines than their non-Hispanic counterparts, many at the CFO level aren’t aware of this.
As such, non-Latino agencies are adapting to the economic landscape by promising in-house Latino-focused marketing to clients at reduced costs, High noted. He urges Hispanic agencies to level the field by going after “general market” accounts.
“You’re under attack and have no choice but to go the other way to maintain viability,” High insisted. “Hispanic agencies should evolve from Hispanic only to full-service general market agencies.”
How to do it? High suggested that Latino agencies begin targeting businesses that are Hispanic-centric and count Latinos as the lion’s share of their customer base; agencies should also acquire new talent experienced in non-Hispanic advertising; and executives must position Hispanic agencies’ websites as having “two doorways” – one for Latino and another for total-market business.
Many Hispanic agency executives attending the AHAA conference nodded in agreement as High spoke; others took notes – some on paper, others mentally.
The Internal Connection.- “We have to be more aggressive and show clients that we’re as creative as any agency out here,” said Al Aguilar, CEO of Creative Civilization. “We can’t play defense anymore, we have to play offense.”
Already the San Antonio-based agency is doing some non-Hispanic work for clients including Procter & Gamble and Coca-Cola. Aguilar points out that one clear advantage for Latino agencies is culture.
“We’re going to maintain our core competency and deliver better work than any general market agency that wants to do Hispanic,” said Aguilar. “It’s easier for us to do general market work than for a general market agency to do Hispanic because we grew up in the culture and they can’t learn in-culture.”
George San José, president of The San José Group, agreed that Hispanic agencies need to broaden their horizons and offer clients non-Latino expertise, something that comes easily to most Hispanic shops.
“Anyone who doesn’t change ceases to exist,” he insisted. “The question is how fast can I change and what will I innovate without being afraid of breaking with tradition.”
The External Connection.- One large hurdle for Hispanic agencies venturing into the non-Latino marketplace is connecting with the right person on the client side who will sign off on the outreach, San José notes. He adds that the multicultural managers of most companies don’t have the authority to give approval to a comprehensive plan that will reach all segments and touchpoints across many different areas.
“Today, most clients are working on marketing communications in silos, and you have to go high up in a company’s structure to find someone who can approve a strategy that touches all silos,” said San José.
The Social Media Connection.- These days, social media is practically the mainstream communication vehicle for Latinos, most of them active users of social media platforms. For most Hispanics, it’s not about mobile or social… it’s “mobile and social” as the two go hand in hand.
Latinos are also outpacing their total-market counterparts when it comes to ownership and rate of adoption of mobile communication technology – from smart phones to tablets. Additionally, their engagement levels are also higher for activities including using their devices for navigating the internet, online shopping and social networking.
Calling social networking the most profound media phenomenon since the birth of the web, Mitchell Reichgut, CEO of Jun Group, told conference attendees that most online advertisers are still focused on a content model, but it’s time for that to change – using Tweets for status updates, incorporating Facebook title ads, using social media for special offers, and delivering content through tools and applications.
“Traditional media will become socialized, blurring the lines between the mobile screen and the desktop,” said Reichgut. “Today, users have more control over advertisers. And brands are demanding more insight and accountability.”
As social media is fast becoming a driving force in contemporary marketing, agencies must stay in-tune with the latest technologies and applications to incorporate them into their clients’ Hispanic-focused strategy and marketing campaigns.
“The message is clear, you have to connect a social media strategy with great content,” said Juan José Durán, content lead – U.S. Hispanic market at YouTube. He warned that social media shouldn’t be a distinct portion of a client’s marketing plan, it must be part of the overall effort to use all screens available to reach consumers.
“It has to be a holistic approach, not work in silos,” said Durán. “You have to focus on what the users you’re targeting are interested in and you have to connect the dots internally.”
Still, there are skeptics about social media’s role in Hispanic marketing and where it should be applied.
Joakim Wijkstrom, chief marketing officer at Perry Ellis International, pointed out during a questions and answer session that social media marketing outreach has to be compelling and a good fit for the brand.
“I’m a bit of a cynic when it comes to social media and I question whether it’s right for every brand,” he admitted. “I haven’t figured out what the angle would be because social media isn’t relevant for all brands.”
New Year. New Leadership.- As AHAA embarks on a year of change and challenges, the organization added new members to its board of directors, led by incoming chairman Roberto Orcí, president of Acento Advertising.
“In very few years, we have seen Hispanic marketing go from a nice-to-have to a must-have,” said Orcí. “We attribute that to smart client marketers and effective Hispanic marketers.”
As he took command of the organization at the conference’s closing on October 13, Orcí detailed his “wish list” for AHAA in the coming year. It includes attracting members from other disciplines; expanding AHAA’s board to include representation from the media and marketing industries; and becoming a strong advocate for progress.
“It’s better to build an airplane than to build a parachute,” Orcí said.
AHAA’s three new board members are:
- Al Aguilar, president of Creative Civilization
- Danielle Gonzales, managing director at Tapestry
- Jorge Plasencia, CEO of República
The group’s continuing board members are:
- Leo Olper, CEO of Totality
- Gabriela Alcántara-Díaz, president of G ADMarketingCommunications
- Daniel Marrero, partner at CreativeOnDemand
- Ingrid Otero-Smart, CEO of Casanova Pendrill
- Linda Lane González, CEO of ViVA Partnership
- Esther Novak, CEO of VanguardComm
- Aldo Quevedo, chief creative officer at Dieste
- Carlos Santiago, president of Santiago ROI
- Member Emeritus: Héctor Orcí, co-founder of La Agencia de Orcí
As part of the new initiatives for 2012, AHAA has teamed up with Círculo Creativo to launch the USH Idea Awards, a national competition recognizing creative work targeting U.S. Latinos. A panel of judges representing both international and U.S. Hispanic creative leaders will select finalists and winners.
Additionally, beginning next year AHAA will shift its annual conference to spring. The objective, say organization executives, is to hold the USH Idea Awards leading up to the annual Cannes Lions International Festival of Creativity.
Hispanic Ad Dollars = Greater Revenue.- Dollars invested in targeting Hispanic consumers through Latino media have a direct impact on companies’ bottom line, driving increased revenue and a faster growth rate, according to the findings of AHAA’s latest Hispanic Allocation Study.
Conducted by Santiago ROI, the study found that a “Best-In-Class” company – those who invested 14.2 percent or more of their advertising budget to Hispanic media – allocating one quarter of its ad spend to Latino-centric media over five years, would generate annual revenue growth of 6.7 percent.
“The Hispanic investment influences overall ability to grow top-line revenue,” says Carlos Santiago, president of Santiago ROI. “Brands with a Hispanic market focus with determination and discipline are going to see more rapid growth.”
In conducting the study the team at Santiago ROI examined the Top 500 advertisers and their allocations to Latino media. Aside from best in class, they identified four categories based on the percent of advertising dollars they invest in Hispanic media:
- Leaders – 6.4 percent to 14.2 percent
- Followers – 3.6 percent to 6.4 percent
- Laggards – 1.0 percent to 3.6 percent
- Denial – less than 1 percent
Despite the marked growth of the U.S. Hispanic population, and their increased purchasing power, 57 percent of the top 500 advertisers fall into the “in denial” category, allocating minimal amounts of advertising dollars to Latino media. Among the brands in this category are Fedex, Hasbro, Mattel, and Southwest Airlines, to name a few.
“The Hispanic market has moved from being an opportunity to a requirement,” Santiago insists. “You need to put adequate resources in Hispanic advertising if you want to grow. And it has to be done consistently, you can’t just pop in and out of the Hispanic market and see benefits.”
Among the best-in-class group – companies with a strong correlation between allocation and revenue growth – are: AFC Enterprises (Popeye’s Chicken, Church’s Chicken, Cinnabon), Allstate, AutoZone, Colgate-Palmolive, Collective Brands (Payless Shoesource), DirecTV, Domino’s Pizza, Echostar Communications, Heineken, JC Penney, Rent-A-Center, SAB Miller, State Farm and Vivendi.
The AHAA report also reveals that advertising spending in Hispanic media increased 14 percent to $4.3 billion in 2010, practically reversing a two-year slowdown. Still Latino media’s share of overall spending slipped slightly – to 5 percent from 5.4 percent.
“Companies now understand that the Hispanic market is not going to simply assimilate and go away, which means that a targeted approach will deliver long-term benefits,” says AHAA’s new president, Roberto Orcí, CEO of Acento Advertising. “This research underscores that companies can’t just pop in- and-out of the Hispanic market as a fad. Companies must get on the train or risk being left behind and becoming irrelevant.”
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