By Isaac Mizrahi - Co President, Chief Operating Officer / ALMA
It’s that time of the year when CMOs look back at 2017 results, analyze important KPIs and assess their industry as a whole, and project 2018’s performance. Based on my personal survey with clients and prospects, most predict a 2018 with challenges, with any gains from a potential higher GDP growth being eaten by the need to keep prices competitive to fight private label, channel disruption, and a more-than-ever empowered consumer ready to make the switch to competitive brands.
Bottom line, most see a dichotomy in brands with diminishing equity, not being able to command higher prices based on higher perceived value, while these same brands have been slow to innovate and to invest on building brand equity.
Moreover, we also see brands that are still timid about taking the plunge into the Hispanic segment as a growth driver, mostly because of misconceived or misinformed information, that helped to create a series of “myths” around the segment.
In this article, we will try to tackle the most important myths that need to be addressed for marketers to unlock the power of Hispanic growth in America:
1 – Behavioral Segmentation Makes Cultural Segmentation Irrelevant:
This is probably one of the most important myths and one of the least debated.
In this paradigm, individuals are basically reduced to consumers instead of people, and what matters is the ability to use big data to assess and predict consumption behaviors, and then try to influence their future purchasing patterns by offering the right product, at the right time, for the right price, and use behavioral data as the driver of any segmentation model.
This Behavioral Segmentation model advocates that a cultural or ethnic background doesn’t have a major impact on multicultural individuals when it comes to influencing sales. What comes most under criticism can be summarized like this: “Hispanic consumers don’t make their purchase decisions on buying brand A or B based on their ethnic background, but rather based on their individual needs as consumers. Therefore, there’s no need for a Multicultural Marketing approach.”
While Behavioral Segmentation models are an important part of strategic marketing, I believe ignoring or reducing the importance of culture-based segmentation is a big mistake CMOs can no longer afford to make for one important reason: while behavioral segmentation tends to focus on what consumers do, cultural segmentation focuses on why they do it and, most importantly, on what are the triggers that can make a Hispanic individual more connected to a brand or a message.
Recent marketplace studies proved a higher ROI of culturally oriented, emotionally driven creative messages. These studies just confirmed what many of us already knew intuitively, that a successful culturally driven Hispanic creative approach doesn’t create a new “reason-to-believe” or a new functional attribute, but rather, it not only helps to break the media clutter we live in but it can also create an emotional layer that increases relevancy in the eyes of a Hispanic individual.
Behavioral segmentation focused on the rational, culture-based segmentation brings to the mix the power of emotions on brand building. The modern market challenge is to recognize how both should play a role on building a brand’s strategy and what’s the right balance between them. Ignoring this will help to commoditize established brands, and it will make it harder to create new ones.
2 – Adopting a Total Market Approach is the Right Thing to Do:
First, most marketers can’t even agree on what Total Market means, and while most may say one thing, their actions often reduce their Total Market strategies based on “one-size-fits-all” creative executions based on so-called universal truths.
Progressive brands figured out long ago that Total Market is about being flexible to capture the Hispanic segment opportunity in order to increase relevancy rather than concentrating on false efficiencies, given that when efficiencies are achieved at the expense of effectiveness, any savings will be washed out by lower market share and sales performance.
In my experience, the secret is to keep one brand positioning and DNA, while looking at opportunities to compare Hispanic and non-Hispanic opportunities for dividing the analysis business, consumer insights and creative execution, asking at every step whether the segments should converge or diverge based on the relevancy of the data.
3 – General Market Agencies Can Handle Hispanic Marketing:
We have seen a wave of Hispanic professionals being hired by General Market agencies over the past few years, and while we applaud this trend, we should also be clear that this doesn’t mean that your agency is now ready to manage Hispanic Marketing.
First, just because someone may speak Spanish, comes from a Latino market, or has Latino heritage doesn’t make him/her an expert in Hispanic Marketing. Sometimes they have never worked directly with the segment, and while they may have the cultural background, their recommendations may be completely biased towards their personal experiences, which could be dangerous for any brand.
Second, even when agencies hire professionals with a background in Hispanic Marketing their voices are seldom heard. Why? Because the internal processes are designed from scratch to unify messages and ideas under one single direction—the “one-size-fits-all.” Key decision makers on Creative, Planning, Digital, and Account Services, in most accounts, tend not to be from a minority background, and their answer to proposals from their minority employees tend to be “What is not Hispanic about this idea”? So, the bar moved from trying to develop the idea that can best work with Hispanics to maximize effectiveness, to work on adaptations and translations that should minimize the risk of alienating Hispanics to maximize efficiencies only.
Recently, I spoke with a Hispanic professional who expressed her frustration with the above situation and she summarized it best:
“I currently work for one of those "One-Size-Fits-All" and it’s just exhausting. Coming from a Hispanic agency shop, I accepted this job with the promise that I will "manage" an entire team dedicated to adapt GM work into HM. So far, I'm the only Spanish-speaking executive and overall the creative is extremely hard to adapt (no wonder our clients’ shares keep falling.)”
4 – Hispanic Marketing = Hispanic Advertising:
Different from regular advertising agencies, a great multicultural ad agency goes beyond Marketing Communications and should help your organization with a broader marketing perspective from a multicultural angle. For instance, when it comes to Hispanic Marketing, a great agency should be able to support the creation of an annual business plan that includes market prioritization, measurement tools, distribution footprint analysis, sales force training, etc. Moreover, a strong multicultural agency can also support a client when it comes to benchmarking organizational design and structure as well as provide the client’s employees with multicultural training.
In the end, while we live in an era when consulting companies are starting to behave like ad agencies, when it comes to Multicultural Marketing, clients have been leveraging their agencies beyond any regular agency. A great multicultural ad agency is also a multicultural consultant partner.
5 – Incremental Budget Is Needed:
I’ve heard this one several times – “Isaac, I hear you, I see the data, I see the growth, if I just get this incremental budget approved to fund the Hispanic initiative I would be able to start the program right away.”
My answer is always the same – “Why do you think the Hispanic segment requires incremental funds? Why can’t you simply reorganize and rebalance your resources to allocate them proportionally to the growth opportunity that you have?”
Nine out of ten times their answer is, “It’s hard to change our culture, budgets have been created the same way for many years, we have to fund several programs, etc. …”
I know this. I’ve been there. I worked on the client side for more than 18 years of my career. The reality is we don’t live in normal times any more. It’s been harder than ever to find any incremental growth, and CMOs’ tenure has been at the lowest point in many decades.
Moreover, Hispanic Marketing leaders shouldn’t be asking for any kind of special allocation system, they should only ask for the same level of scrutiny and validation as any other marketing regardless of the segment. I am convinced that once marketing dollars are allocated based on a mix of sales growth, share growth, margin, and CLTV (customer long-term value), Hispanic marketing allocation would double from the current industry average of 7% to at least 15%-20% of marketing budgets.
6 – There’s Not Enough ROI Research:
This is far from being true. While there are some possible limitations on measurement, Hispanic Marketing has come a long way over the past decade. Consumer goods companies have access to a myriad of studies ranging from Symphony/IRI to Nielsen (add additional sources). Retail companies can leverage data from Geoscape, and service companies are learning a lot about Hispanics with the help from companies like Experian/Simmons.
In addition, there are plenty of studies that can help track your brand and advertising health among Hispanics (and compare them with non-Hispanic executions).
Moreover, all these sources, combined with the possibilities of your own primary data sources driven by the client’s own transactional data and websites, mobile apps, store trackers, and social media, can help by drawing a pretty accurate picture on the consumer’s response to your Hispanic Marketing investments.
Lastly, companies like Nielsen, Millward Brown, and even some media companies are also capable of building Marketing Mix Modeling studies that can estimate the ROI of your Hispanic marketing efforts over time.
7 – The Number of Spanish-Language Users in the U.S. is Down:
Wrong. That’s it. This statement is as false as a three-dollar bill. According to a recent study from the Pew Hispanic Center, between 2006 and 2015 Spanish language usage at home has grown from 31 million to 37 million, a 19% growth!
Now, it is important to mention that the incidence of Spanish speaking at home has decreased during the same period from 78% to 73%. However, if you’re a marketer making decisions about language usage, the reality you must face is that there are 6 million more people speaking Spanish at home in this country than nine years ago.
Some may say that “knowing how to speak Spanish doesn’t mean speaking it often.” Fair comment, but it’s important to notice that the study didn’t survey Spanish knowledge, but actual usage of Spanish at home, when you are close to family and friends and when a lot of content and media consumption happens. (In other words, when many emotional and cultural connections are made).
Tackling these seven myths, or at least openly discussing them with your teams, your agencies can take the first step to a stronger 2018. Are you a myth buster?