MULTICULTURAL? NO, MAINSTREAM

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Anyone who has to ask why Phil Colon's new urban-youth-marketing agency is called Project 2050 probably doesn't know a lot about where the multicultural market is heading.

That's the year, according to Census Bureau projections, when non-Hispanic whites will no longer account for more than 50% of the U.S. population. It's "the tipping point in how the general population will look, when the minority will become the majority," said Project 2050's CEO. "In some cities, that's already occurred."

Indeed, for the first time, the number of U.S.-born Hispanics-more acculturated, English-speaking, better educated and often more affluent than the first, foreign-born generation-is growing faster than the immigrant population. By 2020, just 34% of Hispanics will be foreign-born first generation, 36% will be the U.S.-born, second-generation children of immigrants and 30% will be the third-generation offspring of U.S.-born Hispanics, according to Pew Hispanic Center. Even today, 88% of Hispanics under 18 are U.S.-born, which has huge implications for anyone targeting the youth market.

SEA CHANGE

That cultural phenomenon is sparking profound change among marketers, media and the $3.5 billion Hispanic ad industry, long structured around Spanish-language media advertising, Spanish-dominant Hispanics and traditional agencies mostly owned by holding companies.

Hotshops are sprouting like independents Vidal Partnership, New York, Grupo Gallegos in Los Angeles, and Miami's La Comunidad. Hungry new agencies are springing up to court Hispanic consumers, including the segment's first Hispanic branded content agency, The Lab; Black Sheep, a shop with a direct-marketing focus; and Hispanicity, a year-old ad and promotion shop that uses a tri-generational approach to segment first-, second- and third-generation Hispanics. Project 2050 already counts among its clients Nextel's Boost Mobile and Electronic Arts; it has also met with potential client Nike.

Then there's the "new American mainstream"-the fusion of different ethnic, largely urban groups demonstrated by such trends as the Hispanic urban radio format known as Hurban-blurring traditional lines. Consider this: GlobalHue, an Interpublic Group of Cos.-backed agency founded as an African-American shop, now gets 51% of its $300 million revenue from the Hispanic market.

"The change is much deeper than most people realize," said Guy Garcia, author of "The New Mainstream: How the Multicultural Consumer is Transforming American Business." "Ultimately if the multicultural economy is the consumer marketplace, it's much bigger than the 14% [Hispanic] market that you may or may not decide is worth your trouble. It means companies repositioning themselves, starting from the very beginning, with product development, and the way you staff."

All this had led Hispanic shops to step up their game, not just to fend off new rivals but general-market shops increasingly trying to persuade clients that they, too, can target Hispanics. "We've come under siege from general market agencies who want to eat our pastelitos," said Manny Machado, CEO of Machado Garcia-Serra, Miami, and president until last month of the Association of Hispanic Advertising Agencies. "No, they want to eat our lunch."

changing demographics

David Diaz, creative director of Phoenix-based Grupo Ñ Advertising, said general-market agencies have always been frustrated at seeing money go out the door to Hispanic marketing. "There was a time when agencies staffed at least one or two token employees to try to keep everything in-house, but clients are no longer buying that," Mr. Diaz said. "That's why a few general-market agencies are giving a concerted effort in creating internal Hispanic departments with multiple qualified individuals and that is where we are seeing some strong competition."

In response, his agency is moving toward a multicultural platform, adding African-American, Asian-American and Native American to its Hispanic capabilities, he said.

The changing demographics are also prompting a reinvention at one the granddaddies of the Hispanic agency world, WPP Group's Bravo. For many years the largest Hispanic shop and now No. 2 to Publicis Groupe's Bromley Communications, San Antonio, Bravo was run by one of the icons of Hispanic advertising, Daisy Exposito-Ulla, who joined the Young & Rubicam Brands-owned agency when it opened in 1981. She built Bravo into a powerhouse but quit unexpectedly as chairman-CEO in November 2004, as Bravo's strong financial performance apparently went unrecognized amid Y&R's growing problems, agency executives said. Many high-level defections followed, and Ms. Exposito-Ulla, unhampered by noncompete restrictions except on hiring Bravo employees, has ambitious plans. "I'm going to have an agency," she said. "I'm going to be back in the business."

updating `version 1.0'

Now, Bravo's going from icon to upstart with Y&R's surprise choice of Gary Bassell as Bravo's new chairman-CEO. Little-known in the U.S. Hispanic market, Mr. Bassell, 44, was based in Miami in mostly Latin America-related jobs. Two years ago he became president of one of the hottest U.S. Hispanic agencies, La Comunidad, started by Argentine creatives/brothers Jose and Joaquin Molla, who rapidly picked up accounts ranging from MTV to Citibank.

"Bravo was running on version 1.0 for a long time, and it was time for an update," said Mr. Bassell. While it's "still one of the largest and most important players, it's not defining marketing practices and has lost its original status as a pioneer."

Mr. Bassell said he's interested in the new American mainstream. "Spanish-dominant traditionals are not growing as quickly as the bilingual, bicultural market," he said. "We need to prepare for a different kind of game. It's like cross-training; it's not enough to be a single-sport athlete." He added that he'd like to get Bravo more involved in areas like interactive, CRM, out-of-home and branded entertainment where "there is still the opportunity to be a pioneer."

Author Mr. Garcia said the cultural shifts are an opportunity for old-line Hispanic agencies. "It frees agencies like Bravo to address a larger marketplace."

And a changing one. Pew said 72% of first-generation immigrants are Spanish-dominant, 47% of the second-generation are bilingual, and 78% of the third-generation are English-dominant. That's why Jeff Valdez uses the "Speak English. Live Latin" tag for the English-language Hispanic cable channel SiTV he started in February 2004. And long-neglected, barely-watched MTV Espa¤ol is readying a relaunch with ads using the tagline "Two worlds. One channel" to support a name change and bilingual format.

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