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December 27, 2005

Spanish Language Marketing Dollars Paltry Compared to Market Size

Darrel Rhea at the Cheskin Fresh Perspectives blog is amazed at how little some large, seemingly sophisticated companies spend on Spanish language marketing in the U.S. I share the surprise:

Capital One and Sony score a big zero. That’s right, in 2004, they reported spending virtually nothing on SLM! [Spanish language marketing] Wouldn’t you think that Capital One Financial, who appears to be aggressively going after just about everybody, would focus on one of the fastest rising economic segments in the U.S.? Ditto with Sony Corp.! Any major supplier of entertainment electronics should know better. Perhaps they use nontraditional techniques, such as viral marketing (Sony does sport an RSS feed on its website), but I still find it curious.

In the tech world, HP is spending almost more than Microsoft and IBM combined.

Three out of four of the top advertisers in total spending are telcos. The top spender overall is SBC Communications ($523,503,000). What’s noteworthy is that SBC is also the top spender in Spanish language media (at $9,466,000), which even outranks it own expenditures in business-to-business publications ($9,305,000). Other telcos also include Verizon Communications (#2) and Sprint Corp. (#3) – certainly connoting the competitive nature of the category. Both are way behind SBC when it comes to traditional Spanish language media spending, at $5,333,000 and $382,000, respectively

I am most surprised that there are so few companies that spend more than $2 million a year in SLM, and all of these companies spend a minimum of $40 million a year in total advertising. While Hispanic dominants represent somewhere between 6 - 12% of total population, ad spend is still about less than 4% of total. The level of commitment just seems out of whack with the size of the market opportunity. The short list of players includes Bank of America, Time Warner, Office Depot, AT&T, Deutsche Telekom, SouthWest Airlines, MasterCard International, Aflac, Wal-Mart, AMR Corp., First Data Corp. But…no more.

In fairness, ad spend, in isolation, can be a misleading figure. As Rhea points out, non-traditional marketing techniques do not usually get picked up in conventional measures of advertising spending.

Even still, the concentration of Spanish language marketing dollars among a short list of Fortune 500 companies seems to imply that there will be just a few meaningful large company beneficiaries of the continued economic rise of the U.S. Hispanic market.

Furthermore, these circumstances also imply the tremendous opportunity which corporate America is leaving to smaller companies who decide to exploit the opportunities in this demographic.

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