Our eyes are on the US Hispanic-centered advertising industry. Over 40 million strong, US Hispanics are the fastest growing segment of the largest economy in the world. They spend over USD600B annually, with a GDP equivalent to the GDP of Spain.

Large companies traditionally underestimate Hispanic consumers; They either are ignored or patronized as if they are children. The number of advertising agencies specializing in the Hispanic market has grown over the last few years, the largest of which have revenues in the hundreds of millions of dollars. It is now time for the second phase of growth in the US Hispanics-centered advertising industry.

The quality of advertisements targeting US Hispanics remain inferior to those geared for Anglos. Nonetheless, more and more companies are starting to appreciate the differentiated market as well as the need for better tools and more accurate meaning. The cultures and value sets are different, and so too are effective communication strategies. This creates a number of problems, as well as opportunities.

Companies are beginning to recognize the need to hire specialized advertising firms. However,  in most cases their in-house marketing ranks often lack knowledge required to judge the work they receive. In addition to the well-known advertising blunders (see business gossip February, 2006 for one example), there are many other marketing and advertising failures. One typical example of the corporate misunderstanding of Hispanics is the “Spanish Food” section found in most supermarkets. To promote “Spanish Food”, that in fact represents products from a number of countries other than Spain, communicates a lack of respect and understanding of Hispanic consumers.

One problem is that most companies fail to recognize that Hispanics differ by nationality and by socio economic background. Differences in Hispanic individuals’ immigration histories also is an important, but rarely recognized, characteristic of consumers. For example, individuals who immigrate to the US to escape poverty differ in important ways from individuals who come to the US to study, and from entrepreneurs who are escaping the political or economic turmoil of underdeveloped economies.

These groups are not expected to be equally receptive to universal marketing messages targeting all US Hispanics. In addition, immigrants from each Latin American country use different conversational language styles. Many Latin American firms are aware of these differences and have experience with “neutral Spanish” that avoids regionalisms in order to be more widely understood. It is time for this knowledge and experience to be applied in the US.

Capitalizing on cross-border collaborations to develop creative, culturally sensitive advertising and marketing materials is now possible with the use of existing technologies. These cross-border collaborations are now only an e-mail or FTP away.

Although large multinational advertising firms may one day wake up to the need for utilizing Latin American units to handle advertising campaigns geared towards the US Hispanics, this is not yet happening. We see a clear opportunity for small local Latin American firms to fill this gap, and for small to mid-sized US firms to establish strategic partnerships with their Latin American counterparts as a way to offer specialized products.

The US Hispanic market is there, but we need to create the same quality work found in Latin America in order to capture it. As always, there are a number of ways to take advantage of this situation. We feel strongly that advertising agencies with an intimate knowledge of the Hispanic consumer, and the ability to communicate their potential and professionalism to the Anglo management, will most certainly be the ones who will gain the most. We also think there is a growing market for companies that strengthen and support the decision makers at a corporate level regarding Hispanic marketing.

Whether this should take the form of consulting, new internal departments, or any other form is yet unknown. Nonetheless, US companies are beginning to realize they lack the knowledge and expertise to understand whether what they are being offered by the Ad agencies is on target or not.