October 28, 2010
By Tony D’Altorio
Expect the 2010 U.S. census to show profound changes to the “typical” U.S. consumer.
According to the Brookings Institution, 83% of U.S. population growth in the last ten years came from ethnic minority groups. Together, their purchasing power rose by $1 trillion from 2000 to 2008.
Now exceeding $2 trillion, it’s set to grow by half by 2013. So many companies’ success depends on wooing these consumers.
No longer can they rely on a vast homogenous market. David Lawenda, president of advertising sales for Spanish-language broadcaster Univision, says the ad industry must switch “from multicultural marketing to marketing to a multicultural nation.”
And as Jim Stengel, former chief marketing officer for Proctor & Gamble, put it, minority groups “set trends in food, fashion and music. You have to be in touch if you want your brand to be relevant.”
The Largest Minority Consumer Group in the U.S.
The Hispanic and Latino population is now the largest minority group in the nation.
Census figures will likely show an additional 50 million Hispanics in the U.S. since 2000. That means they now make up a larger market than Spain or South Korea.
They’re making themselves known too. For three weeks now, Univision has beaten all four English-language broadcast networks in the coveted 18-34 bracket six out of seven nights.
Realizing this, well-known brands from Coca-Cola (NYSE: KO) to Verizon Communications (NYSE: VZ) are increasingly courting them. Even during the recession, they have increased big brand spending on Hispanics.
In fact, most of their U.S. growth came from Hispanics. In effect, American multinationals have found the same growth dynamics here as in an emerging market.
The same holds true for companies across the border in Mexico. Earlier this month, Mexico’s largest media company, Grupo Televisa (NYSE: TV), made a $1.2 billion investment to expand its relationship with Univision.
It found growth prospects with a U.S. Hispanic audience better than its local possibilities.
Incidentally, that move ends the stalemate over U.S. digital rights to Televisa’s programming, which had made Spanish-language programs among the most popular content on unauthorized video download sites. That marks an important decision, considering the growing power of online advertising.
Media companies are pinning their hopes for growth on the digital arena. And as they do, they’re finding Hispanics and Latinos to be quick to adopt new technology, and react to online and online advertising.
The Interactive Advertising Bureau projects that the number of Hispanic online users will grow four times as fast as non-Hispanic whites by 2014.
Spanish-language advertising is big business… and only set to get bigger.
Investing in Hispanic Consumers
Investing in the growing strength of Hispanic consumers can be a challenge.
For example, Univision is now privately held… but possibilities do still exist…
A Nielsen study found that spending on Spanish television networks jumped by 24% in the first half of 2010, nearly triple the rise on English-language networks. And since that trend looks set to continue, companies like Televisa look strong right now.
Comcast (Nasdaq: CMCSA) is set to gain too if it succeeds in obtaining NBC Universal, which owns Spanish-language channel Telemundo.
But perhaps even more interesting is Liberty Acquisitions (AMEX: LIA). The special purpose acquisition company is merging with Promotora de Informaciones, or Prisa, which will soon be listed in the U.S.
Currently listed in Spain, Prisa is the world’s largest Spanish-language media company. Shareholders in LIA will receive either $10 in cash, or the preferable option of 1.5 Prisa Class A ordinary shares, 3 Prisa Class B non-voting shares and $0.50 in cash.
Most analysts see Prisa’s shares as undervalued right now. And they think Liberty Acquisitions’ investors stand to benefit greatly from the merger.
Prisa plans to expand rapidly to take advantage of the U.S. Hispanic population. For one, it is forming a unit specializing in bilingual education.
Such investments will prove profitable in the years ahead. As Univision CEO Joe Uva said, “America is transforming into a new majority [of minorities].”