Searching for the U.S. Hispanic Market

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Some marketers today think the development of SEM tactics for the U.S. Hispanic and Latin American market will not be profitable, while others have glimpsed opportunities just around the corner, but until now, few have taken vigorous action. Call them early adopters if you wish, call them pioneers – it doesn’t matter. What does matter is that this is a new, attractive, and profitable trend for 2006 and beyond, and it’s Latino HOT!

U.S. Hispanic Background

Many companies have tracked and researched the U.S. Hispanic market for over 20 years; however, more than just accurate demographics and consumer data are needed. Predictions for future activities can help guarantee that you take the lead in marketing to this demographic.

In 2002, Hispanics officially became the largest minority in the U.S., a position predicted to last at least through 2050. Synovate reports over 43.5 million individuals of Hispanic descent comprise almost 15% of the U.S. population, and the segment is growing five times faster than the general population (70-plus percent increase in the last 10 years).

The immense buying power of Hispanic consumers will energize the U.S. consumer market as never before. Synovate’s reports reveal Hispanics controlled over $575 billion of spending power in 2003. Today, that number is $700 billion and projected to reach $1 trillion by 2010, according to new estimates by HispanTelligence. Demographics and better employment opportunities are two forces supporting this substantial and continued growth. Current average household annual buying power is about $46,200. For Internet users, 58% of Hispanics report more than $36,300 in annual household income, with 39%  above $54,450 (46% of non-Hispanics in the U.S. place themselves in the “above $54,450″ range).

Not surprisingly, because of differences in per capita income, wealth, demographics, and culture, spending habits of Hispanics are not the same as those of other U.S. consumers. For example, a recent Consumer Expenditure Survey indicated Hispanic consumers spent only about 87% as much as the average non-Hispanic household, but spent 7% more of their income on goods and services.

Language Considerations

The following chart shows the language(s) most commonly used for Internet marketing programs targeting Hispanics at the beginning of 2006.

Language used for Internet marketing programs specifically geared to target Hispanics
English 38%
Spanish 17%
Combination 28%
I don’t know 16%

Source: MarketingProfs.com, iHispanic Marketing Group (iHispanic.com) January 2006

When considering marketing strategies, keep in mind that the purchasing intentions of the Hispanic consumer may be triggered by a word in their thought process that may be either English or Spanish. Bilingual consumers (even if not fully bilingual) may use both languages for all transactions in their daily life. Although a company cannot control that thought process, they can make relevant advertisements in both languages to attract all users and not just a specific segment of the market. PPC ads are ideal for this strategy. The more options marketers use, the greater the opportunity to win over a diverse market. Otherwise, you risk leaving potential transactions to competitors by simply targeting a single portion of the market.

There is no doubt that translation of content and advertising has an elevated cost that is perceived as a barrier to entry; however, companies should begin thinking that creating a Spanish-language website is an asset rather than an expense. For 20-plus years, the Hispanic market has shown growth in both market size and purchasing power. Companies can no longer ignore the cost of not doing business with 44 million U.S. consumers who happen to have Hispanic cultural backgrounds.

True, there are many other challenges in marketing to Hispanics. Perhaps the largest challenge is the various dialects of Spanish found in the different countries and regions of origin. For example, consider the following picture.

When Hispanics look at this object, they may think of any of the following words in Spanish: cometa, barrilete, papalote, papagayo, volantín, milano, etc. Which is the correct one to use if you sell kites and wish to target U.S. Hispanics? Make it your job to research the possibilities, and don’t back off from the significant opportunities of this target market.

Taking Action on the Hispanic Market

Research is obviously important in the pre-targeting phase, but there are many other steps to consider in an effective SEM campaign for the U.S. Hispanic market. Ten items to keep in mind are:

1. Have a realistic, objective strategy. Resist comparing Hispanic market strategies to general market tactics. This unique demographic responds in distinctive ways.

2. Top executives and marketing managers must be committed to the market, not just experimenting with a test here and there. You need at least 12 months to measure real results and adjust campaigns for maximum efficiency.

3. Pre-targeting the Hispanic market requires readiness assessment. Marketers need appropriate front- and back-end processes, as well as third-party specialist audits.

4. You must set aside sufficient resources (people, time, money and technology) . At times, CEOs do not move into Hispanic marketing over concerns of how it will change their organization. They want the option to retain, up-sell and cross-sell. If done correctly, the right strategy can be very rewarding.

5. Should your website be in Spanish or in both languages? Each case is unique. Some companies need to have a fully translated website, while others can just  implement some bilingual web pages. Previously, content-heavy portals needed full translation, while ecommerce websites could succeed just by adding product descriptions in Spanish. As competition grows, the right decision on language use can be vital to your overall strategy.

In addition to translation of content, don’t neglect proper production standards and effective creative with accompanying imagery to achieve high conversions on landing pages.

6. Start with paid programs. Pay-per-click campaigns in Spanish are much less expensive, with very high-traffic volume keywords available for a fraction of the cost of English terms. Organic results on search engines in Spanish are also much less competitive, so be the first to set foot on solid top rankings through SEO efforts.

7. Anticipate additional marketing efforts when designing advertisements and optimized pages. Copy is typically longer in Spanish. Keywords need to be carefully researched, as a strict translation of your keywords into Spanish may not yield the highest traffic volume possible – slight variations may better match the targeted market.

8. Apply the same analytical metrics to Hispanic campaigns as to all marketing efforts, but do not expect the same results. Test, measure results, and make adjustments until you reach maximum efficiency in your Hispanic SEM campaigns.

9. Most importantly, realize that the Hispanic market is not a “one size fits all” target. Proper segmentation is vital for reaching the right consumer for your product or service. Different acculturation segments, countries of origin, education levels, financial status, geographic and demographic characteristics, among other factors, play important roles in finding the targeted online Hispanic consumer right for your business.

Internet Marketing Tactics

Marketing to Hispanics in the last 20-plus years has been primarily through traditional media, but that is beginning to change quickly. The following chart compares the percentages of use of different marketing tactics for both the overall market and the Hispanic market in particular.

The results provide insight into the comparative usefulness of market techniques, even if actual percentages are not dramatically different. Clearly, SEO is the most popular tactic for both markets; likely because it relies on a pull strategy, based on users’ needs, rather than a push strategy that’s focused on brand awareness and potential reach.

Marketing strategies are key. The following chart shows  how pull marketing attracts a more targeted market and is based on persuasion; while permission marketing is more about communities and occupies a middle ground in consumer intent; and push marketing is used more for reach and awareness.

When it comes to reaching the Hispanic population, search engine marketing is highly underdeveloped, as Hispanic advertising agencies (through which most advertising media spend travels) have largely ignored search, through a lack of knowledge of SEM tools and techniques, inadequate Internet budgets, and unwise online ad spend decisions. The growth of firms and independent consultants solely dedicated to search as a result of unprecedented upwards movement of the market leads to estimates that  the value of the paid search market alone is expected to total $14 billion dollars in 2006 and grow to $34 billion by 2010 (Piper Jaffray “Company Report”). Keep in mind this figure does not include SEO – thus the overall SEM market is much larger.

Whether you are a U.S. Hispanic advertising agency, a business owner, an entrepreneur, a webmaster or independent consultant, the opportunities to become educated about this  new multilingual and multicultural search marketing opportunity are here now. For example, Incisive Media (via Danny Sullivan, Editor of SearchEngineWatch.com) has held numerous conferences in the U.S. each year since 1999. In the light of  solid growth in the Hispanic online market, they have added “Search Engine Strategies Latino” (next scheduled for July 9-10, 2007), focused on the U.S. Hispanic and Latin American market. Visit www.seslatino.com for more information on how to attend.

Today, the task of search engine marketing requires full commitment by an individual working in the Hispanic market. It used to be relatively easy to translate paid ads into Spanish or optimize web pages for top ranking among the most popular search engines. Now it is a complicated process requiring research, analysis, and skills that need to be adapted and personalized specifically for the different needs and tactics aimed at the Hispanic market.  If you’re willing to put in the time to explore this relatively untapped, but potentially huge target market, don’t wait until everyone else has jumped aboard. Act now and watch your opportunities and revenues surge ahead of your competitors.

About the Author

Nacho Hernandez is the CEO and founder of iHispanic Marketing Group (www.iHispanic.com). His experience as an entrepreneur, consultant, and public speaker has allowed him to start up new online ventures, as well as help professionals and business owners from the U.S. and Latin America to develop advanced search engine marketing and Internet strategies.

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