• by Jose Villa , Columnist, March 4, 2010

For those who work in the trenches of Hispanic advertising, you know most Hispanic communications programs are direct response in nature. The biggest ad spenders in the U.S. Hispanic market (auto, retail, telecom and food / beverage) confirm this, as I discussed in greater detail earlier. However, it's important to keep in mind that while the "goal" of most of Hispanic advertising is direct response in nature, most Hispanic media spending does not go into performance media platforms like Direct Response TV (DRTV), direct mail and telemarketing.

As fellow Engage:Hispanics columnist Marcelino Miyares mentions, while it has been growing substantially, only approximately $50 million was spent on Hispanic DRTV in 2009. Even when Hispanic DRTV spending is combined with the amount spent on other forms of traditional Hispanic direct response media (direct response radio, direct mail, telemarketing, door hangers, etc.), it represents a relatively small percentage of the $4 billion spent in Hispanic media in 2008 (TNS Media).

This will all change because of Hispanic online performance marketing.

First, a little introduction and background in online performance marketing. Online performance marketing, or online lead generation, refers to the creation or generation of prospective consumer inquiry, interest or purchase of products or services online. There are two types of leads in the lead generation market: sales leads and marketing leads. Sales leads are generic leads generated on the basis of demographic criteria such as zip code, FICO score, income, age, HHI, etc. Marketing leads are brand-specific leads generated for a unique advertiser offer.

There are three prevalent pricing models in the online performance industry: cost per click (CPC), cost per lead (CPL) and cost per acquisition (CPA). There are, however, a variety of other performance pricing models, such as cost per call and cost per interaction, that are starting to gain traction. Online performance marketing has had a big impact on online marketing and the traditional advertising industry, providing advertisers with the opportunity to purchase media with guaranteed results. The ripple effect has spread throughout the entire marketing and advertising industry.

During the last three years, online performance marketing has expanded into the U.S. Hispanic market. Starting with a few pioneering lead gen companies in late 2006 / early 2007, Hispanic online performance marketing has expanded to include just about every publisher and media company working in the Hispanic digital market. It will only grow in viability and capabilities with the rapid growth in Hispanic consumer Internet penetration.

The emergence of Hispanic online performance marketing will change and grow Hispanic direct response for three reasons:

1) The availability of Hispanic online performance marketing will allow advertisers that have been hesitant or slow to enter Hispanic direct response to do so by getting their "toes wet" online. Starting a direct response campaign online is quicker and less expensive than testing out TV, radio or direct mail. Creative assets are relatively less expensive and allow for testing of multiple offers, payouts, etc., to more quickly optimize plans.

2) Starting a Hispanic direct response program online provides valuable metrics, particularly highly valuable CPAs and CPLs, that can guide offline direct response plans and negotiations. For instance, advertisers can use online CPLs to negotiate TV and radio per inquiry (PI - the offline equivalent of CPL) programs. If an offer does not perform in the television or radio PI space, it is almost impossible to get the stations to take the commercial again without changing the payout. Being armed with CPL figures gleaned from online performance campaigns can save advertisers a lot of money when extending offline.

3) There are significant benefits of combined online and offline Hispanic performance marketing. As we see with search engine advertising vis-à-vis broad reach media, using mass media outlets like TV and radio will drive a lift in lead generation across all media channels, particularly online. Integrating online and offline lead generation will also provide a nice one-two punch: online will drive volume while offline will drive awareness and quality. As a bonus, CPL and CPA online media buys can generate lots of ad impressions, resulting in branding benefits.

The pump is already primed for Hispanic direct response based on who spends in the Hispanic market and what their goals are. With powerful new online tools, the sky will be the limit.