The outlook for Hispanic advertising: Rosy
Spending will be strong in 2016, boosted by political campaign dollars
December 15, 2015
By the editors of Media Life
This article is part of an ongoing Media Life series entitled “Catching the next big wave: Hispanic media.” You can read previous stories by clicking here.
Next year will be a strong one for Hispanic ad spending, with the Olympics and the presidential election, yet there’s still more money that should be funneled into Hispanic media that’s not. In part that’s because advertisers remain confused about the best way to reach Hispanics, including whether to use English- or Spanish-language media. And in part this it’s also because English-language media has been so slow to embrace true biculturalism, such as shows or magazines that truly show a Hispanic influence. Carlos Santiago, president and chief executive officer at Santiago Solutions Group and research chair at the Association of Hispanic Advertising Agencies, talks to Media Life about what to expect for ad spending next year, how TV is holding up in the digital age, and why media buyers are still confused about Hispanic media.
What’s the general outlook for Hispanic ad spending in 2016? How much do you think it will rise over 2015?
I think it will be up.
I think that this last year might have been down from 2014 because of the World Cup. So those are normal fluctuations, and next year is a political year. There are several big soccer games that will help boost it also. So I think overall next year it should be up, but the key question is if the percentage of the overall ad spend will go up, stay the same or go lower.
Which media will see the biggest gains and why?
TV and digital, but TV with Hispanics is still the major vehicle.
We should see TV going up substantially because of the Olympics and elections. A lot of that spending will be on TV. But I also believe digital and mobile will also see major increases. That has also been the case in previous years.
Is TV suffering from any of the problems that English-language TV is facing, in terms of competition from digital? Why or why not?
Yes, absolutely. I think not to the same degree because there are not as many Hispanic-centric digital outlets.
But overall Hispanics are going to a lot of sites and content that attracts the general population, especially bicultural Millennials–they go to a lot of the same channels, such as YouTube and social media. That continues to increase and it should create healthy competition to traditional TV.
And also sites such as Univision.com and the NBCU properties online are placing major priorities on those media, to increase the Hispanic traffic. But at the end of the day there’s lots of competition online.
What sort of impact do you expect to see from political? Will candidates spend more this time around on reaching Hispanics via local TV or social media? Why or why not?
I think the Hispanic vote is going to be critical this year.
It always goes down to those states where Democrats feel they’re very close to the Republicans, but they will have to ensure that the Hispanic voters get out. In a lot of elections, Hispanic voters have a certain degree of apathy about the system, and overall the U.S. doesn’t have very high voter turnout.
So it’s really critical to make sure they’re very energized, and I actually think Trump is doing a good job at that. But they’ll have to make sure in key swing states the Hispanic vote is out there. For example, Florida has been a major swing state in the past three elections, and there’s a major influx of Puerto Ricans that are now able to vote. Usually that’s kind of the epicenter of the decision of the U.S., so that’s going to be very, very important. Broward County and Orange County will be very critical.
I would say these elections are going to be bigger than ever, the political dollars, including Hispanic. Hillary Clinton cannot do without that vote, and it cannot be taken for granted, so I think we’ll see a lot of spending.
Which ad categories allocate the most to Hispanic-focused advertising? Why?
Two categories stand out, consumer packaged goods and auto. Those are the biggest in terms of spend, with each spending over $1 billion annually.
In terms of rising categories, we would be looking at a different set, including pharmaceuticals, which is not at the level from an overall share of ad spend. Pharma, for example, is only spending about 2.5 percent to 3 percent of budgets on Hispanic, but in the last year we’ve seen a lot more medications advertised. So we should expect that to continue to increase.
At the same time, health insurance advertising related to the Affordable Care Act seems to be spending heavily. That should continue into next year as well.
Almost every category has been growing at about four times the annual increase of the general market, so that should continue. However, I think that pharma and health-related will show much greater pace of growth.
Are there any ad categories that continue to lag? Why?
I think that there are sub-categories. Some that are behind that have some players but are still in development are the luxury and near-luxury segment of auto, such as BMW, Mercedes and those types of brands. They’re just coming in at a regional level. I think what we’re about to see is those efforts will get to a larger scale and spread to more regions. They typically start in the southwest and southeast of the U.S.
The same thing with casual restaurants–we see a lot of fast food, but from a casual restaurants standpoint we’ve seen a surge, but I don’t think we’re seeing that [in Hispanic]. So we should see a steep increase there this year as well.
And again the pharma category has the potential to triple in Hispanic because it’s still significantly behind where a lot of other larger categories are [in terms of share of total budget].
What’s the biggest misperception about Hispanic ad spending?
I think the biggest misperception right now is that Hispanics can be reached with the same message in English and that we can reach audiences–especially Millennials–just through English vehicles.
That is really confusing advertisers to a large extent. The reality is that Millennials are really living two cultures at the same time, and that duality has differences in terms of their functional and emotional rewards.
So when a Millennial is watching the NFL and seeing advertisers during a game, they respond differently and move their emotions less than when they’re watching a soccer game in Spanish with their family and friends and watching those advertisers in that context.
This idea that the Millennial is watching everything in English is not correct, and secondly and more importantly, even if they’re watching it in English, their triggers to purchase are activated in a more effective way when the advertising is in-language and in-culture.
Where does the money for Hispanic ad spending come from? Is it stealing money from other parts of the budget? Or is it allocated as a greater part of spending on a medium, for instance, an advertiser has $X for digital, and $Y of that goes to Spanish-language sites.
That’s a good question.
I think most of the time it’s taking money from someplace else, because budgets are pretty flat these days. So there’s a conscious decision to spend in Hispanic either because the competition is doing so and seems to be having success, or because they’re a company that measures their sales by stores, and Hispanic sales are strong, making it worth prioritizing the Hispanic market more than in previous years.
Those continue to be the two biggest factors for convincing companies that their spending needs to increase.
What we’ve seen the past four or five years is the companies that used to be the largest brands in categories have been doing Hispanic for more than 20 or 25 years. So there’s an influx of brands that are kind of in the middle now coming to the Hispanic market. There’s been an increase in spend from the leaders of each category, but the number of companies that did not advertise before and are now is increasing significantly. And when they come in, they don’t come in in a small way. They’re jumping in at substantial levels. So we’ve seen a large increase in the number of companies that have come from almost nothing in Hispanic to spending, say, 8 percent of their budgets on Hispanic. So that increases the overall expenditure.
What’s something buyers should understand about media aimed at Hispanics that they seem to struggle with?
I think media buyers are still trying to make sense out of the duplication of viewership.
So, where Hispanics are already watching many English channels, buyers may think that they’ll have them covered with “American Idol” or whatever show it might be. But the reality is the majority of Hispanic households are either Spanish-dominant or bilingual, and they’re still going to be motivated by ads that are in-language and in-culture to a high degree compared to ads that did not have that embedded in the strategy.
So they may be watching the ad [on English channels], but they’re not as responsive as when the ads really embed Hispanic nuances in the communications strategy.
I think it’s not a question about reach, it’s more a question about effectiveness. Many times that reach might be more cost-efficient in the overall media landscape, but the effectiveness is lower.
So I think that’s what a lot of media buyers have to reason for to clients. And sometimes they do have the answers, but many times they don’t. The number of advertisers that are spending on things such as marketing effectiveness, ROI and media mix-type of analysis, is still small.
What’s your long-term outlook for Hispanic ad spending? Where will we be five or 10 years down the road?
The media is evolving.
Hispanics are looking for content that’s highly relevant, and there’s still a formula to attract bilingual and bicultural viewers that’s not quite consistent yet. We saw “Betty la Fea”/”Ugly Betty” kind of surge, and then we saw “Jane the Virgin” maybe five years later. But there hasn’t been consistent and powerful bilingual and bicultural content in the media that has significant scale.
We see “Modern Family,” but really is it every day of the week or every hour? No. There aren’t enough major hits that truly become a source of passion for that bicultural and bilingual viewer. I think we need to see more of that in order to evolve and increase the options for advertisers, where they know they’re going to get that Hispanic bilingual viewer in bilingual media, because for now there aren’t that many choices.
There have been tests and explorations such as Fusion and NuvoTV, but overall the results from those efforts when they’re very Hispanic-specific haven’t been to the scale that advertisers would like to see.
The CW and NBC are trying to bring more options to their channels, and I think we need to see more of that. We need to see more content to see more than incremental increases. Advertisers are really thirsty for content that reflects that bilingual bicultural Hispanic audience.
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