January 2007 - America's Other DR Market

What has 45 million people, 55 TV channels, buys mucho DR products, and is right under your nose? It’s the U.S. Hispanic market, of course.

By Jack Gordon

Last spring, a direct response television (DRTV) campaign for a new product, called Auto Cool, tested well in the American mass market. The solar-panel device keeps cars cooler when they are sitting in the sun. Its sponsor, Allstar Marketing of Hawthorne, N.Y., thought that Auto Cool might be attractive to the U.S. Hispanic audience, as well. So Allstar worked with Vivar Advertising of Los Angeles, a direct response (DR) agency specializing in the U.S. Hispanic market, to test a Spanish-language version of the campaign.

“From the first week, results were incredibly strong, basically matching the high ratios and average sales being seen in the English-language market,” says Adriana Eiriz, Vivar’s managing director. More promising still, Eiriz says, the same ROI was achieved with an interactive voice response (IVR) system at the call center, “indicating that a Spanish-language audience would accept this new technology and deliver similar results.”

One- and two-minute versions of the Spanish commercial ran in heavy rotation during the hot summer months on networks, including Telemundo, Galavision and the Discovery Network’s Spanish channel. Thanks in large part to the coverage in two languages, Eiriz says, the Auto Cool campaign was “one of the bigger short-form hits of the spring and summer of 2006.”

Allstar’s experience was by no means unusual. The U.S. Hispanic population stands at about 45 million. Media buyers and production agencies that specialize in reaching this vast audience cite a long and growing list of successful mass-market DR products that have found new customers and additional profits by adapting their campaigns for Spanish-language media: Body by Jake, 6 Second Abs, Proactiv Solution, Dual Action Cleanse, Nu Wave Oven, Little Giant Ladder, Infinity Razor and many more.

The Carabella Collection, which specializes in women’s apparel, shoes and accessories, has been successful in the U.S. Hispanic marketplace.

Spanish-language media outlets even use the direct-response model to sell themselves, points out Jose Luis Valderrama, president of Miami advertising agency the Hispanic Group. For instance, Valderrama says that Dish Latino, a subsidiary of the Dish Network, has relied on a DR sales campaign to acquire what now are 1 million households subscribing to its 35 Spanish-language satellite channels.

U.S. Hispanic purchasing power is now estimated at about $700 billion a year, says Dr. Nadia Ashrafian, CEO of Capital Media Inc. of San Juan Capistrano, Calif., a marketing agency that specializes in bringing mass-market DR products to the U.S. Hispanic audience. And the audience of Spanish-speaking consumers is growing. Citing figures from The Conference Board research group, Ashrafian says that today’s 10 million U.S. Hispanic households will soar to 13.5 million by 2010.

Spanish-language media outlets are proliferating, as well. Valderrama says that at least 55 Spanish cable or satellite channels now are available in the United States, with 15 added in the past three years alone.

Alex Agurcia, president of U.S. Hispanic marketing agency Omni Direct Inc. in Coconut Grove, Fla., says that marketers with successful English-language DRTV campaigns can boost their revenue by as much as 20 percent by adding Spanish channels to their media buys.

But potential is one thing. Capitalizing on the potential is another. From media buying and creative concerns to backend operations, expanding effectively into the U.S. Hispanic market calls for some special understanding.

On one level, “media buying is media buying; it’s all about demographics and targeting,” says Ron Perlstein, CEO of InfoWorx Turnkey DRTV, a full-service infomercial company in Boca Raton, Fla. But while the basic concepts are universal, the landscape in the U.S. Hispanic world differs from the American mass market in significant ways.

For instance, says Ashrafian, “Media buyers need to be cognizant of the relative youth of the Hispanic household.” The median age for U.S. Hispanics is 26.7 years, compared with a mass-market median of 39.6, she says. Hispanic households also are larger and more likely to include children under 18. “Translated into a media buy,” she says, that means looking at the 18- to 49-year-old audience, or even 18 to 34 in some cases, rather than the 25- to 54-year-olds generally are used as a starting point when targeting the “average” American household.

Another thing to understand is that U.S. Hispanics do not comprise a single market but a number of them. While Mexicans account for the largest segment, about 67 percent, Valderrama says advertisers also should consider Central Americans (9 percent), Puerto Ricans (8.6 percent), South Americans (5.3 percent), Cubans (3.8 percent) and others.

These populations do not necessarily share the same tastes, Valderrama says; Mexicans tend to be bigger soccer fans than Argentines, for instance. Neither do they all revere the same saints; the Virgin of Guadalupe is the most honored saint in Mexico, but Cubans have more reverence for Virgin of Charity (Virgen de la Caridad).

The recent proliferation of Spanish-language television channels allows for both broad and narrow targeting. Agurcia says that Univision has the largest U.S. Hispanic audience, followed by Galavision, Telefutura and Telemundo. Fox Sports Español, GolTV and ESPN Deportes also attract broad audiences for soccer and other sports. More specific viewers can be reached via networks, such as the Dominican Channel, WAPA America (Puerto Rico), TV Columbia, TV Peru, TV Venezuela, Canal Sur and more.

Agencies differ in picking favorites among these options. Perlstein’s choices for “best value” include ESPN Deportes, Dish Latino and Galavision. Ashrafian says that Telemundo “works wonderfully on both a national and spot-market basis.” But in terms of ROI, she says, her “best efficiencies” are coming from cable outlets, including TuTV, Fox Sports Español, and GolTV.

Auto Cool, a solar-panel device that keeps cars cooler when sitting in the hot sun, was one of the biggest short-form hits of spring and summer 2006. One- and two-minute spots ran in heavy rotation on-air.

By population, the top five U.S. Hispanic markets, in order, are Los Angeles, New York, Miami, Chicago and Houston. The next five are San Francisco, Dallas, Phoenix, San Antonio and McAllen, Texas. Perlstein finds that the “best responses” to Spanish-language DRTV campaigns come from Miami, San Antonio and Phoenix. Eiriz points to opportunities in up-and-coming “hypergrowth” Hispanic markets, including Raleigh, N.C.; Atlanta; Portland, Ore.; and Denver. Eiriz also notes that Puerto Rico, if ranked as a U.S. designated market area (DMA), would be the third-largest Hispanic DMA. “There are really interesting marketing and media opportunities happening [in Puerto Rico] that will be something to watch in 2007,” she says.

Media buyers agree that the competition for inventory (avails) is comparable to that in the mass market, if not stiffer. Perlstein says that general advertisers have begun to “get it” with regard to the U.S. Hispanic market, and are driving up prices for DR marketers. “Clearance is always an issue,” he says. Most experts concur that long-form avails can be especially hard to come by-”easily sold out,” as Valderrama puts it. At the same time, however, all of those new Spanish-language channels represent new avails, serving to ease the crunch.

Eiriz is keeping an eye on developments in the wake of a recent ownership change at Univision, which has never offered long-form DRTV avails. “We’re watching closely to see if that line of thinking changes. That alone would be a game-changing event [for U.S. Hispanic media buyers],” she says.

Agurcia observes that as inventory becomes more competitive and costs increase, “it becomes critical to identify the specific market the product is targeting” and “to understand cultural, educational and economic segments by geography.”

If that is the daunting part of the DR marketer’s challenge when approaching the U.S. Hispanic market, the good news is that it needn’t cost a fortune to test the water. Much depends on the nature of the campaign, of course, but Agurcia says that a decent DRTV test often can be done with a media budget of $15,000 to $20,000.

Ashrafian says that a 30-minute English infomercial often can be translated or reconfigured and then tested for less than $50,000, including media costs.

Suppose a DR product is a hit in the mass market. Are there ways to tell in advance if it would be successful with the U.S. Hispanic audience? Not really, other than by research and testing, agencies insist. As a rule, products that do well in one market will do well in the other. “We must remember that the U.S. Hispanic consumer is a U.S. consumer,” Ashrafian says. Cultural nuances aside, Spanish speakers tend to want the same stuff as English speakers.

Experts suggest that programs with high-profile hosts who are very popular in the general market, such as Body by Jake, should be dubbed in Spanish.

There are occasional exceptions. Eiriz recalls a potential client who consulted her about a successful mass-market product that removed pet stains on carpets. She recommended against it for the U.S. Hispanic market on grounds that Hispanics tend to spend less on their pets and also because the product’s name “did not translate well.” The supplier went through another agency to test the market, “and we later heard it did not work,” she says.

Eiriz adds, however, that a product’s price point is not as big a factor as many marketers assume. Though average incomes are lower than in the English-speaking market, U.S. Hispanic households tend to contain more people, especially including children. “The person making the purchase for certain products may end up buying more units for other members of the household,” Eiriz says. She suggests that this may explain why many of her DR clients see the same average sale per order from U.S. Hispanic households as from mass-market ones.

But a DR commercial cannot sell a product unless it appeals to its target viewers. The most appealing way to reconfigure an English program for Hispanic media, agencies agree, is to go back to the drawing board and create an entirely new production. “I believe that ultimately is where the market will land,” says Ashrafian. But, of course, this also is the most expensive option.

A less pricey alternative is a “hybrid” production. Elements of the existing English show, usually including host segments and testimonials, are re-shot in Spanish, with the demonstration pieces left alone.

The cheapest route is simply to dub the existing English commercial into Spanish. Eiriz says that dubbing can be a good, low-risk way to go for an initial test of the U.S. Hispanic market. It gives you a rough read on the product’s appeal, after which you can determine how best to revamp the show and otherwise improve the campaign’s performance.

But the inherently lower appeal of dubbed shows is not their only problem. For instance, Eiriz says that Univision, the largest U.S. Hispanic network, forbids face-to-camera dubbing, meaning that nobody can look into the camera and speak in a dubbed voice.

While dubbing is problematic as a rule, however, there are exceptions, as when a celebrity endorser is integral to the campaign. Agurcia suggests that in a program for a Jack LaLanne juicer or an exercise device from Body by Jake, for instance, testimonials should be re-shot with Spanish speakers. But the Hispanic audience doesn’t want to see new hosts, it wants to see Jack LaLanne and it wants to see Jake. So they should be dubbed.

Regardless of how extensively you change an English show for the U.S. Hispanic audience, experts say, it is important to use speakers and voiceovers with neutral Spanish accents. Accents vary significantly throughout Latin America. Remember that Mexicans represent only two-thirds of the target market.

As for cultural nuances and American references that might be baffling to recent immigrants, Valderrama suggests that a translated show should be vetted by a first-generation U.S. Hispanic. “Some content is impossible to translate” for recent immigrants, he says, and an “assimilated” U.S. Hispanic won’t necessarily spot Americanisms that might be off-putting or incomprehensible to a new arrival.

With a population of 45 million and growing, buying power that increases every day, proliferating media outlets and readily available backend services, the U.S. Hispanic market may be waiting for your DR product. What these agencies want to know is, what are you waiting for?

Jack Gordon is editor at large for Electronic Retailer magazine. We would appreciate your feedback. To submit comments, please e-mail the magazine at [email protected].


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