New Advertisers Continue to Court Latino Market

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NEW YORK (Adage.com) -- Buoyed by a Census 2000-driven boom in all things Hispanic but buffeted by the deteriorating U.S. economy, Hispanic media growth is slowing but still outpacing the general market.

In TV, dominant Spanish-language broadcaster Univision Communications saw second-quarter revenue growth slide to 2%, prompting analysts to cut full-year growth forecasts to 3% from 7%. That's still way ahead of a general market decline of about 10%, but a big drop from the double-digit growth that Hispanic TV usually enjoys. The upfront TV market, usually closed by August, is dragging on into fall as advertisers, unsure of what next year will bring, find it hard to decide whether to spend aggressively or pull back.

"People are taking longer to make decisions," says Tom McGarrity, Univision's president of network sales.

The advantage the Hispanic media market enjoys is that new advertisers-bringing new money-are still discovering it.

"Demand in general is up," says Les

Read Ad Age's full coverage of census-related marketing issues.
Margulis, VP-director of communications at the Vidal Partnership, New York.

Both Univision and rival Telemundo are likely to draw new viewers-and advertisers-by operating multiple networks. Univision on Jan. 14 launches its second network, Spanish-language Telefutura, aiming at Hispanics who watch English-language TV. And Telemundo is relaunching its Gems Television cable network as trendier Mun2, pronounced "Mundos," Spanish for "worlds."

"Telefutura will bring a whole new audience in," Mr. Margulis says. "The same with Mun2, for Generation X, young baby-boomer types. It's very hip. A lot of people who watch Fox now will move over."

Telemundo expects to end the upfront with about 20 more advertisers than it had last year, and positive growth, says Steve Levin, exec VP at Telemundo Network.

"While the economy is softer, there's a little bit less of a tendency to cut back Hispanic first," says Monica Gadsby, senior VP-director of Hispanic media at Bcom3 Group's Starcom Worldwide Hispanic Group, Chicago. "My best guess is net results will be pretty much a flat market. This is pretty good news but not the double-digit growth we've come to expect from Hispanic in the last two or three years."

Speculation has intensified that Viacom, General Electric Co.'s NBC and AOL Time Warner are all looking at Telemundo, with an estimated price tag of close to $3 billion. That may reflect less an imminent bid than an awareness that the major networks need a Hispanic strategy, whether it's buying Telemundo, adding a Spanish audio option, creating their own Spanish-language cable, developing programming with Hispanic appeal or a combination of options.

One victim of the slowdown is Azteca America. Mexico's TV Azteca and Pappas Telecasting were scheduled to start the U.S. Spanish-language network earlier this year.

That project-plagued by financial, distribution and programming problems-has been scaled down to a Los Angeles TV channel, called KAZA-TV54, that started July 28 and has as advertisers only Miller Brewing Co. and Tampico, an orange drink marketed in the U.S. by Marbo. President-Chief Operating Officer Peter Chrisanthopoulos says Azteca America will roll out later in other markets.

Radio is slightly up
Radio executives aren't swooning over recent growth, but again compared with the general market, 2001 is a banner year. "We've been up 1%-2% on same station revenues, while the industry is down 8%-9%," says McHenry Tichenor Jr., president-CEO of Hispanic Broadcasting Corp. For the six months ended June 30, HBC's net revenue rose 2% to $113.7 million vs. the same period last year; net income, however, fell more than 19% to $13.9 million.

Ad pages fall
For magazines, ad page growth has skidded to a halt, but that hasn't discouraged publishers from trying new ventures.

Hardest-hit is Essence Communications' Latina, with a 10% drop in ad pages to 415.73 for January through July 2001, vs. the same period last year, according to the Publishers Informa-tion Bureau. Latina's ad dollars fell by 9.1% to just over $6 million during the first seven months of the year.

Christy Haubegger, the magazine's founder, publisher and CEO, lost control of Latina in June, keeping simply the title of founder. A former Time Inc. executive, Roy Levinson, has joined as chief operating officer.

Time Inc.'s People en Espanol saw a 0.9% drop in ad pages to 307.29 but a 14.9% jump in ad dollars to more than $8.6 million for January-July 2001. Following an April relaunch, ad pages in Reader's Digest Association's Reader's Digest Selecciones were up 2%, but ad revenue grew by 60.5% to nearly $2.5 million after a big rate base increase.

"You come out of 2000 with the kind of growth we saw and then hit a mini-recession," says Lisa Quiroz, publisher of People en Espanol. "The census numbers helped make it a bit easier than for general population."

The economic climate hasn't discouraged cautious launches. A small sampling:

  • Time Inc.'s Cooking Light used its own seed money to publish a test issue in April of Gusto, an English-language cooking and healthy lifestyle title.

  • American Media did four trial issues in July and August of a twice-monthly men's sports title called Accion Deportiva. The soccer-heavy magazine's fate will be decided this fall. In June 2000, American Media launched a monthly celebrities and entertainment title called Mira!. The title went weekly in January 2001.

  • Latinos on Wheels hits the gas Oct. 26 as a quarterly insert in 35 Hispanic newspapers. On Wheels, publisher of African Americans on Wheels, owns 49% of the new title. Initial distribution is 500,000 copies; advertisers include BMW of North America and Toyota Motors Sales USA.

In another sign of optimism, Sears, Roebuck & Co. will expand its customer magazine Nuestra Gente to six issues a year from quarterly in 2002, and boost circulation by 65,000, or 8.1%, to 865,000, says Gilbert Davila, VP-multicultural management and partnership marketing.

And at a time when English-language newspapers are losing readership, leading Los Angeles area daily La Opinion has boosted circulation 10% to 118,205 for the six months ended March 31, according to the Audit Bureau of Circulations. Display advertising is up about 4%.

Online en espanol
As dot-coms come and go, one of the striking Internet trends is a move toward Spanish-language usage. In a study among Hispanics conducted by Roslow Research Group in July 2000, respondents said they spent 30% of their time online using Spanish. In a follow-up study last March, the amount of Spanish-language time online grew to 39%.

President Peter Roslow predicts the next study, due out in Novem-ber, will show even greater Spanish-language usage. Earlier Internet users, he says, tended to be young and proficient in English. Newer converts are older and more Spanish-dominant, plus Hispanic users in general are learning to use the Internet to stay in touch with home countries through sources like local newspapers.

"The biggest thing is there are more and bigger Spanish sites, and they've done a good marketing and promotions job," Mr. Roslow says, adding that the launch late last year of Univision.com has done the most to shift Internet users into Spanish.

Univision, along with AOL Latino, Terra and Microsoft Corp.'s Yupi MSN, are emerging as the key Hispanic players. Online ad budgets are still small.

Manuel Bellod, CEO of Terra Networks USA, says U.S. Hispanic online budgets are tiny but effective ideas can shake loose more ad dollars. One client for which Terra created a program "suddenly started to find money, not from the original budget but from the integrated budget for the whole brand," he says.

To enhance credibility with advertisers, Terra and other Hispanic sites are pushing for the first online syndicated study for the Hispanic market. ACNielsen is likely to start one in first quarter 2002, he says.

Explains Mr. Bellod: "For us, it's a key indication."

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