Commentary

Recession's Effect Equals Opportunities For Advertisers

Liz Castells, President/CEO, Castells As advertisers cope with falling sales numbers, ad budgets are always among the first items cut. However, the recession's impact on different cultural groups may prove to be a boon for savvy marketers, especially in the Hispanic Consumer Market (HCM).

In strong economic times, Hispanics typically over-index in food and basic living product consumption at grocery stores and quick serve restaurants. Over half of all Hispanics spend $100 plus per week on food shopping, and over one-quarter spend in excess of $150 per week, over-indexing the rest of the population. Hispanics typically are less fazed by economic challenges as they have generally been through far worse, being mostly immigrants or children of immigrants, escaping dire economic or political circumstances and enabling them to "roll with the punches" more easily.

Thus, in the current economic state, we are seeing a rise in Hispanic purchases at discount chains and with generic brands, generics having been historically weaker among Hispanics. As with the General Consumer Market (GCM), Hispanics are looking to save wherever possible, and the recession offers discount chains a chance to strengthen themselves as a go-to brand as established retailers pull back.

HCM Spending vs. GCM Spending

The recessionary climate has caused many companies to cut back, with ad budgets first on the chopping block. Certain categories (automotive, banking/financial services) are experiencing significantly reduced Hispanic budgets. However, we're seeing an opposite budgetary reaction from other sectors, especially telecom, fast food, casual dining, packaged goods and pharmaceutical sectors.

The Hispanic market is still a healthy landscape for consumer spending when compared to Anglo markets, having experienced less of a percentage cut in budgets. During these times, many companies are making their advertising buys more targeted. With fewer dollars to spread around, how far and how much impact each dollar has is incredibly important. It becomes a lot more about how you spend, not how much you spend.

As "Hispanic" is often considered "targeted," it is receiving a second look from many advertisers. This need for greater ROI has led some first time companies to enter Hispanic marketing seriously, realizing there may be some "low hanging fruit" that had been previously overlooked.

Why Advertisers Should Continue Investing in the Hispanic Market

  • From a strictly accounting point of view, Hispanic media is more cost efficient than general market media, enabling companies looking to maximize ad dollars to expect a proportionately greater ROI.
  • Hispanic households continue to have larger families, and feeding the family as well as possible is a priority any time. Food brands should continue their efforts.
  • In some categories softened by the economy, there is an opportunity for newer advertisers to build their brand in a less cluttered environment, with a smaller investment than in times of plenty.
  • The Hispanic population continues to grow steadily. Population growth projections are expected to hold (e.g., Synovate's 2008 projections: 2008:47.1 million, 2010: 49.8 million, 2015: 56.7million, 2020: 63.8 million; 2040: 96.2million).
  • All consumers fall back on trusted brands in troubled times, but this holds especially true for Hispanics, with emphasis on familiar "comfort" brands.
  • Hispanics look more to advertising for information, especially in tough times. Brand loyalty and conversion to brands that deliver and advertise in recessionary times pay off in the long run, as Hispanics perceive companies who are advertising during tough times to be the most reliable and strong.

Examples of advertisers increasing market share during recessionary times are Pepsi's aggressive marketing in 1991 or Apple's iPod right after 9/11, and what brands like McDonald's or Nestle are doing right now. McDonald's Hispanic commitment is long-standing and sincere, and the Hispanic community knows it. Hispanics also know and trust that, in tough times, McDonald's is there for them, maintaining its HCM efforts and community presence, responding to their needs and redefining value, always providing reliable quality.

Investing in the Hispanic market is a no-brainer. It simply makes good business sense. And now in the toughest times, marketers will find the easiest route to sales and ROI is with the Hispanic consumer market. Better late than never.

Next story loading loading..