A Gold Rush of Ethnic Diversification

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NEW YORK ( -- For the past three years, Robert Rosenthal has scoured Latin America for creative ad agencies to build a network in the region for late arrival
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Latest census figures indicate 12% of the U.S. population is Hispanic. A wall mural in Belvidere, Ill., celebrates Hispanic heritage.
TBWA Worldwide. It recently struck his bosses that Mr. Rosenthal, president-Latin America, speaks Spanish, and he was handed a new task: get TBWA into the U.S. Hispanic market. He expects to close a deal next month.

So far, the U.S. Hispanic market is one of the few bright spots in the U.S. ad industry this year -- and is still attracting new players. TBWA, Bates Worldwide and J. Walter Thompson Co. are finalizing ways to tackle the U.S. Hispanic market, while others zero in on areas such as direct marketing that appeal to Hispanics but are underdeveloped.

J. Walter Thompson
For WPP Group's J. Walter Thompson, the spur has been the desire to get more Ford Motor Co. business. JWT gradually won Ford's business in Latin America, then set up a JWT Ford Distributors of South Florida unit this year in JWT's Miami office. Although WPP owns U.S. Hispanic agencies Mendoza, Dillon & Asociados, Newport Beach, Calif., and Young & Rubicam's Bravo Group, New York, JWT doesn't have a Hispanic association to call its own.

JWT is negotiating a nonequity affiliation with DLC, a small U.S. Hispanic agency

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set up in Miami by Puerto Rico's largest agency, De La Cruz Group.

"DLC will help us drive clients that need U.S. Hispanic," said Maximo Sanguinetti, operations manager of JWT's Miami office. Even with an entry in the U.S. Hispanic market, JWT will have a tough job wresting Ford business away from Zubi Advertising, Miami, a top Hispanic agency. But it's a start.

Taking a different approach, Cordiant Communications Group's Bates is refocusing its Miami office, primarily devoted to Latin American coordination for clients such as Mercedes-Benz.

'Grow U.S. Hispanic billings'
"Our No. 1 project this year is to grow U.S. Hispanic billings," said Gary Bassell, president of the Miami office. Right now, U.S. Hispanic work accounts for about 15% to 20% of Bates' Miami billings. "I'd like to get that up to 50% in a year," he said.

Typical of the new U.S. Hispanic agencies is Austin, Texas-based Latin Works Marketing, believed to be the shop that Omnicom Group's TBWA is likely to buy, although Mr. Rosenthal coyly says that he has "narrowed it down to a couple agencies." Two Anheuser-Busch executives, Manny Flores and Alejandro Ruelas, saw an opportunity in the U.S. Hispanic market and started the agency in March 1999. Their first big client was Miller Brewing Co.; then Latin Works beat out 16 other U.S. Hispanic agencies for the hotly contested SBC Communications account.

Mr. Flores said he can't confirm who else TBWA is talking to about a deal, but he did say "we

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Hispanic products are now a retail mainstay throughout the country. Here, a rack in a Salt Lake City grocery store.
just might [do it]." He said he's weighing the agency's options, and that "a lot of folks have approached us. It brings you access to clients, systems, a pool of talent and financial support as opposed to growing on your own, which makes a more difficult road to success."

New agencies are still cropping up. Jose Molla, a former Wieden & Kennedy creative responsible for the agency's award-winning Latin American work for Nike, left Wieden's Portland, Ore., headquarters and opened La Comunidad in Miami this month to handle U.S. Hispanic and Latin American work.

Publicis, DDB acquisitions
Earlier this year, Publicis Groupe bought part of U.S. Hispanic agency Siboney in March and Omnicom's DDB Worldwide acquired a stake in Del Rivero Messianu in February.

Looking for growth, San Antonio, Texas-based Cartel Creativo opened a direct-marketing shop, Cartel Contacto, in New York this year. President Michael Saray said response rates among U.S. Hispanics are typically double or triple those of the general market.

The recently released 2000 U.S. census figures revealed that 33 million people, 12% of the U.S. population, are of Hispanic origin, up from 9% in 1990. Advertisers are taking note, even companies such as DHL that have not targeted Hispanics yet.

"We've been doing some research on Hispanic-owned businesses that do business with Latin America," said Rose Marie Abella, a marketing communications and brand manager at DHL. "But it's hard to get [information]. We're still looking to see what programs we want to put into place."

She said DHL is likely to start its Hispanic initiative next year.

Outperforming English-language broadcasters
One indicator of how the Hispanic market will fare this year is the forecast for Univision, the Spanish-language TV network that dominates U.S. Hispanic ad spending and that will announce first-quarter results April 18. Merrill Lynch is forecasting 8% growth to net sales of $196 million but is cutting its full-year forecast for growth to 10% from 13%. That's a big drop from 2000's 25% revenue growth for Univision, but, Merrill Lynch notes, "they easily outperform English-language broadcasters."

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