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Tuesday, July 24, 2012

Spanish Language TV and Hispanic Marketing


Article I, Section 2 of the United States Constitution requires that a census or enumeration of the population of our country be taken every 10 years. Congress uses the census figures to apportion seats in the House of Representatives, which then affects the makeup of our electoral college.

In most of my lifetime, the biggest interest coming out of the census is watching New York, Pennsylvania and Ohio lose House seats and Florida, Texas, and California pick them up. A shift to the Sunbelt has been evident over the last few census tabulations and states such as Utah will also likely pick up more House seats in the decades to come.

Marketers would often look at the Statistical Abstract that comes from the U.S. Census and study trends plus sometimes put together amusing little factoids such as number of flush toilets per primary residence in America.  But after the 2010 census data was released, more action seemed to come out of it than ever before.

Over the last few months, if you have been paying attention, the marketing and media world seems to have something of a California gold rush mentality toward the growing Hispanic population in the United States. For more than 20 years, demographers and futurists have reported on the growth of the US Hispanic population but not a great deal was done about it. Some of the soft drinks and McDonald’s, in particular, got in early and were rewarded for their foresight. But, many marketers and media conglomerates held back.  Some marketers that I know well basically said that yes the market was growing but Spanish language TV and radio did not work. A couple even mentioned measurement problems, which I always found a bit specious especially in Nielsen metered TV markets. Others said that young Hispanics watched Anglo TV so they could be reached as well in English language settings.

Now, things are changing and fast. The current Hispanic population in the U.S. is close to 52 million. By the time we hit 2050, it will be 133 million at current projections. Marketing wise, the average age of Hispanics in the US is 27 while it is 42 for non-ethnics. That has a boatload of appeal for lots of categories. Most important, purchasing power is about $1 trillion dollars, which would place the US Hispanic market in the top 12 of global national GDP’s. One source even said that it would soar to $1.5 trillion by 2015. That seems a bit high to me if the current level is at $1 trillion. But, let us not quibble. The spending is huge, growing, and very real.

The media business is taking notice and moving very fast. For the last three decades, Univision has dominated Spanish language TV in the U.S.  It has the stunning capability of reaching 97% of all US Hispanics. In the last year, they have added three new channels to their stable and remain the big player in Spanish language viewing. Working with Disney (ABC) they will roll out a 24-hour Spanish language cable news network in 2013.

Comcast, a huge media player, has big plans as well. When they purchased 51% of NBC Universal, they became parents of Telemundo, long the #2 player in Spanish language programming. Telemundo will now have many more hours of originally produced programming going forward. Comcast is also going to launch a unique niche player—Baby First America that will focus on that burgeoning demographic, the Latin Baby. It will be targeted at very young children and their parents and try to help the youngsters develop verbal, mental and motor skills.

Rupert Murdoch is not standing around watching either. Mundo Fox is ramping up which will consist of 60 local stations in the US that will cover three quarters of Hispanic households. People laughed when Murdoch took on the “Big Three” in 1986 and launched Fox. The Fox people have a proven track record of reaching young adults.

To me, overhanging all of this is a unique situation for young Hispanic adults in the US. If you are bilingual, as many are, you have MORE viewing options than other Americans. With several new Spanish language networks coming on board your choices will only grow. So, will these key emerging consumers gravitate toward more Spanish language fare? Or, will they follow the rule that “content is king” and watch the best programming available to them regardless of language?  To me, this has always been why advertising to the Hispanic market has been so tricky. The younger and better-educated Hispanics shift comfortably from English to Spanish language TV and back again. How much emphasis do you put on each has never been easy. And, will the flood of new Spanish language entries not increase Spanish language viewing much at all but merely lower shares for the entrenched top rated players?

The market is too big to ignore for sizable brands and will only get significantly larger. As more players in the brand world and media world pile in to this gold rush, there will likely be some big winners and some sour losers.

Tread carefully!

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com


Tuesday, July 17, 2012

Luxury Brands and Demographics


In the financial industry, there is a very attractive client group known as HNWI, which stands for High Net Worth Individuals.  There is no hard and fast rule about the definition but most would say that the category starts at $1 million dollars or more in liquid assets. There are all sorts of groups as you climb the ladder of affluence into real wealth with many management firms describing those with $50 million or more in liquid or investable assets as “ultra HNWI.”

It should come as no surprise that emerging markets, particularly the Asia-Pacific region, have the fastest growing number of HNWI.  For the moment the U.S. remains on top with about 30% of that fortunate group but the Asian contingent has passed Europe and could pass the US eventually.

Over the years I have always been amused at how people market luxury brands. Very few US agencies seem to “get” what needs to be said. Young copywriters often use the same tact for a fine champagne or apparel line as they do trying to sell a  package good to middle America. Increasingly, the big international agencies are dominating luxury brand assignments as they have staffers who can appeal to those with sophisticated tastes.

The scope of luxury brands is amazing if you dig a bit. Let us look at publicly traded LVMH Group (Louis Vuitton Moet Hennessey). Despite an extremely uncertain economic climate in the US, a very poor one in Europe, and signs of a possible China slowdown, LVMH is chugging along nicely. Sales were up 16% last year despite clear economic headwinds. The company has a stable of brands that reeks of luxury: in wines and spirits they own Moet & Chandon, Dom Perignon, Veuve Clicquot, and Krug Champagne plus Cloudy Bay and Cape Mentelle wines. Hennessey is a big player in the spirits category and a relative of mine visiting Scotland a few weeks ago was surprised to find that Glenmorangie scotch is now owned by LVMH as well. In fashion, leather goods, perfumes, and watches entries include Louis Vuitton,  Berluti, Givenchy, Pucci, Donna Karan, Dior, Loewe, Tag Heuer, Bulgari, and DeBeers. In retail they even own Le Bon Marche Rive Gauche and DFS.

Louis Vuitton has approximately 180 stores in China and they are very astute marketers. In more than one article I have read that some Chinese are getting weary of seeing their trademark monogram pattern on products. One Chinese shopper was quoted as saying “everyone has a Louis Vuitton bag, I am looking elsewhere these days.” Well. Everyone, I assure you, does not carry Vuitton but they are now floating many new designs in Asia to respond to customer comments and pre-empt other brands from making serious inroads in their most explosive growth market.

The art world has taken notice. Toney auction houses Sotheby’s and Christie’s now are drawing nearly a fifth of their business from their Hong Kong offices and I have tracked auctions for both in Hong Kong, Macau, Taiwan and mainland China.

Interestingly, Tiffany’s, the epitome of luxury in the US for decades, seems stalled. Some of their business seems to be tied to Wall Street bonuses and European visitors, neither of whom may be spending as much these days as in the past.

Most luxury brands have a strong online presence, which is essential. The affluent and HNWI use the web as their #1 source about luxury goods along with word of mouth. An area that needs to be developed is mobile. The potential is huge and when mobile can zero in on these people as online and magazines can, the payout could be tremendous. This is particularly true in key Asian markets and in Latin America.

The future of luxury brands is interesting. The rich will always be with us but they may be found in many new places over the next two decades. Looking at demographics, it appears to me that China is the place for the next several years along with smaller Asian countries as well as Brazil, Chile and Uruguay (yes Uruguay!) in Latin America. Longer term, the demographics seem to favor India. The population is huge but, unlike China, it will remain young. There will be plenty of workers supporting the old folks , which will not be true in China down the line.  Do not be surprised if the LVMHs of the world start opening shops for their premiere brands in India a few years from now.

Disparate cultures deal with newfound wealth in different ways. The message may need to be different in India vs. what has worked in Hong Kong recently or New York a decade ago. The successful in emerging markets love luxury Western brands. No matter what happens in the global economy in the next several years, you can bet that many of the high quality products will find new customers in large numbers.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com


Friday, July 13, 2012

A Tactical Suggestion for the 2012 Presidential Campaign


A young media planner based in the American Midwest contacted me yesterday. He had a few questions about the 2012 Presidential race and its effect on TV pricing in spot markets. The core issue is that he has a lot of spot market TV buys coming up for a key client this fall. Many, by sheer luck or bad luck, happen to fall in what the media pundits are calling the “battleground states.”

I have to be careful to disguise this fine young man’s identity. Let us say, for example, that he will be planning strategy for his important client in Ohio, Wisconsin, Virginia and North Carolina (other battleground states at this writing would include Florida (natch), New Hampshire, Iowa, Colorado, Nevada and perhaps Pennsylvania). As the campaign wears on, the list of authentic battleground states will shift a bit as polls get more definitive.

After we e-mailed back and forth a bit, I got in touch with a few people in the states where he would be executing plans. Candidly, they were licking their chops. One stated that pricing would be up 40-50% by September and October for some pretty indifferent inventory. Another stated that he was having scheduling difficulties NOW as Political Action Committee (PAC) money came in backing both candidates with eye-popping budgets.

I got back to my new friend and advised the following:  Don’t buy spot TV in the heavy battleground markets this fall. My logic is pretty simple. If the pressure on key inventory is such that prices rise by 50% over normal rates, you are asking your TV advertising to work awfully hard. Additionally, this young man is making a name for himself by putting together some very nicely wrought media plans. The buys to execute these plans will likely never see the light of day as pre-emptions by either the campaigns or PACS will totally disrupt the carefully designed weekly media weights baked in to the original plans (Federal law states that political advertising must always clear if the advertiser provides upfront money. Previously scheduled commercial advertising is often “pre-empted” by the political dollars).

This is a hard thing to tell clients. You may have to put them in media that does not have a good track record for them. Or, you may miss supporting a key sales period for some advertisers. But, your odds of successfully executing a spot TV campaign are really low this year in many battleground markets. On top of this, the agency you work for may lose income if you defer spending to 2013.

So, you need to look at each market separately. Maybe you can use radio plus a digital option in some Designated Market Areas (DMA’s). Or, local cable plus radio although sophisticated campaigns such as these are using specific cable channels to great effect given the narrow demographic appeals of some channels. Regional sports is also an area which often dodges the political bullet but it is hard to build a total campaign on regional sports working largely on its own for a brand.

This fall will be interesting and I am glad that I do not live in a battleground state or where there will be a hotly contested US Senate seat as well. In that case, I might stick to Netflix, Hulu, PBS, and Turner Classic Movies until after the election.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com





Thursday, July 5, 2012

Baby Boomers and the Future of Media Planning

On January 1, 2011, we hit a demographic milestone. The first Baby Boomer hit 65 years old. Baby Boomers are defined by most as Americans born between 1946 and 1964.  The Baby Boomers comprise our largest generation to date. There are 76 million of us.

The aging of Baby Boomers has profound implications for our economy, product development, our government programs for the mature, and, of course, media usage. Keep one fact in mind at all times going forward if you are marketing a brand or selling media. It is simply this--every day for the next 17 years some 10,000 Americans will be celebrating their 65th birthdays. When we hit 2030, approximately one is five Americans will be 65 years or older. As I write, only one in eight is 65+.

Most writers who talk of the greying of America dwell on the strains that an aging population will put on programs such as Social Security, Medicare and Medicaid. Those are all huge and serious problems but today we will focus on how an aging population base will affect the media and advertising.

Fifteen years ago, as the Internet began to hit its stride, people saw it as a youth oriented means of communication. Now, no one blinks if a 75 year old says "I will e-mail you about that." Many retirees spend hours a day on Facebook or trolling the web.  Hulu and Netflix have made huge strides in terms of usage among the older Baby Boomers in the last 18 months.

So what does all of this mean?

For advertisers, despite warnings by futurists for the past generation, more emphasis needs to be placed on the mature in advertising copy and product development. Why? To me, it is pretty simple. We have a lot of the money. :)  Older Baby Boomers lead virtually every affluent category be it millionaires, people with disposable income, financial security and flexiblitity of purchase decisions and travel options.  Yet, amazingly, many brands allow their agencies to buy against an Adult 18-49 demographic or 25-54 demographic. A few counter that the older you are, the more television that you tend to watch. True, but 15 years ago, that worked beautifully when the major networks still dominated viewing. So, if you bought a 1000 rating points against Adults 18-49, you might deliver 1250 points against Adults 50+ given their tendency to watch so much television. Now, with viewing fragmented, the heavy viewing segment has their own list of favorite programming, often on cable, that are far more pure plays in terms of age than in the past. A 35 year old woman and a 64 woman did not intersect a great deal in their viewing habits. You no longer get the mature as a "free ride" as you once did.

The purchasing power issue has also not been examined carefully enough by most marketers. Many older Baby Boomers do not earn as much as they did in their prime earning years so they do not get much advertising attention. Yet, many do not have a mortgage and their college bills are long behind them. Think of the liquidity this gives them if they are not feeding the mortgage meter each month or paying out a huge check every September and January.  Income has always been overrated in evaluating lifestyle--the key is purchasing power!

A few friends tell me that the aging Baby Boomers will save local TV news. I am not so sure. They have not saved newspapers as many thought they would. Anecdotally, a lot of them appear to be watching ESPN Sportscenter or Baseball Tonight when knee jerk thinking would place them with affiliate news at 10 or 11 pm.

Remember, as well, that what began last year is not a demographic blip. Some 10,000 Americans per day will turn 65 for the next 17 years! They will live longer than any previous generation as well. If you run an agency, does a 27 year old copywriter or media planner know how to connect with these people whom they see as "geezers"?  Think about it.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com