By J. Russell
A 1999 Federal Communications Commission study found that revenues for minority broadcasters were 63 percent lower than for their nonminority competitors. The primary reason was “minority discounts.” In short, advertisers paid less money to reach blacks and Hispanics because they didn’t value those audiences as much as Anglo consumers.
Today the price gap in Spanish-language TV is disappearing, said Alex Lopez Negrete, CEO of Lopez Negrete Communications in Houston and chairman of the Association of Hispanic Advertising Agencies. “For a long time, clients expected Hispanic media to be cheaper on a [cost-per-thousand] basis,” he said. “As time progressed, the 2000 census, Univision, Telemundo and [Hispanic] agencies all helped explain and prove the value of the Hispanic consumer to general-market advertisers.”
A popular argument for advertisers and their general-market agencies seeking “minority discounts” from Hispanic media was that the Latino audience had lower income than the U.S. average. But from 1994 to 2004 Hispanic purchasing power grew almost three times faster than the national average, according to the HispanTelligence research service, and is now just under $1 trillion-a hard-to-ignore number.
Besides, Mr. Lopez Negrete said, advertisers should look at consumption patterns rather than income, and Hispanics “overindex” in many product categories. For example, beyond being heavy consumers of apparel, health and beauty aids and brand-name packaged foods, Hispanics go to watch movies in a theater an average of 9.9 times per year, compared with the national average of 5.3 times per year, according to a 2002 report from the Motion Picture Association of America.
For Spanish-language broadcasters, CPM catch-up translates into huge financial gains. Investors in Univision stock and the financial types at NBC (which purchased Telemundo in 2001) figured the market undervalued Hispanic consumers, and the trend has proved them right. Although the years of big CPM gains are waning, “CPM rates are running about 5 percent above year-ago levels” at Univision’s 2005 upfront, said analyst Philip Remek of brokerage Guzman & Co.