With more people living south than north of the Rio Grande, growing consumer affluence and economies emerging from decades of stagnation, marketers such as Federal Express Corp. see the region as an area of opportunity.
But while top-billing U.S. agencies have long had offices south of the border, many smaller U.S. Hispanic shops are entering this market through network affiliations.
"Getting [clients and foreign ad communities] to trust you is a very difficult thing. That's the sort of thing you're buying into when you have a network," says Fausto Sanchez, president of Sanchez & Levitan, Miami.
For domestic Hispanic shops accustomed to servicing 25 million Hispanics stateside, the growing Latin American population, currently 460 million and projected to reach 512 million by 2000, according to market researcher Strategy Research Corp., provides ample incentive to get involved.
It's one reason why D'Arcy Masius Benton & Bowles created its DMB&B Americas network earlier this month.
The network, featuring divisions in eight Latin American countries, two large U.S. Hispanic agencies and $375 million in total billings, illustrates how a major agency is organizing resources to serve this emerging market.
It also shows what kind of competition smaller U.S. Hispanic shops will face on foreign soil.
For these smaller shops, the benefits of affiliation agreements are numerous. They gain an immediate presence in a Latin America and can tap the affiliate's knowledge of the marketplace. Similarly, the U.S. partner serves as a beachhead for the Latin American shop and its clients.
For work abroad, U.S. agencies usually will give an affiliate some segment of a client's project, such as media buying or creative assistance. The foreign shop's degree of involvement varies by project scope.
By having connections in Latin America, U.S. Hispanic shops become a first stop for marketers looking to work there, says Hector Orci, president of La Agencia de Orci & Asociados, Los Angeles.
"People believe we can help them out," Mr. Orci says. "It helps to be here, and have the credentials of having worked there."
Mr. Orci says his affiliations with La Compania, Mexico City, and Gache y Asociados, Buenos Aires, give his shop familiarity in those markets and reliable answers to media research questions.
Foreign affiliations help U.S. Hispanic shops recognize creative and cultural differences among the various countries.
A paramount misconception about this market is that Central and South America is one pan-hemispheric region, says Dick Tobin, president of Strategy Research. Instead, each nation has cultural distinctions.
Mr. Tobin remembers that one battery company's ad campaign designed for Argentina "got blown out" when it was aired in Mexico. The problem: the Argentine campaign used a dialect of strongly worded copy and symbolism; Mexico, conversely, needed a "soft, passive" approach.
"As a result they now do all of their advertising in Mexico through a Mexican agency," Mr. Tobin says.
"That is one very common mistake that we make in this country: We think that we know how to do things that other people know how to do better," Mr. Sanchez says. After establishing ties with agencies in Guatemala, Brazil, Mexico and Venezuela last July, Sanchez & Levitan landed the Latin American business for Federal Express.
Not only do affiliates give Hispanic agencies input on creative, they offer expertise on media.
Enlisting a Latin American affiliate provides the U.S. partner more reliable access to media ratings in the given markets, says Carlos Montemayor, president of Montemayor y Asociados, San Antonio, Texas. His agency set up a relationship with Monterey, Mexico-based R. Trevino & Asociados in 1992.
Mr. Montemayor's shop tried to place media in Mexico, but was too distant to get honest numbers from the newspapers and radio stations there. And few-if any-reliable ratings services (Continued on Page S-7)
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exist to check numbers, he says.
"We saw the need to work with somebody that had experience," he says. "At least if we were given one rate, we had something to judge it by to see if we were getting screwed or not."
Affiliations help U.S. Hispanic agencies earn the respect of the ad community abroad, which may become angered if a U.S. shop creates a campaign without home input, says Paul Casanova, president of Casanova Pendrill Publicidad, Irvine, Calif.
The shop doesn't have any affiliations, in part because ad executives in Mexico wanted their own say in creative and account supervision.
"And for them to think that it's being done in the states sometimes doesn't go over very big," Mr. Casanova says.
Keeping peace with the local ad community is one of several issues U.S. Hispanic agencies must address after forming connections.
Latin American countries historically have held an anti-trade philosophy, Mr. Tobin says, making nation-to-nation marketing even more difficult. Many nations have labor laws requiring talent be hired from within the nation.
Also, executive talent is expensive to recruit and hire in Latin America, leaving some U.S. companies more inclined to stick to affiliations rather than open new offices.
Though cultural differences exist, international similarities in culture and language-and proximity to the U.S.-will help speed market development, says Lionel Sosa, president of Sosa, Bromley, Aguilar & Associates, San Antonio, a DMB&B Americas shop.
"We've already been doing a lot of business," says Mr. Sosa, chairman of the Americas group.
Contenders for new business in the region include Puerto Rico, Dominican Republic, Colombia and Chile, says Ana Maria Fernandez Haar, president of Miami-based Hispanic shop IAC Advertising. The North American Free Trade Agreement has made Mexico ripe for new business.
"If they have any profit potential in their bones, they should be setting up in Mexico," Mr. Tobin says.M