• by Paul Gough , September 11, 2003

As the Hispanic population continues to grow, agencies that specialize in the market are seeing more activity from mainstream marketers but say ad budgets continue to be less than it should be.

"It's healthy but still small," said Carl Kravetz, chairman and chief operating officer of cruz/kravetz: IDEAS, a Culver City, Calif. Agency that specializes in Hispanic marketing. Kravetz spoke at a panel that helped kick off the Association of Hispanic Advertising Agencies four-day conference in Los Angeles, which was broadcast live via the Web. Kravetz said the Hispanic marketplace hadn't seen the declines that have hit the general ad industry but that Hispanic ad budgets still are disproportionately low.

There are 39 million Hispanic consumers in the United States, with about $229 million in purchasing power. A trend that demographers saw beginning in the 1980 Census has grown into reality: Hispanics are now the nation's largest minority group. Hispanic marketing has blossomed as well, as mainstream companies realize the opportunities in both Spanish- and English-language media targeting the demographic.

"It's so much bigger than anyone thought," said Carlos Santiago, of The Santiago Solutions Group of San Francisco. Santiago said that more immigrants are deciding to settle in the United States instead of returning to their native countries.

"Those are adults with disposable incomes, ready to buy," Santiago said.

Kravetz said attitudes about the multicultural marketplace have changed and a lot of companies and categories that weren't previously interested in the Hispanic marketplace are now starting to show interest, including pharmaceuticals, technology and business-to-business.

"We used to tell them that this was an opportunity," said Ingrid Otero Smart, president of the Association of Hispanic Advertising Agencies and executive vice president of multicultural shop Mendoza-Dillon & Asociados, Irvine, Calif. "Now we're telling them it's a necessity. If they don't do it, then they're going to go out of business."

Tony Ruiz, a partner at New York's Vidal Partnership, said there are some areas of the country where there's no way companies can fulfill their sales potential unless they heavily leverage the Hispanic market. And a company that doesn't know what to do and how to do it could easily lose dominance in markets like Los Angeles, Miami and New York, where the Hispanic population is so heavy.

"It's part of the competitive landscape," Ruiz said.

But a company's knowing it needs to address Hispanics doesn't mean that it will do it well. It starts with a question among some advertisers as to why they need a Hispanic agency in the first place. Why won't a general market agency do, they ask?

Kravetz said that just like hiring an interactive agency to do a Web campaign, a Hispanic agency should be hired to do a Hispanic campaign.

"It's not just about language. It's about culture," said Otero Smart. "They need an agency that understands the culture, that understands the market."

Ruiz predicted the Hispanic marketplace would grow only to the extent that clients get the right kind of leadership from an agency committed to the Hispanic community.

Hector Orci, co-chairman of La Agencia de Orci in Los Angeles and the panel's moderator, said that some of the questions that they field now from clients are the same ones they fielded 20 years ago. Other panelists agreed. One sticking point: The idea that general-marketing campaigns will satisfactorily reach the Hispanic population that speaks English. But that isn't the case, Santiago said. He said that even among the Hispanics who speak all or mostly English, at home they prefer messages to come to them in Spanish.

"It's not that they don't go to watch 'Friends,'" Santiago said. "That means that the ad doesn't persuade them as much as an ad in Spanish does."

Even among the younger population, the advertising aimed at English-speaking Latinos has suffered from a lack of resources on TV.

"Part of the problem is the environment where you deliver those messages. There hasn't been a critical mass of English-language programming that is of specific interest to Latinos of any age," Kravetz said.

And even when the language of choice is English - although studies have shown that ads targeting Hispanics are more effective in Spanish - general market techniques don't take into account the cultural effect.

"There seems to be an assumption . that if a Latino is English-dominant they cease to be culturally Latino," Kravetz said. "People remain culturally Latino even when they choose to speak English some or most of the time."