The 2010 U.S. Census figures underscore what the Hispanic advertising industry has known for well over a decade: the Latino population continues to increase dramatically, representing the majority of the growth of the U.S. population. Data released this past March shows that the Hispanic population grew 43% from 38 million in 2000 to 50 million in 2010. With the total U.S. population at nearly 310 million, 1 in 6 Americans –or 16 percent– are Hispanic!
But it’s not just a matter of population; it’s about buying power. Over the past 10 years, Hispanic earnings have increased 347% reaching $1 trillion in 2010. That’s more than the gross domestic product of Brazil, Spain or Mexico, making the U.S. Hispanic market the world’s ninth largest economy.
There are a variety of advantages in advertising to the Hispanic market. Hispanic consumers are the most geographically concentrated of any large segment, with eight states accounting for almost 80% of the total U.S. Hispanic population. The top ten most populated U.S. cities are 35% Hispanic on average, with New York at 29%, Los Angeles at 48% and Chicago at 29%. Plus, Hispanic media is far less fragmented. Spanish-language television networks have out-delivered one or more English-language broadcast networks on five out of seven nights during a given week and Hispanic Radio listenership over indexes vs. the general market. Online, Hispanics increasingly search, research, socialize and purchase using the Internet.
With larger, younger households, Hispanics continue to outspend the general market in several categories, including consumer packaged goods at an average gross sales rate of 13. Other strong categories include apparel, and health and beauty. While the recession has not affected Latino shoppers as drastically as it has the general market, Hispanic consumers now look for more than just pricing in the value equation. That additional “something” could include customer service, product attributes or exclusive offers, to state just a few examples.
Advertisers who sustain their efforts targeting the Hispanic market have seen their investments translate into significant revenue growth. Recent data shows that the market is not simply going to assimilate and go away, which means that consistent, integrated marketing approaches will become all the more important to achieve long-term benefits in the current environment.
Companies who have not yet made those efforts risk being left behind and eventually becoming irrelevant.
By Tony Aguilar-Arellano Chief Integration Office / Partner LinkedIn
eMarketer estimates that 63% of the U.S. Hispanic population accesses the internet at least monthly this year, rising to 73% by 2015. This group skews young and somewhat male. Two-thirds of online Hispanics use social networking sites, a level that’s slightly above the average rate.
As highlighted in a special report from IBISWorld, Hispanics have influenced the American palate for decades, but have only recently become a major demand determinant in restaurants and supermarkets. Hispanics spend about 7.7% of their incomes eating at home, compared to 6.0% for non-Hispanics. However, excluding income differences, they also spend 0.9% more than non-Hispanics on food at home. For example, the average Hispanic spends roughly 38.1% more on eggs every year than the average non-Hispanic. As supermarkets and grocery stores catch on to this trend, they’re scrambling to cater to Hispanic consumers, often through ethnic aisles and food offerings.
According to Coca-Cola CMO Bea Perez, 86% of the growth through 2020 for Coca-Cola’s youth-targeted market will come from multicultural consumers, especially Hispanic. Focusing on this segment is critical to Coca-Cola’s future growth.
McDonald’s has experienced 31 quarters of growth by leading its marketing efforts based on Multicultural Insights. Their 30-40-50 rule: 30% of their customers are multicultural who, in turn, account for 40% of their sales and they always remember that 50% of the multicultural population is under the age of 18.
Nielsen CEO David Calhoun told 1,400 attendees that he would encourage them all to spend 65% of their time “figuring out their Hispanic opportunity” because it was no doubt the single biggest source of growth for all companies in the U.S. in the short and long term.
“You may have a home full of generations with different perspectives,” said Roberto Orci, chief executive of Acento, a Los Angeles-based advertising agency aimed at Hispanics.
How do leading marketers view the growth opportunity of the Hispanic market? To answer that question, I traveled across the country to interview chief marketing officers at Wells Fargo, Verizon, Macy’s, and Best Buy, among others. I then presented my findings at the Global Retailing Conference. Here’s a summary of what I found out, including some video excerpts of our conversations.
Sylvia Reynolds, the Chief Marketing Officer at Wells Fargo and one of Acento’s clients, discusses how a huge proportion of her company’s growth comes from diverse segments. She says, “The Hispanic segment is a very important part of our growth today. Hispanic customers have un-tapped credit needs that Wells-Fargo is well positioned to serve and we can help them strengthen their financial identities.”
In this video Reynolds offers important pieces of advice to other marketers that want to reach Hispanics. Most notably, she advises marketers to be consistent and be ready to sustain your efforts. “If you move in and out of the market, if you are essentially here today and gone tomorrow, it really increases brand distrust and undercuts your brand’s ability to grow and to really be meaningful to the segment.” Learn more about her insights here.
Mike Ritter, the Chief Marketing Officer at Verizon, says that all of its major markets – New York, Florida, California, Texas – have huge Hispanic populations.
“The word ‘important’ is probably an understatement. It’s a critical market for us.” Up to 40% of its top markets are Hispanic, so it’s critical that his company addresses this growth audience. Verizon found success in building product bundles specifically for the Hispanic market with targeted content for its FIOS digital television product. Learn more about Mike Ritter’s insights here.
In this interview, Peter Sachse, Macy’s Chief Marketing Officer, convincingly outlines his strategic growth projections for the Hispanic market in the apparel industry.
And lastly, I interviewed Teresa Iglesias-Solomon, Best Buy’s former Vice President of Multicultural marketing about why the electronics retailer markets to Hispanic shoppers. She estimates that about 30% of the electronics retailer’s sales growth will come from Hispanics. Considering that Hispanics represent 16% of the population, all marketers should pay attention to a demographic that delivers double the growth rate relative to its percentage of the population.
According to data through June 2011, Hispanics are back to buying vehicles and looking for fuel efficient small cars with great design and features that complement their lifestyle. The Hispanic auto market has increased 23.8% and the general market has increased 17.5%.
