multicultural markets: Expanding the Brand In Silicon Valley

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The San Jose Mercury News found a perfect niche market in its own backyard - and VietMercury was born.

The Memo

In the early hours of May 3, 1996, San Jose Mercury-News publisher Jay Harris and vice president of marketing Ann Skeet met in the parking lot and started their work day discussing the company's launch that morning of Nuevo Mundo, a free Spanish-language weekly.

"Jay turned to me," recalls Skeet, "and asked, `What was the one thing that kept you up last night?'" Her answer: "The Vietnamese community. We're going to have to do this again."

Less than three years later, they did. At the time of Nuevo Mundo's launch, Harris and Skeet had already begun work on a similar weekly for the Vietnamese American residents of Santa Clara County, California. And on January 29, 1999, SJMN launched VietMercury, a free 25,000-circulation weekly that, so far, is blowing away all advertising and page projections in a market where there are more than a dozen local newspaper competitors.

The Discovery

"I like to think we have the type of newspaper readership America had in the 1950s," says De Tran, a Los Angeles Times veteran who is now editor of VietMerc. "Back then, you had tightly knit families with strong immigrant backgrounds and dreams of upward mobility. And everybody read newspapers."

Today's reality, however, is more complicated. The Newspaper Association of America reported last spring that 57.9 percent of adults living in the top 50 media markets read a daily newspaper, nearly a 1 percent drop from the 1998 readership average of 58.6 percent. In 1964, the first year the NAA released figures, that percentage was 79.9 percent; by 1989, the number had fallen to 61.5 percent. On average, most English-language dailies continue to slip in overall circulation, and the struggle for new readers is thwarted by the rise of broadcast and online media.

But the 200,000 Vietnamese American residents of Santa Clara County are behind one of the most thriving newspaper niche markets in the United States. In fact, the Vietnamese population in the greater Bay Area supports four daily newspapers and 12 weeklies, according to Tran.

Today, the areas with the largest concentration of Vietnamese Americans, in terms of overall regional population are, in order, Orange County, California; Santa Clara County; and the greater Houston area.

Since their early days of working on assembly lines for the first generation of personal computers, Silicon Valley's Vietnamese settlers have gained spending power and local influence. Tran cites statistics, gathered by Hispanic and Asian Marketing Communication Research Inc. (HAMCR) of Belmont, California, that helped persuade SJMN to launch VietMerc:

- 80 percent of the Vietnamese American population in Santa Clara County was born outside the United States.

- Santa Clara County residents of Vietnamese descent who read at least one Vietnamese-language newspaper a week have an average annual household income of $44,000.

- In Santa Clara County, 34 percent of Vietnamese American households speak only Vietnamese. Only 8 percent are English-dominant; 40 percent are bilingual.

- 58 percent of the area's Vietnamese population regularly read a Vietnamese-language newspaper; 52 percent of those readers also read the English-language SJMN.

- 73 percent of this population have a home computer, and 56 percent of those have access to the Internet.

Vietnamese immigrants are dedicated, voracious readers, Tran says. "The World Bank and other agencies have differing figures, but [SJMN's] research puts the literacy rate in Vietnam at 88.1 percent for individuals over 15 years of age. It is a reading culture, and for a developing nation, that literacy rate is very high," he says.

VietMerc is not simply a Vietnamese-language distillation of SJMN. The weekly's focus is completely different from its English-language daily parent. "The traditional Vietnamese press is very political, either very pro- or anti-Communist," says Skeet. "From an editorial standpoint, we wanted to stand apart."

HAMCR set up focus groups that got to the heart of what Vietnamese Americans wanted to read. Tran says the research showed that VietMerc's readers like stories on the local job market, assimilation into the local culture, and a heavy dose of international news from large Communist countries like China and Cuba. "Our readers are particularly interested in news from China, since so much of what happens there influences what happens in the rest of the socialist Far East." They also want to keep abreast of economic news in Vietnam, since the Asian economic slump of 1998 slowed the flow of foreign investment there.

The Tactics

VietMerc is backed by the considerable resources of Knight Ridder Co., the media chain with a track record for foreign-language spinoffs of dailies in Miami and Texas. The weekly is distributed free of charge in newspaper boxes, doctors' offices, supermarkets, and other places where large numbers of Vietnamese readers are likely to congregate. Neither Harris nor Skeet would reveal launch or promotion expenses, but they say initial promotion costs have been nominal: Besides house ads in the flagship paper, outdoor ads appeared in Vietnamese business centers. SJMN also had a booth at the recent Tet Festival in San Jose, where editorial staff met the community, and marketing staff handed out T-shirts and mugs with the VietMerc logo.

VietMerc's Vietnamese-language Web site went up in early August (www. VietMercury.com), and its computer-savvy audience isn't shy about getting back to the editors with story ideas and comments on how they like the publication. "We've been getting e-mail from Australia, Canada, and France - all the places where readers travel to see their relatives. They seem to be very impressed with what we're doing," says Tran.

The Payoff

Despite the relatively small starting circulation of 25,000, pages for the weekly tabloid have doubled since its launch. "We launched at 88 pages and never looked back," Tran says. As of September, the paper had reached 176 pages.

Advertisers seem to be impressed, based on such an increase in page count. The initial issues of VietMerc were supported exclusively by local advertisers; more recent issues carry ads from major automakers, computer makers, and department store chains. The first national ads were in English, but more are converting copy into Vietnamese.

"We are seeing a repeat of what the advertising strategy at the Mercury-News was 30 years ago," explains Harris. "[The Hispanic and Vietnamese] communities are very important customers for the advertisers in our English-language product to reach because they are growing in numbers and economic influence. Big advertisers like Macy's, Sears, and Nordstrom already know that this is their customer base of the future. Other [English-language] advertisers are learning," he adds.

Harris says niche products like Nuevo Mundo and VietMerc have to be allowed time to grow, both in print and on the Internet. That means not looking for profitability for the first three or four years. "We're doing this not to make money today," says Harris. "This is about our position ten years from now." But editorial focus - not advertising - should drive the product, Harris believes.

"When we considered VietMerc, we decided to go with an all-Vietnamese-language product because we wanted to fully focus on the community, to create a product in that language, because it is obviously what fuels the competition," says Harris. "If the community changes to the point where it desires a more assimilationist, more homogenous product, we will change with that."

What the Critics Say

When an 800-pound gorilla like SJMN entered a crowded marketplace, Tran expected criticism. And it's definitely gotten its share. Several smaller competitors, including Saigon USA, a twice-weekly publication, lashed out, saying that VietMerc had no intention of reporting the "real" news in the Vietnamese community. "They took over by storm," Tam Nguyen, Saigon USA's managing editor told The New York Times in September. "That's why we feel resentful. It's a repression, not a service to our community."

Hanh-Giao Nguyen, co-founder of the 5,000-member Vietnamese Chamber of Commerce in San Jose, agrees that VietMerc has shaken up the community and the Vietnamese newspaper market, but it's generally been for the better, she says. "Most of the Vietnamese newspapers are mom-and-pop organizations, with limited resources," says Nguyen, "But that is not to say that [VietMerc] hasn't had its problems, too. Sometimes the grammar isn't correct, and many people feel the [writers] cannot say what they believe like the rest of the Vietnamese papers do."

However, the advertising and editorial opportunities created by VietMerc have far outweighed any glitches the startup publication has had. "VietMerc is raising the standard for other publications," says Nguyen. "They have full-time people working on it, which isn't seen in many of the other newspapers. [SJMN] is taking it seriously, and that has to have a positive effect on the competition and all of us."

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