Directo Days Speakers: Hispanic Market Untapped

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The 2001 census gave Hispanics what the marketing community generally denies them -- recognition.


Though Hispanics comprise 13 percent of the U.S. population of 284.8 million and are now the largest minority group, advertising spending on that market is just $1.2 billion compared with $173.2 billion on the general market nationwide.


"Thirty percent of U.S. companies are targeting the Hispanic market; you really wonder what the 70 percent are doing," said Rick Blume, vice president of multicultural list marketing at 21st Century Marketing, Farmingdale, NY.


And even those 30 percent do not spend enough, attendees were told at the 10th Annual Directo Days Conference hosted March 3-4 in New York City by the Direct Marketing Association.


Speakers like Blume were almost evangelical about the Hispanic market's untapped potential.


Take the population explosion itself. By 2010, Hispanics will account for 15 percent, or 56 million, of the country's population. In 2020, that figure will balloon to 70 million, or 21 percent.


Hispanics are already a force in parts of the country. One out of three residents of California and Texas is Hispanic, one out of four in Arizona and one out of eight in Illinois. The United States has the fifth-largest Hispanic population of any country. Blume expects the United States to become No. 2 in a few years behind Mexico.


Though these numbers represent a new frontier for marketers, U.S. Hispanics are not a homogenous group. Roughly two-thirds claim to be of Mexican origin. Hispanics from Central and South America account for 15 percent. Puerto Ricans are 9 percent, Cubans 4 percent and others born of intermarriages are 5 percent.


Such diversity within Hispanics makes marketing to them harder. No lists target individual segments within that demographic, Blume said.


The U.S. Hispanic population is not clustered in one place, either. According to the census data, 31.8 percent live in California, 19.4 percent in Texas, 8.3 percent in New York, 7.9 percent in Florida, 4.5 percent in Illinois, 3.8 percent in Arizona and 3.3 percent in New Jersey. The rest are spread elsewhere, increasingly in markets like Las Vegas and Alaska.


Fifty percent of the Hispanics are in seven metro areas. Los Angeles accounts for 18.7 percent, New York City 10.8 percent, Miami 4.6 percent, Chicago 4.4 percent, Houston 4.1 percent, San Francisco 3.7 percent and Dallas 3.5 percent.


Armed with these data, what should direct marketers keep in mind when viewing Hispanics in the United States?


Though most share Spanish as a common language, Hispanics are not to be confused as one group. Venezuelans will think differently from Argentines, as Mexicans will from Colombians and Puerto Ricans. The written language may be the same, but not the spoken dialect.


Immigration also plays a key role. An estimated 64.1 percent of the country's Hispanics are foreign born, with 28.3 percent in the United States for one to nine years and 35.8 percent for 10 years or more. Those born in the United States account for 35.9 percent, with 15.7 percent belonging to the first generation and 20.2 percent to the second generation.


"This is a market that's dynamic; it's not a static market," said Ruth Gaviria, director of marketing and brand development at Time Inc.'s People en Espanol magazine in New York. "It's an immigrant market that defies every other model in the U.S."


Gaviria thinks Hispanics are the nation's emerging middle class. They reported more than 136 percent growth in household median income from 1980 to 2002 vs. 17 percent for the general market.


And marketers also should note: Forty percent of the Hispanics are younger than 20, meaning this audience has a longer lifetime value to a marketer in search of a loyal consumer.


"Any product out there that is targeting kids or teens, if there is not a Hispanic flavor or Hispanic influence, you might want to think it over," Gaviria said.


Teen People, for example, more than any other Time Inc. magazine, has covers featuring people of African-American, Asian-American or Hispanic origin, she said.


Hispanics by and large vote Democratic, yet are fairly conservative. Many are Catholic. And this conservative streak probably helped George W. Bush in the 2000 presidential election, Gaviria said.


Hispanics value public education, access to affordable healthcare, reduced crime and, most interestingly, the economy. Hispanic parents are keen that their children have a better life than they did. And here's the paradox.


"The Hispanic parent does not know how to save," Gaviria said. "The opportunity for financial marketers is immense."


And like Asian-Americans, Hispanics put their family first. Marketers already use this to their advantage in television commercials.


"This is not a jaded consumer," Gaviria said. "This consumer has not been targeted that long."


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