Taking Stock of the Hispanic Market

Jun 16, 2003  •  Post A Comment

Headlines about the Hispanic population plus Nielsen’s plan to change its handling of Spanish TV ratings put advertisers on notice: Pay attention to your Hispanic media budgets.
Publications ranging from The New York Times to The Wall Street Journal have heralded the power of the Hispanic population. The Times’ front-page announcement, “Hispanics Now Largest Minority …” and The Journal’s article, “Buying Power of Hispanics Is Set to Soar,” highlight the buzz. While the latter story is based on a study sponsored by a Spanish TV network, there is no doubt that the Hispanic market is big and dynamic.
When it was announced that Nielsen would introduce special weighting for Spanish-speaking homes, a Hispanic-network representative said that this could mean a $680 million bonanza. Presumably, this assumed benefit would accrue from a dramatic increase in their ratings. As the 2003 upfront market approached, some Anglo networks were concerned about corresponding losses in revenue. (Correct or not, the market is viewed as a zero-sum game.)
Now, with Nielsen’s decision to postpone for a year the introduction of Spanish weighting, some of the pressure is off. But that makes this an ideal time to reflect on actions to be taken when and if the Nielsen weighting does occur.
If advertisers and media planners have their act together, the financial implications may be nil or even reversed from what was hoped or feared.
The marketing process involves planning followed by action. Advertisers determine media budgets to achieve specified objectives related to share of market or share of voice. They know product shipments of Hispanic-directed products, sales of Hispanic-directed services and purchasing at Hispanic market outlets. While that picture may not be fully clear (Hispanics as well as Anglos shop at Wal-Mart), each advertiser has a pretty good picture of the importance of this market.
A key part of media planning is to know how Hispanics spend their time in media space. Stereotyping does not work.
Some Hispanics spend 100 percent of their media time with Spanish outlets or publications, and some spend 100 percent with English; many are in between, according to KN/SRI’s MultiMedia Mentor service.
The share of Hispanic television time among all persons (age 12 to 64) is 4 percent to 5 percent overall; users of major products and services are generally in a range from 2 percent (selected fast-food outlets) to 6 percent (some soda brands). If the overall analysis is restricted to persons of Hispanic origin, the share of Spanish-language TV is 28 percent.
Hence, the components are in place to create an informed media plan. Planners are driven by objective information on sales and on customers’ media profile. The media plan describes the advertiser’s objectives to achieve a designated level of audience impressions or reach within Spanish and Anglo media respectively.
This is the point at which Nielsen ratings should come into play. Nielsen provides a relative index of media vehicle delivery and is essential to execute the plan. The data are used at the buying stage. Nielsen data tell buyers where to spend the dollars, not how many dollars to spend.
So what should happen to Hispanic media prices if Spanish ratings increase? Media market prices are a product of supply and demand. If Nielsen’s Hispanic ratings go up, the reported audience supply is increased. If supply goes up and demand is unchanged, prices or costs-per-thousand should go down. For English-language telecasters, if ratings go down, audiences become scarcer and prices go up. That is the economic theory.
Then there is measurement theory. Nielsen data are only a mirror of what is going on out there. Mirrors are distorted to varying degrees. Weighting changes the distortion-not the reality.
A media researcher’s job is to understand and advise operations on such matters. Also, media sales personnel are not exactly quiet about perceived ratings shortcomings. Therefore, if present reports are off-center, the market should already reflect that. In addition to supply and demand, evidence of unmeasured or overstated audience estimates explains some CPM variations.
If Nielsen does weight its data, it will be interesting to see what really happens. The market should be rational- if media planners and media researchers have survived staff cuts and are doing their jobs and if they communicate.
Higher or lower reported ratings by themselves should not affect the overall dollar allocation between market segments, and there should be no surprise windfalls or losses.
The extent to which the Hispanic media market does change should be an important point of reflection for advertisers. Spanish audience estimates are not the only potential distortion in the ratings business.
Gale D. Metzger is senior consultant with Knowledge Networks/SRI