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Ad Agencies Turn to New Media

Hispanic Business, Posted: Nov 27, 2009

The current economic climate has toppled many a titan, and the advertising industry is no exception.

In November, for instance, the legendary Cliff Freeman and Partners creator of iconic campaigns such as "Where's the Beef " and "Pizza Pizza" shuttered its shop.

But while the advertising industry as a whole has felt the hard knocks of the recession, studies indicate that the downturn has been slower to hit the Hispanic-owned agencies. And anecdotally, many of the shop owners themselves insist that the blow to the Hispanic segment of the industry hasn't been as severe. In fact, for at least a few Hispanic-owned shops, the year 2009 has been a time to thrive.

"It's been an excellent year for us," said Daisy Exposito-Ulla, owner of D Exposito & Partners. In the past year, Exposito-Ulla's four-year-old business has landed several major clients such as Amway and a piece of the U.S. Census campaign and doubled the size of the staff . "We've outgrown our office space,"Exposito-Ulla says. Similarly, Acento Advertising, a Hispanic-owned agency based in Los Angeles, doubled its full-time staff in two years, from 27 to 56. Revenues in 2009 are on track to be up 30 percent from the year before.

This year's HispanicBusiness magazine focuses its annual media report on Hispanic-owned ad agencies.

Market understanding The strong performance of these companies in the face of a historic economic downturn is telltale evidence that more companies are coming to understand the value of reaching out to the ever-growing U.S. Hispanic market.

To reach those consumers, companies are increasingly using digital technology to reach the sea of untapped market potential.

In July, Advertising Age released a report concluding that ad revenue in Hispanic media outlets grew by 1.9 percent in 2008, even while revenues shrank by more than 4 percent in the general media market.

The report went on to say that of the top 50 Hispanic-owned ad agencies, just seven posted a drop in revenue.

"We are still in many ways in growth mode," Gisela Girard, chair of the Association of Hispanic Advertising Agencies, and herself the president and COO of the Texas-based agency Creative Civilization, told HispanicBusiness Magazine. "It's fascinating to me to see how major universities across the country are offering degrees in Hispanic marketing. Th at tells you it is a segment of the industry that's solid, continuing to show growth, and that has a tremendous amount of longevity."

To be sure, the advertising in Spanish language media has experienced its share of pain. Industry analysts forecast that revenues in Spanish-language media outlets will be down by 11.2 percent in 2009, according to Jack Myers, a media advisory group. But he projects that general-market revenues will drop an even steeper 14.1 percent. By some measures, Spanish-language media outlets have been hit about as hard as general-market outlets.

In the first half of 2009, revenues in Spanish-language newspapers were down 20.5 percent, compared to an industry-wide decline of 24.2 percent, according to a mid-September report by TNS Media Intelligence. But the report also showed that revenues in Spanish-language TV dropped 12.7 percent, a slightly worse decline than the industry-average decrease of 10 percent.

The majority of the ads in Spanish language media outlets are produced by Hispanic-owned ad shops, said AHAA spokeswoman Elinor Kinnier. But not all ads from Hispanic owned shops are aired on Spanish language mediums.

For instance, anti-smoking ads by Ancento Advertising ran on Fox TV's American Idol slot. In any case, anecdotally, many Hispanic-majority-owned shops say they are doing well. Of the seven firms contacted by HispanicBusiness Magazine for this story, all but one said revenues are up from last year, with the lone exception saying revenues were fl at. At least four of the seven say they employ more people this year than last.

The Hispanic segment of the advertising industry is also uniquely independent. AHAA's Kinnier said while 80 percent of the general-market agencies are subsidiaries of four global giants - WPP Group, Omnicom, Interpublic Group (IPG) and Publicis - 80 percent of the association's approximately 100 firms are independently owned. Many of these firms are well equipped to understand the nuances of a market that is not only growing, but changing.

"The challenges are that, in many businesses, the people who are the major decision makers, still do not recognize the complexity of the population," said Dr. Federico Subervi, director of the new Center for the Study of Latino Media and Markets, formed in 2008, at Texas State University. "But there is value in that complexity."

Census Impacts

The diversity of the Hispanic population could be underscored with next year's U.S. Census. Experts expect that the Hispanic share of the population will officially grow to 15 percent up from 12.5 percent in 2000.

Girard of AHAA said a few companies such as JC Penny, AT&T and American Airlines have long been keen to the benefits of Hispanic marketing. But many more companies are only now coming to that conclusion.

They include The Girl Scouts, which this year created an account with Grupo Gallegos of Long Beach, and Snapple, which left Cliff Freeman and Partners in 2008 and contracted its Hispanic-outreach account to Houston's Lopez Negrete Communications. (Its overall campaign went to Deutsch Inc.) Hispanic advertising professionals say the industry is changing in many ways at a breakneck pace. Decades ago, the main mission of many Hispanic-owned firms was to reach out to their audiences in Spanish.

Buzzword is 'Bicultural'

But much of the growth in the market has been fueled by Hispanics born in the United States. The industry buzzword is no longer "Spanish" or even "bi-lingual," but "bi-cultural."

"At many U.S. school districts such as Houston and L.A. the student populations are 50 percent Latino," said Alex Lopez Negrete, president and CEO of Lopez Negrete Communications. "Guess what: they are bilingual and they are bi-cultural." Some of Lopez Negrete's ads for Wal-Mart reflect this new bi-cultural mindset.

One ad opens with a Hispanic woman talking to the camera in English about how much money she saves at Wal-Mart. Then the camera pans out so the viewer sees her husband, who's white. Of course, the digital revolution has been another major game-changer for Hispanic-owned and general-market firms alike.

"In the '80s, to reach the entire population, you'd buy three networks and you'd have the whole nation," said George San Jose, President and COO of The San Jose Group in Chicago, whose revenues are up 11 percent this year.

"Cable systems now bring you a whole Hispanic tier," San Jose continued. "Then you begin to add social media like Facebook cell phones, and marketing with electronic billboards. To sum it up, where we once used three vehicles, we now need to use 20 to effectively reach that customer."

The digital explosion has been a particularly fortuitous phenomenon for the Hispanic-owned firms, which enjoy the benefits of an audience that is not only growing, but young. What's more, studies show that young Hispanics in particular tend to be enthusiastic adopters of new technology.

Reflecting this reality, the digital unit at Lopez Negrete has grown in a year and a half from just two employees to 16.

Agencies now are also in the business of creating Web sites that are both visually appealing and highly interactive.

The San Jose Group, for instance, put together a Web site for the state of Illinois encouraging Hispanics from around the country to visit the state. Called disfrutaillinois.com, the state-of-the-art site features a Hispanic family whose characters move fluidly about as if on video, and talk to the viewer directly when touched by the computer mouse. The site also creates individualized travel packages for clients based on their answers to a multitude of questions. During the site's debut year, San Jose said, Web traffic has increased 2.5 percent. Much of the 21st Century-style advertising involves an entirely new concept: Getting customers to come to the ads, instead of vice versa.

For instance, Anita Santiago Advertising has a campaign with IKEA in which it places electronic billboards near the U.S. border for people driving into San Diego from Tijuana. The billboards inform the motorists of ongoing sales, and provide them a number they can text with their cellphones if they want more information.

"I think, in a general sense, that the Hispanic marketplace is becoming more and more critical to clients," Exposito-Ulla said. "We are the new American agency. We're not out to be the classical or traditional Hispanic agency, because the marketplace has changed."

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