January 23, 2011

By Cynthia Clotzman / VayaDirect

This is the first in a series of five articles.

Any Hispanic who isn't a recent transplant from Mars is familiar with big advertisers like Inglés sin Barreras and the myriad companies offering legal services via DRTV. This media type is a primary sales driver for many Hispanic-focused companies. For some verticals (think telecom and insurance) DRTV is also the main branding medium. For the purposes of this article we will focus on more highly targeted media such as direct mail, email, and paid search (SEM).

DIRECT MAIL AND EMAIL

First, consider direct mail as a medium irrespective of the target market. It's a specialty requiring years of experience to employ with sophistication. Already expensive, skyrocketing postage has increased costs. It's labor intensive. These facts alone make many a general marketer shy away from it.

Until fairly recently little was known about the nuances of the Hispanic market as it specifically relates to direct mail. More importantly, quality mailing lists were hard to find and internal databases were not large enough to warrant Spanish-language retention programs for many companies. This gave executives more reasons to avoid direct mail to the Hispanic market.

Lately there has been a shift. Agencies like Castells & Asociados, Acento, and Lopez Negrete are beefing up their capabilities. Companies like TimeWarner Cable and DIRECTV are measuring the lifetime value of the Hispanic customer, and using this information to re-allocate marketing budgets. Companies are keeping in touch with customers via email.

In short, a lot is happening. Later in this series we'll share some direct mail and email strategies and tactics that we've found to be successful with Hispanics.

PAID SEARCH (SEM)
You may know that Hispanics are currently more likely to click on an online paid ad than the general market. Additionally, Spanish keywords are often less expensive than their English counterparts, making search especially attractive. For these reasons, brands like Los Defensores put more dollars towards Spanish language keywords versus English, especially for highly searched keywords that command top dollar.

If you are reading this article, Spanish-language paid search shouldn't be optional for you. Begin at minimum with your branded keywords. Go after anyone using your branded terms - they are stealing business from you. If you are already doing Spanish-language paid search, keep it funded. More and more marketers are figuring out their optimal Spanish-language paid search spend and making sure it is a line item in their budgets.

THE FUTURE: INTEGRATING ALL DIRECT MARKETING MEDIA TYPES

Except for large companies with big budgets and the most to lose by not embracing direct marketing to Hispanics, we have seen very little in terms of integration. Even Lexicon Marketing, which ranked #1 or #2 in Hispanic DRTV media spend for many years, never truly integrated its direct media types even when non-DRTV media began to play a bigger role. This is changing. For example, Seguros sin Barreras, a car insurance brokerage, has employed integrated campaigns with direct mail, email and outbound telemarketing components to successfully increase B2B car insurance sales.

THE FUTURE: SEGMENTATION AT A LEVEL OF SOPHISTICATION RIVALING THE GENERAL MARKET

The top direct mailers employ sophisticated segmentation techniques using statistical models to determine who to mail and control-based testing to determine what to mail. The same techniques are being used with digital: the difference is that there are fewer costs and the results are real-time. It takes time to develop, execute, analyze and report on these models, methods and techniques. Different skill sets are required: those with excellent analytical skills, including a good grasp of college-level statistics will be in greater demand.

With search, keyword ID tracking will become more sophisticated, allowing marketers to gain insights into their customers on the backend, not just at Google's “conversion” level. Since Hispanics tend to use more words in their searches, there is great opportunity to analyze phrases, refine creative, optimize spend, and create data points for use in predictive models.

THE FUTURE OF AGENCIES AND DIRECT MARKETING

Hispanic advertising agencies are scrambling to make their services more relevant in a direct/digital world. When the dust settles, many may find that while they have people with a decent understanding of direct, the strategic part of the discipline is lacking. Or, they will find that they have strategists but are wanting on the executional front. Successful agencies will realize they need to support separate “direct” planning and execution functions. The complexity of direct marketing compared to traditional advertising means more specialists.

I'd prefer to work with a direct marketing agency that has branched into the Hispanic market over a Hispanic advertising agency that has branched into direct. The reason? At this time, the sophistication level of the top general market direct agencies is rarely found on the Hispanic side. There has been little need until now.

Agencies that specialize in direct marketing to Hispanics are starting to spring up and may eventually rival their general market counterparts. This will lead to more acquisitions by the big agencies.

THE FUTURE: CHANGING HOW WE MARKET TO HISPANICS

As more control-based testing is conducted, we'll learn how similar (and different) marketing to Hispanics really needs to be compared to the general market. This will have implications beyond direct marketing. Control-based direct marketing is the best form of market research since it focuses on the most important behavior of all: parting with one's hard-earned cash. Spanish dominant segments will need to be treated differently for obvious reasons, but how different really are the most acculturated segments?

Hispanic agencies with a good command of direct/digital strategies, techniques, and technologies will ultimately be in the best shape. Creative directors will need to be flexible and think about creative differently. In fact they will need to create creative differently, perhaps relying on their memory of past test results more than inspiration. All of this may cause some blurring of the line between Hispanic and general market agencies and it will be exciting to see.

By Cynthia Clotzman / VayaDirect
310-913-1364 and my email: cclotzman@gmail.com

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