Electronic Retailer: The U.S. Hispanic Marketplace Breaks Records in Growth, Buying Power and Success in DRTV


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Mercury Media director of Mercury en Espanol, Marcelino Miyares, was quoted in Electronic Retailer Magazine’s September feature story “The U.S. Hispanic Marketplace Breaks Records in Growth, Buying Power and Success in DRTV.”  See complete article below or on Electronic Retailer Magazine’s website.

The U.S. Hispanic Marketplace Breaks Records in Growth, Buying Power and Success in DRTV.

BY JACQUELINE RENFROW

U.S. Hispanic consumers are rapidly becoming one of the most important segments in direct marketing. In fact, with Hispanics constituting 15.4 percent of the total population in the United States–more than 46 million people–the industry can hardly afford to ignore them. This second largest ethnic group not only continues to grow, but so does its spending power. Despite myths, credit card use in this population is high–90 percent of U.S. Hispanics who purchase through DRTV have access to credit cards, and 46 percent use credit and 26 percent use debit when making a purchase. The collective buying power of the segment is expected to reach $1.2 trillion in 2010, up from $862 million in 2007.

“Our client case studies have shown that we experience an average of three times the call conversions when comparing the Spanish to the English version of a show,” says Eitan Cohen, president of Media Stream Direct, a Sherman Oaks, Calif.-based media buying company with more than a decade of experience in the U.S. Hispanic marketplace.

Beyond growth and spending power, marketers are finding renewed success in categories such as beauty, ingestibles, hardware, financial services and kitchenware thanks to U.S. Hispanics. And with Spanish-language advertisements drawing strength from DRTV, marketers are expanding campaigns across growing channels such as mobile and online social communities.

Growing Market, Growing Power
The most important reasons to be in the U.S. Hispanic market space are twofold: the size and the spending power.

Pull Quote“It is the demographic growth of the market that is driving the growth of DRTV,” says Marcelino Miyares, director of Mercury en Espanol, a division of Mercury Media in Santa Monica, Calif. “In fact, it is the population growth of the Hispanic market that is driving the population growth of much of the country. It is not necessarily that Hispanics are spending more, but rather that more Hispanics are spending.”

Along with population increase, there is a new comfort with using credit cards. In turn, marketers have seen an increase in direct-response sales via long-form television commercials. Not to mention, the demographic is more likely to purchase via direct response. An estimated 11 percent of U.S. consumers will make a purchase through DR, but that number is as high as 15 percent among the Hispanic population.

Purchasing Trends
According to Cohen, products that tend to sell the best in DRTV correlate with the interests of the Hispanic demographic such as beauty, fitness, health and housewares.

“We have been able to take English infomercials in these categories that are either successful or, in some cases, only marginally successful, and create tremendous hits with a Spanish creative,” says Cohen. Media Stream Direct recently brought the Ab Rocket infomercial to the U.S. Hispanic market. Although the product was successful over the past three years in the English version, the introduction of the Spanish version created a resurgence in response.

Miyares agrees that ingestibles, housewares and beauty products are the workhorses of U.S. Hispanic DRTV, along with music and video, diet and exercise, hardware, and financial services. In addition, language learning services and telecommunications continue to be stronger in the U.S. Hispanic marketplace versus the general market.

Miyares also believes that U.S. Hispanic DRTV has followed the general DRTV trend to push to retail. “What makes this convergent with Hispanic marketing is that Hispanic shoppers over-index at these types of retailers–Walmart, Kmart, Bed Bath and Beyond, Anna’s Linens, etc.,” says Miyares.

“I forecast that over the next 18 months, we will see a proliferation of products in the two extremes–$19.95 and $200-$400 range. The lower-priced products have been difficult to make work given the costs of limited media inventory. This problem is solving itself with the addition of more cable channels. And the higher priced products have simply been inaccessible to cash-oriented customers, but credit card penetration has reached a critical mass,” Miyares adds.

Photo of Young Hispanic CoupleToday’s Challenges in a Unique Space

Though very lucrative, experts agree that marketers, media buyers and call centers all need to be aware of the nuances of the U.S. Hispanic market and brace for a learning curve when starting a campaign. One of the biggest challenges when marketing a product to Hispanics in the U.S. is translation into Spanish. The key, says Cohen, is not to translate but to “transcreate.” “When speaking to the Hispanic market, it is essential to understand that there are different expressions and nuances in the phrasing that simple voice dub-over cannot communicate,” says Cohen. “Taking the time to properly re-phrase the intention of each statement into appropriate Spanish dialect immediately ingratiates the viewer to the brand and the show. We’ve had several marketers come to us after working with other agencies, who simply had the show hastily dubbed over and could not explain why the campaign did not work.”

Another challenge to the U.S. Hispanic market is client patience. “The problem is that few clients truly commit,” says Miyares. “While in the general market they may test offers, media mixes and telemarketing scripts until a campaign works, the Hispanic market is more like one or two strikes and you are out.” He advises clients–who can eventually imagine their product on the shelves of a Walmart–to stick with a campaign.

Yet another challenge marketers face is properly budgeting Hispanic campaigns versus general market campaigns. In markets that are predominantly Hispanic, Spanish-language media can substantially lift retail sales and increase overall campaign performance. Interestingly, Denira Borrero, vice president of operations for Omni Direct Inc. in Miami Beach, Fla., says that English-language sales lift when running a Spanish-language campaign simultaneously. This is mostly due to the fact that U.S. Hispanics consume media and use the Internet in both languages. So the message is reinforced in their native language, but in many cases, orders are processed through English-language channels. Omni Direct was established in 1999 as a company focused on the potential of Hispanics as a U.S., not foreign, market.

Kathi Moore, CEO and president of Engagem3nt in Newport Beach, Calif., believes the biggest challenge in this market is breaking down the myths that surround it. One myth is a belief that the demographic doesn’t have credit cards, when 84 percent of Hispanic DR purchases are made via credit. Also, that the market is too small to be worthwhile. And finally, the myth that marketers don’t need to advertise in Spanish because Hispanics will catch the English campaign. However, 30 percent of the market watches only Spanish-language television and even those who watch both respect advertisements in their native language.

Callzilla, a Miami-based call center specializing in the U.S. Hispanic space, deals with the same issues as a call center for the general market–converting calls to sales and now, more than ever, third-party upsells. What’s different about a Hispanic-focused call center is how the sales agents are trained. It’s about “training, educating, retraining and monitoring “>the agents and making sure they adhere to best practices that the industry mandates,” says Neal Topf, president of Callzilla. He says there are three main challenges for call centers. First, reaching the expanding demographic. Second, call centers must be ready for an increase in credit and debit transactions. And finally, the economy has put pressure on marketers to capitalize on a new segment.

Channel Changing
DRTV continues to be the strongest media channel for both general and U.S. Hispanic DR. Cable and satellite televisions have increased in popularity over the past two years, both in channel options and distribution, even though broadcast television has taken a hit. And interactive and digital TV activity among the U.S. Hispanic market will increase over the next 18 to 24 months, according to Miyares.

One of Omni Direct’s recent successes was with the campaign for “Sobre de Oro,” marketed in non-Hispanic markets as “My Gold Envelope,” by Money 4 Gold. The campaign ran on TV, radio, online and print channels and has expanded internationally. Money 4 Gold believed its product was under-tapped in the U.S. Hispanic market and so it worked with Omni Direct to develop creative production and identify Hispanic celebrity endorsements. The campaign built a trusted name through a customized Hispanic message. Even when the category suffered bad press due to other industry players, “Sobre de Oro” withstood the hit because of its brand recognition among Hispanics.

While the buying principles for time in the U.S. Hispanic market are the same as with the general market, the universe is limited. There are far fewer cable networks, particularly in the long-form space, and even fewer in broadcast networks. This creates a high-demand, low-supply situation, according to Miyares. As more marketers begin focusing on the Hispanic market, demand for long-form media time will rise and subsequently, so will rates.

Pull QuoteOnline is increasing faster than any other channel. Since 2008, the U.S. Hispanic online population has grown faster than the non-Hispanic population in terms of visitors and time spent and pages consumed. Just two years ago, most Hispanic campaigns did not have an e-commerce website. Now, about 25 percent of U.S. Hispanic campaign orders come through the Internet. “Based on our own research and national statistics, we expect Internet usage to continue to grow in this direction,” says Borrero. “Also, because Hispanics are significantly over-indexed when it comes to the use of mobile technology, we expect to see growth in marketing through the mobile channel, even within the very short term.”

Moore says that mobile is definitely a growing segment of the demographic. Everyone is trying to monetize the channel’s value and it’s already an effective means to get outbound messages, special offers, reminders, etc., to customers. And U.S. Hispanics are conducting more business transactions via mobile than the general market.

Moore also says that grassroots event marketing is a strong channel in the U.S. Hispanic demographic. The group tends to have more family oriented outdoor events and attend large festivals in population-dense cities such as New York, Miami, San Diego and Los Angeles. It benefits a marketer to spend money and have a booth at these events.

According to Topf, there is an emerging trend in using online social media in the direct-to-customer acquisition space. Although at the moment it’s not being used much in this way, users of social media and other web applications (either on the computer or by phone) will start to see a correlation between purchases and this channel.

No matter what the channel, more and more marketers are going to arrive in the U.S. Hispanic space in the coming year. The question, according to Topf, is not “Do I have to be there [the U.S. Hispanic market], but how do I get there?”

Marcelino Miyares is director of Mercury en español, the first full service Hispanic direct response specialty practice in the U.S., where he has expanded the agency’s current in-language direct response television offerings to include a full suite of Hispanic, in- language general market, integrated direct response services.  Miyares has developed marketed communications programs for varied clients such as Body-by-Jake, Citibank, MCI, Signature Group, Montgomery Ward, PepsiCo, Ameritech, PharMor, American Stores, Beneficial Finance, Chrysler, Chevrolet, McDonald’s, Toys R Us, Philip Morris.

Contact him at MMiyares@MercuryMedia.com

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