Direct marketing to the Hispanic market has moved out of the embryonic stage, but it's still in its infancy. More clients are turning to direct marketing in an effort to establish a deeper connection with Latino shoppers and to drive them to action – purchase, subscribe, and even donate.

“It’s on the verge of becoming a major boom,” says Shayne Walters , president of Carmen's Cupones y Consejos, a glossy direct mailer with up to 24 bilingual offers. “We’re experiencing a significant increase in clients’ interest in direct marketing to Hispanics.”

It’s not easy to ignore a market of more than 40 million people, representing $600 billion per year in purchasing power. And one whose population growth shows no signs of slowing down - by 2020, Latinos are projected to number 70 million — 21 percent of the total U.S. population.

“There was a time when we had to beg companies to make their mailing lists available so we could have things out there,” recalls Gustavo Gruber , business development manager of Banta's Direct Marketing Group “Now the industry has opened up so much, there are more opportunities.”

The premise behind direct marketing is to create advertising that is targeted to consumers, not businesses. This includes television spots, print ads in consumer publications, direct mail and radio commercials. Hispanics have proven more receptive to such contacts than non-Latinos because they receive one-tenth the amount of direct mail, say industry analysts.

A study by the Direct Marketing Association indicates that 55 percent of Latinos receive six or more pieces of advertising mail per week, with close to 30 percent receiving between six and 10 pieces.

 “It's an audience that prefers more direct advertising communications and is notoriously loyal to brands, says Harrison Douglas Kline, who heads the direct marketing department at López Negrete Communications.

 However, those active in Hispanic direct marketing point out that there is still plenty of room for improvement. Although Hispanic households are 3.5 times more likely to respond to a direct mail offer than non-Latinos, some companies are still shy about targeting Hispanics with initiatives of this nature. Many hold back out of concern that Hispanics don’t regularly make mail-order purchases.

Despite the challenges, growth in direct marketing aimed at Hispanics has been significant. Once a vehicle used mainly by pharmaceutical companies, now insurance companies, telecommunications firms and financial services entities are often adding direct marketing to their marketing efforts. Small or mid-sized service providers are also giving the discipline a closer look.

Commanding Attention

Though historically underdeveloped, the Hispanic direct marketing industry is now becoming attractive to advertisers. Among the factors driving interest are the return on investment and the accountability that direct marketing offers for clients. You can easily track the response rate – the number of people who subscribed or who purchased a product - of a given direct marketing effort, notes Humberto Freydell , CEO of Directo Hispano, the New York-based direct marketing firm launched last year.

As more firms seek a clearer – and greater – return on investment and accountability from their media buys, the use of direct marketing aimed at Hispanics will increase. Looking to keep their brands top of mind with Latino consumers, many advertisers are moving from “brand advertising” to “brand direct ,” which allows them to maintain the look and feel of the brand and generate a response from consumers, explains Freydell.

“They break down each effort so that 50 percent of the commercial, or of the initiative, focuses on the brand and the other 50 percent on the call to action,” he adds. “This allows clients to track success two ways – brand awareness and response rate.”

The challenge that remains, notes Walters, is convincing corporate America that Hispanics want more mail and that they do read what they receive. “We need to get them to think outside of the broadcast arena,” says Walters. “Getting the mail is a lifetime event – usually one of the first things people do upon arriving home and a routine that is performed six out of seven days per week. We all look for stuff with our name on it.”

Breaking The Language Barrier

One of the long-time barriers to successful direct marketing efforts to Hispanics has been language. Many companies were hesitant to communicate with Latinos in English given the large numbers of Hispanics that are Spanish-dominant.

The quest for messages in Spanish, or bilingual efforts, has given rise to issues over translation – the quality of the language and the cultural context as well, say insiders. Explanations of offers, commitments and legal issues need to be clearly spelled out. But clients must not lose sight of the culturally relevant tone and imagery, experts warn.

“The person wants to know that what you are saying in Spanish is the same as in English,” says Gruber from Banta. The copywriter has to keep in mind that although the demographics may be the same for the non-Latino target and the Hispanic one, there are elements of culture – family, faith, friendship and how we operate – that were not in the original piece, he points out. “The best thing to do is to make the message relevant to the consumer being targeted.”

A credit card company, for example, should first identify its target’s acculturation level and offer a card according to his or her financial needs at the moment, notes Gruber. “There’s no need to offer a platinum card to someone who is building credit, keep it in the back hand to have them upgrade at a future stage,” he offers. “The goal in this case should be to deliver a more basic credit card package and use the direct marketing communication to educate the person on credit and its uses.”

Bilingual direct marketing offers, particularly mailings, have been around for two decades. Gruber recalls that in the 1980’s a client asked him to produce a bilingual mailer and the consumer response rate increased 200 percent. “The response was so good, the client thought something was wrong. So we tested it twice to reconfirm,” he adds.

Since then, bilingual messages have become the standard methodology for communicating with Hispanics on acquisition initiatives – efforts to attract a new customer. Among those going the bilingual route, notes Gruber, are insurance companies, credit cards and offers with small print fields. For customer retention and customer-relationship management programs, the advertiser should zero in on the targets’ language preference data, and then mail in that language.

Hitting The Right Target

Any direct marketing effort requires one key factor to be successful: knowing the target. While it’s a given that Hispanics receive considerably less mail than non-Latinos, and that they are more likely to be receptive – and responsive, connecting products or services to the target audience is a must.

Besides the obvious age, sex, income and Hispanic questions, acculturation is a key factor that must take center stage in a direct marketing initiative. Is it a recent immigrant? A second generation Latino that feels more comfortable in Spanish? This is a critical success variable when marketing to Hispanics.

The level of acculturation, say those in the know, helps define the target : someone who moved to the U.S. recently is most likely to be Spanish dominant, to not have established credit and to not know how things are done in this country. But, given the size of the Hispanic population in the U.S., numerous variables - credit score, income, educational attainment, geographic location and presence of children - should be used to target a profile. Often, testing and a process of trial and error is required, especially for new programs.

The target can be a woman, between the ages of 40 and 50, with a $50,000 per year income, but what else?, notes Gruber. “The better you identify that person, the more receptive he or she will be,” he insists. “You can address me as a Hispanic, but my reaction won’t be the same as if you address me as a Venezuelan who has been living here two decades or as a U.S.-born Hispanic that is of Central or South American origin. The message has to be relevant.”

When targeting Latinos through direct marketing, the Hispanic background and acculturation level take on greater importance, explains Gruber. Among Latinos, addressing the right target – with the correct message - can represent as much as 40 percent of the reception to the offer or product, he points out. In contrast to the non-Latino market where the value of the offer is tops, among Hispanics it falls to second place.

The Coveted List

The starting point for any direct marketing effort – be it a simple postcard or door hanger or an hour-long infomercial – is a list. The names of targeted individuals who would make a prime consumer for the product or service.

Lists of known Hispanics, like the subscriber logs of magazine titles including Selecciones and People en Español, deliver a solid lineup of qualified names and addresses. These lists are also fairly easy to obtain. But, warns Gruber, clients and marketers can quickly run out of names.

“If you are doing a national campaign, there may not be enough names,” says Gruber. “And if you’re in testing mode, after a roll out or two, there are no more names to go around.”

One way to get around this is to rely on compiled lists , those that are put together by refining the information in a phone book or other large directory. “You start with a humongous universe of names and then narrow it down with demographic data and other variables,” says Gruber. In an effort to come up with more sophisticated lists, some companies call all the Spanish surnames in neighborhoods that are 95 percent Hispanic. “This works for some clients and some efforts, not for others,” he warns.

The Agency Connection

Driven by the growing client interest in direct marketing to Latinos, Hispanic advertising agencies continue to expand their in-house offerings to include direct marketing.

Last fall, López Negrete Communications launched a direct marketing department offering direct mail, direct broadcast, telemarketing, digital and alternative media to existing and new clients (HMW Archives 9/19/05. López Negrete Zeroes In On Direct Marketing ).

Early last year, two non-Latino direct marketing agencies - Quigley-Simpson and In Clover –joined forces to launch Vivar Advertising, a shop focused on direct response marketing aimed at Hispanics (HMW Archives 5/30/05. Arriba/Abajo).

Hispanic agencies’ dive into the direct marketing space comes as the industry gains strength in the Latino market. “Almost all advertising agencies are looking seriously at the direct marketing discipline,” says Gruber.

But, warns Freydell from Directo Hispano, agency executives shouldn’t think they can just launch a dedicated direct marketing department and hit the ground running. Someone accustomed to developing brand-focused creative will not easily be able to produce materials for direct marketing, which requires that every dollar spent deliver return on investment results.

“Direct marketing is a science,” says Freydell. “It has to be studied.”

Alberto Ferrer, director of direct and digital marketing, at The Vidal Partnership notes that more Hispanic agencies are creating departments to offer direct marketing for clients. “There’s also the incursion of non-Latino shops trying to get in the Hispanic market game,” he adds.

Who’s In?

In addition to the traditional categories that have been active in direct marketing to Latinos for several years, new advertisers are venturing into the mix. Clients are showing more interest and a greater commitment to direct marketing aimed at Hispanics, notes Sergio Mankita , direct marketing account supervisor at Zubi Advertising.

“More and more companies are seeing the value of integrated campaigns and are committing the necessary dollars to fund those efforts,” he adds.

Mankita points out that the automotive category continues to be active in direct marketing, one in which testing of different mediums and formats continues and now shows a greater tendency towards an overall integrated effort. “While direct mail is still a cornerstone of overall strategy, we are beginning to see greater use of print, events and online initiatives,” says Mankita. “There is more movement towards sweepstakes and other alternative media vehicles.”

Financial services firms continue to include direct marketing in their overall strategy to Latinos. While direct mail is still the bulk of the media mix, Mankita notes, clients in this sector are beginning to expand their efforts to include direct response television, and online/email initiatives in their overall mix.

With consumer packaged goods , direct marketing is a small but growing element, Mankita explains. He points out that for many packaged goods advertisers, strategic tests and direct mail initiatives are laying the groundwork for broader campaigns – with coupons and brochures leading the pack. “Online initiatives are beginning to gain traction as top of mind for marketers,” Mankita says.

As interest grows, advertiser categories that traditionally avoided direct marketing or were reluctant to consider it a viable option in their marketing strategy are now coming around. “They are beginning to understand the importance of metrics – return on investment, CPL, CPO – and are now more open to including direct in their media mix,” says Mankita. “We certainly see online and events activity to grow in the coming year.”

Last year, The Vidal Partnership prepared a direct marketing effort for Century 21 Real Estate that was built on driving Latino traffic to the company’s website and getting Hispanics to do more property searches while online.

Tapping into the Hispanic Heritage days theme, the agency created an micro-site with Hispanic specific content, explains Ferrer and used online direct marketing efforts to drive Hispanics to the site. The results: more Latinos visiting Century 21’s website, their spending more time on the site and conducting more searches of properties.

“Direct marketing delivered good results on all three fronts,” says Ferrer.

A Broad Range Of Options

Today's marketers are using a wide variety of direct marketing  vehicles to reach the Latino market – these range from television and radio commercials to direct mail pieces and billboards.

In terms of printed direct marketing efforts, the postcard is widely used especially by retailers looking to drive traffic into a store. Freestanding inserts, which are delivered inside a newspaper, offer broader reach to the masses, notes Gruber.

Walters, from Carmen's Cupones y Consejos , points out that he's seen an increase in the number of U.S. firms wanting to use his company's direct mail program to reach Hispanic consumers. Carmen's Cupones y Consejos, in full color 6"x 9" envelopes, is mailed to densely populated areas, targeting Hispanic homes where there is a female, 25-40 years old, children under the age of 18, and an average income of $28,000 and above (HMW Archives 5/20/02. Building).

Latin-Pak is entering the new realm of electronic relationship marketing with Latin-Pak Electrónica, which allows advertisers to append databases to e-mail lists and vice versa, produce on-line consumer surveys and produce e-mail video commercial advertising. The database includes demographic, age, marital status, gender, occupation, household income and lifestyle selects leading to highly targeted, permission-based marketing for advertisers. "There is a continual increase in the time that Hispanic consumers are spending online and making online purchases,” says Vince Andaloro , CEO of Latin-Pak.

As the U.S. Hispanic population burgeons, and as marketers learn how to fulfill this demographic's wants and needs, direct response television (DRTV) is becoming an increasingly popular medium for reaching out to Latinos. Even direct response radio – infomercials via the airwaves  - is gaining popularity, notes Walters.

Data indicates that Hispanics are younger - 65 percent are under 35, compared to 45 percent for non-Latinos – and are avid television watchers. According to Nielsen, Hispanics spend 25.4 hours per week watching television, while their non-Latino counterparts dedicate 17.8 hours to television. Latinos also spend 17 hours per week listening to the radio, compared to 14.75 hours for non-Hispanics.

Another trend, notes Ferrer from The Vidal Partnership, is the development of multi-channel direct marketing for Hispanics. That is, direct marketing efforts that encompass more than one media channel.

For DIRECTV , the agency has used DRTV, alternative media, print, mail and online to deliver the business-building results they need. “In the past, direct marketing was relegated to just mail, which is a great and effective tool, but not the only tool,” says Ferrer.

Making The Jump

Advertisers active in the Hispanic direct marketing arena range from veterans like Lexicon Marketing’s “Inglés Sin Barreras” to new arrivals like Gevalia Kaffee, which ventured into this realm in January.

Kraft Foods' Gevalia Kaffe made its first dedicated foray into the U.S. Hispanic market early this year with a direct mail test aimed at prompting Latinos to buy coffee by mail. The effort – which boasts an offer of a free stainless steel coffee maker for buying two ½-pound boxes of coffee - targets partially acculturated and unacculturated segments of the U.S. Hispanic market. Consumers who respond to the offer are automatically enrolled to receive monthly supplies of Gevalia.

In total, 400,000 Latinos throughout the U.S. will be contacted by Gevalia’s efforts. The first mailing went out in mid-January and a second is scheduled for this month. Some names were identified to receive Spanish-language correspondence while others will be targeted with bilingual materials.

In addition to a list of Hispanic mail order purchasers, Gevalia conducted focus groups last fall in high-density Latino markets – including Miami and New York – to test the viability of a direct marketing effort aimed at Hispanics.

Los Angeles-based Lexicon Marketing is the leading direct marketing company serving the U.S. Hispanic market. Founded in 1974, Lexicon Marketing has been using direct marketing efforts to sell its products nearly from the start. In an effort to boost the connection with consumers, in 1994 Lexicon created the Hispanic Call Center, a bilingual telemarketing and customer service center.

“What we love about direct marketing is that it's extremely accountable – we measure everything that we do,” says Karissa Price, director of marketing and business development at Lexicon. “Either the phone rings or it doesn’t. And if it doesn’t, off goes the direct marketing effort and something else fills its place.”

Today, Lexicon is the biggest buyer of Spanish-language print and television media - for its direct-marketing efforts. In 2005, the company increased its advertising spending from $12.6 million to $75 million. Its two best-known products – “Inglés Sin Barreras,” and “Disney's World of English,” a learning course for children – boast over 95 percent brand recognition in U.S. Hispanic households today. After years of focusing solely on television for its direct marketing efforts, Lexicon has now added direct mail, internet and event marketing to the mix, notes Price.

A Bright Future

All signs point to a strong industry and a market that will retain its rapid rate of growth. Insiders see "growth at every level" within the Hispanic market and in the direct marketing industry.

“We’re definitely going to see more direct marketing, and direct mail in particular,” says Gruber.

The DRTV market is also poised for growth, driven by the size of the U.S. Hispanic population plus factors like age, buying power and television-watching habits. Technologies like video-on-demand, interactive commerce and wireless will offer new media options for advertisers looking to reach Latino consumers.

In addition to increased direct marketing activity from clients, budgets are also on the rise. Two direct marketing clients at The Vidal Partnershio, DirecTV and Sprint, regularly increase their investment in the discipline, he adds. “This is traditionally a test then invest discipline,” says Ferrer. “But there is a very clear indicator – across clients and categories – that the budgets are coming.”