Colorado companies targeting Hispanics aim to tap a booming consumer market
August, 2008
By Carlotta Mast
Colorado’s casinos generated double-digit revenue growth in the 1990s. But thanks to increased competition, annual revenue growth has dwindled to less than 5 percent. Hoping to buck this troubling trend, Riviera Black Hawk Casino decided to tap into a rapidly expanding and increasingly affluent consumer base: Colorado Hispanics.
With the help of Heinrich Hispanidad, a Denver-based agency specializing in Hispanic advertising and marketing, Riviera Casino launched in spring 2006 a direct-response advertising campaign aimed at increasing the number of Hispanic consumers enrolled in its Players Club and growing the profitability of its current Hispanic customer base.
"The gaming market is highly competitive," says Kelly Horton, director of marketing for Riviera Black Hawk Casino. "We saw this as an opportunity to get an edge over our competitors."
Within one month of launching the bilingual campaign, which was built around the slogan "Bueno Pa’ Gozar" (roughly translated to "You’re Going to Have a Good Time"), Riviera Casino increased new enrolls to its Players Club fourfold, Horton says. Within two months, the number of Hispanic surnames in the company’s player database grew from 15 percent to 21 percent, and the money this consumer demographic spent with the casino grew 15 percent.
Molson Coors Brewing Co. is another Colorado company seeing dollar signs in the burgeoning Hispanic market. Earlier this year Coors rolled out a new Spanish-language marketing campaign for Coors Light that features the tagline "Refresca Tu Mundo" (Refreshes Your World) and is aimed at bilingual Hispanic males age 21 to 34.
"Hispanics comprise a significant percentage of the Coors Light target audience," says Paul Mendieta, director of Latin America and U.S. Multicultural Markets at Coors. "In the future, Hispanics will become even more important for Coors’ success."
Welcome to the new face of marketing.
With Hispanics now making up almost 20 percent of Colorado’s population and nearly 15 percent of the total U.S. population, Colorado companies of all shapes and sizes are reaching out to Latino consumers.
"Demographics are changing," says Mario Carrera, vice president and general manager for Entravision Colorado, which operates four Spanish-language radio stations and four Spanish-language television stations in the state. "If businesses and other organizations want to grow, they must address the Hispanic market."
But effectively targeting this growing and complex market takes more than just translating a commercial into Spanish or adding a Latina grandmother to a billboard. It requires understanding the various subsets of the Hispanic demographic and creating culturally relevant messages that will resonate with rather than alienate Hispanic consumers.
Not to be ignored
Prior to the 2000 U.S. Census, which showed the Hispanic population had grown nearly 58 percent since 1990 to 35.3 million people, many businesses were blind to the market potential of this rapidly expanding demographic. But, as Laura Sonderup, director of Heinrich Hispanidad notes, "When those numbers came out, people were flabbergasted. All of a sudden, businesses began to see this enormous untapped opportunity."
U.S. Hispanics now total almost 43 million people and are expected to make up 20 percent of the total population by 2020. Almost 900,000 people of Hispanic origin reside in the state, according to the 2005 U.S. Census American Community Survey for Colorado. Taking into consideration Census underreporting and growth over the last two years, the number of Colorado Hispanics has likely surpassed 1 million, Sonderup says.
Census data shows that Hispanics make up nearly 40 percent of Denver, which is the 15th largest and fifth fastest-growing U.S. Hispanic market. Other areas experiencing rapid Hispanic growth include Greeley, Longmont, Fort Collins, Lafayette, Commerce City and Pueblo.
But Hispanics are not growing in numbers alone. The U.S. Department of Commerce reports Hispanic Americans are expected to spend an estimated $928 billion by 2007 and $1.2 trillion by 2010. In Colorado, Hispanics have more than $10 billion in buying power, and Denver ranks as the eighth largest U.S. market in the area of Hispanic disposable income.
"Assuming all Hispanics are poor is a big mistake," Sonderup says. "Poor, recently immigrated, Spanish-dominant people do make up a portion of the state’s Hispanic population, but it is a very small portion."
Despite current political sentiment, it’s also a mistake to assume the majority of Hispanics are here illegally, notes Janina Calderon-Ferguson, founder and president of Denver-based Calderon Hispanic Marketing.
"Sixty-one percent of Hispanics were born in the United States, and 11 percent are naturalized citizens" — and this doesn’t count the many Hispanic residents who are living here legally with work visas, Calderon-Ferguson says.
Regardless of status, studies show that Hispanics outspend non-Hispanics in numerous categories including food, apparel, and health and beauty — largely because Hispanics tend to have bigger families, Carrera says. And as a population, Hispanics are much younger: The average age nationally is 26.9, and one out of three U.S. Latinos is under 18, Census data shows.
This, Calderon-Ferguson says, creates a great opportunity for businesses to court these young consumers in meaningful ways and transform them into what many marketers will tell you Hispanics are known for becoming: loyal customers.
Tuning in to Latinos
The increase in Colorado’s Hispanic population is also fueling growth in the number of media outlets targeting this demographic. Last year, the Denver Newspaper Agency began publishing Viva! Colorado, a Spanish-language weekly tabloid, and Dex Media rolled out a new Spanish-language yellow pages for the Front Range. In August, Entravision Colorado plans to launch a new Spanish-language TV station for the Colorado Springs/Pueblo market.
Latinos consume every kind of media, but research shows they seem to have an affinity for Spanish-language radio and television, Sonderup says. Nearly 50 percent of U.S. Hispanics who watch TV during prime-time hours tune in to Spanish-language television. Hispanics listen to an average of 26 to 30 hours of radio every week.
Demonstrating the growing popularity of Spanish-language radio in Colorado, Entravision’s KXPK 96.5 FM, which plays regional Mexican country music, is now the No. 1 radio station across all demographics in Denver.
Entravision is faring equally well on the business side, thanks to the growing number of businesses keen on tapping the power of Spanish-language radio and television to reach Hispanic consumers.
"We have grown significantly over the last four years, and this year we are (growing) at a much higher rate than any of our competitors on the TV and radio side," Carrera says. "We expect even greater growth to take place within the next five years."
Like the Latino demographic, the number of Hispanic marketing and advertising agencies has grown exponentially over the last decade. Colorado is now home to several growing Hispanic agencies, including a Denver branch of Arvizu, the fifth largest Hispanic ad agency in the country.
"Businesses are often led to believe that an advertising agency that doesn’t have Hispanic expertise can help them get into the Hispanic market," Carrera says. "That is a huge mistake because you can get into very troubled waters from a creative standpoint and even from a media buying standpoint."
Lost in translation
More and more companies may understand the importance of reaching out to the growing Hispanic population, but too many still do not know how to do it effectively or with good taste, says Toti Cadavid, principal of Xcelente!, a Centennial-based Hispanic marketing agency.
"One of the most common mistakes businesses make is thinking all they have to do is translate their mainstream marketing messages into Spanish, and Hispanics will respond," Cadavid says. "This is not only ineffective, but it can be insulting as well, and then you have to spend a lot more money trying to fix the problem."
Volkswagen learned this lesson the hard way last year when it had to pull billboards for its 2006 GTI from New York, Miami and Los Angeles because the messaging used to describe the car — "Turbo-Cojones" — was considered vulgar by Hispanic consumers.
Using direct English-to-Spanish translations or marketing strategies aimed at the general public to reach Hispanics may provide some results but "not with the sales volume, strength and recall that a truly culturally attuned marketing and advertising effort can attain," Sonderup says.
The California Milk Processor Board went the extra mile to connect with Hispanic consumers in the 1990s by creating a separate Spanish-language ad campaign — one that touted the more traditional pitch, "Familia, Amor y Leche" (Family, Love and Milk) — rather than simply using a Spanish-language version of its popular "Got Milk?" slogan, which for Hispanics translates into "Are you lactating?"
"Hispanic people are sophisticated buyers, and they know when someone is really trying to reach the community by providing advertising that is in touch with their cultural values," Calderon-Ferguson says.
Latino consumers are often described as being focused on family, children, tradition, religion and hard work. But because Hispanics do not make up "one monolithic audience," these values can vary among different Hispanic sub-groups depending on their country of origin, how long they have been in the United States and other factors, Sonderup adds.
Cultural values and consumer behaviors differ among Mexican-Americans, Cuban-Americans, Puerto Ricans, Dominicans, Salvadorans and other Hispanics, says Liesl Leary, senior localization strategist for Boulder-based translation provider ENLASO.
"Even among immigrant groups from the same country, significant cultural variations arise from differences in education, socioeconomic status and degree of assimilation," Leary says.
Hispanic consumer tastes also have evolved to become edgier and more multicultural. In an effort to keep pace with such changes, the California Milk Processor Board last year replaced the long-running "Familia, Amor y Leche" campaign with a more dynamic, entertaining one aimed at younger Hispanics.
The new campaign, which features the tagline "Toma Leche" (Drink Milk), promotes the health benefits of drinking milk by showing people with exceptionally strong teeth, bones and hair. In one spot, for instance, people are shown using their teeth to carry a briefcase, catch a skateboard and hold on to the straps of a commuter train.
"We recognize that Hispanic audiences are increasingly sophisticated and that our advertising needs to keep up," says Steve James, chairman of the milk board.
Habla usted Espanol?
Although many U.S. Hispanics are fluent in English, communicating in Spanish is necessary to reach certain segments of the Hispanic population. In fact, says ENLASO President John Watkins, nearly 50 percent of the U.S. Hispanic market identifies itself as having limited English skills.
Even if they do speak English, many Hispanics simply prefer receiving information in Spanish.
"These people will preferentially purchase from a company that communicates with them in Spanish," Watkins says. And, adds Leary, "if you reach out to them in Spanish, they will be loyal for a lot longer and less susceptible to price differences than other demographics."
Spanish-language advertising also is often more effective at leaving an impression on Hispanic consumers. According to Sonderup, 56 percent of Hispanic adults respond best to advertising when it is presented in Spanish.
The longer Hispanics live in the United States, the more likely they are to be bilingual, Cadavid says. "If they are born here, they will most likely speak English and a little Spanish." But even if English is their primary language, many young Hispanics "think it is cool to be bilingual," Calderon-Ferguson says. These consumers speak and consume media in both languages.
Because a Hispanic household may contain Spanish-speaking parents and children who are bilingual, CollegeInvest, a nonprofit created by the state to help Coloradans finance higher education, began offering its marketing collateral in both English and Spanish several years ago.
"Paying for college is a family decision and one that is particularly confusing if you don’t speak English or haven’t gone through the college process," says CollegeInvest spokeswoman Kathryn Powell. "We wanted to be able to reach every member of the family."
Language can be a common denominator among U.S. Hispanics, but the type of Spanish spoken is largely influenced by the culture in which a person was raised. For instance, as Leary points out, Cuban Spanish, Mexican Spanish and Iberian Spanish each have their own unique cultural expressions, dialects and colloquialisms.
When targeting a specific segment of the Hispanic demographic — for example, Mexican-Americans living in the Southwest — it’s most effective to use messaging that best reflects the cultural expressions and language of the target audience, Sonderup says. But when targeting Latinos nationwide, it’s better to use a more generic approach that will appeal to the broader Hispanic market.
Of course, some U.S. Hispanics speak no Spanish at all and are put off when an organization assumes they do. "You cannot assume anything about these consumers," Sonderup says. "To be successful, companies need to take the time to understand what appeals to each segment within their Hispanic customer base."
The lure of ‘Oye Como Va’
Sonderup’s agency, Heinrich Hispanidad, used research and focus-group testing to get to know the specific audience Riviera Black Hawk Casino wanted to target with its direct-mail campaign: partially acculturated and fully acculturated Hispanics over the age of 21 who live within a one-hour drive of Black Hawk and who are bilingual but prefer to speak English.
Because the agency understood its target audience, it was able to form an emotional bond with these consumers using English copy that was peppered with the tagline "Bueno Pa’ Gozar"— a phrase derived from Tito Puente’s song "Oye Como Va," which was made famous by the Mexican-born rocker Carlos Santana.
"These people all know ‘Oye Como Va,’ so the campaign resonated with them," Sonderup says. "Hispanics are no different from any other consumer group — they respond well to messaging and creative that speaks to them."
Of course, developing loyal Hispanic customers requires more than just marketing. Supporting the community through local events and outreach efforts is important, as is providing a shopping environment and customer service that is friendly and inviting to Latino consumers, Carrera says. "People need to feel comfortable doing business with you or they will walk in, turn around and walk out."
Source: ColoradoBiz Magazine
