Tom Kadala on the Hispanic Consumer

Opinion: Young Hispanic Ad Agencies are Redefining ‘Business-as-Usual’

A recent article in Advertising Age dealt with an interesting paradox. Despite a ten-fold growth in Hispanic advertising in the last ten years, most major corporations have yet to see a positive return on their advertising investments. Having surged from $500 million in 1996 to $5 billion in 2006, corporate Hispanic advertising continues to weigh on the minds of marketing directors who frequently struggle with allocating advertising funds to Hispanic ad agencies rather than to traditional general market ad agencies.

Some Hispanic ad agencies justify their less than stellar results on harder-to-measure factors such as language preference and rates of acculturation. Others tell a different story claiming that the $5 billion ad spend in 2006 was actually not enough to properly address the rapidly growing Hispanic markets and that the appropriate amount should have reached three times greater or $15 billion by 2006. They derived this figure by matching the 15% of Hispanics represented in the total US population with the approximate $100 billion total ad spend for the US.

If increasing the ad spend is the answer, why is it that so many marketing directors have done just the opposite by reducing their budgets and redirecting funds away from Hispanic ad agencies? Is it because department heads believe that Hispanics will eventually acculturate and meld into the general market thus reducing the need for Hispanic ad agencies?

This downward trend has caused many talented Hispanic agencies to fold. Those that have survived have been forced to compete head on with general market ad agencies who produce solutions that are more in line with general market strategies and less with culturally-specific solutions.

This younger crop of Hispanic ad agencies argue that corporations should be more willing to give them a chance, since more established Hispanic ad agencies have seemingly lost their touch with emerging markets. They claim that many of these older Hispanic ad agencies cannot come up with ‘home-run’ ideas since they consistently source the same talent year after year. Just as emerging Hispanic markets are constantly changing so to must their creative teams change. Given a chance, these younger ad agencies could eventually carve powerful niches based on timely out-of-the-box creative solutions. Their determination to survive will inadvertently redefine how corporations will eventually view Hispanic markets.

Tripling ad spend may be one way to reach Hispanic markets, but what if the results continue to trail expectations as they have for the past decade? At some point corporate leaders will have to seek out alternative solutions by giving a younger crop of Hispanic ad agencies a chance to prove their talents and skills with more culturally-specific marketing strategies. It is only a matter of time!

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: Job Seekers will favor Hispanic-friendly Employers

Every career-minded executive must follow a personal plan to ensure that their skill sets are always in line with the future requirements of their preferred employers. Otherwise, choosing to remain complacent could be risky, potentially leading to a demotion or unemployment. What are some of the key warning signals on the job market today that executives should recognize, and what can they do to keep their career advancement on a steady course for years to come?

According to PEW Hispanic Center (www.pewhispanic.org), 47 million Hispanics currently live in the US and by 2050 their numbers are expected to reach 129 million. Furthermore, the Census Bureau states that in the next 20 years over 78 million baby-boomers will retire, vacating over 35 million job positions. The White House has acknowledged that unless Congress takes action soon, by 2030 only one wage owner will be available to support six pensioners.

These statistics suggest that the American labor force may potentially suffer from a severe case of underemployment where the talent pool needed to fill key positions may become insufficient. That may be bad news for the retiring baby boomers that rely on wage earners to support their pensions, but it does open a window of opportunity for experienced executives. Companies looking to fill entry level positions with Hispanic candidates will need plenty of assistance to properly welcome, manage, leverage, and retain this burgeoning workforce estimated to surpass 27 million by 2016. How then can executives prepare to make themselves more marketable to an employer?

First and foremost, career-minded executives should favor companies that are seriously preparing their employees to absorb a younger Hispanic talent pool. Key initiatives to identify should include comprehensive training programs taught by qualified instructors who have experience teaching Hispanics, mentorship programs designed to move Hispanic candidates up the corporate ladder, and meaningful scholarship funding efforts with local Hispanic non-profit organizations.

In the meantime, executives should consider brushing up on Spanish culture by traveling to Central or South America. Sampling local Hispanic dishes, listening to local music, and watching local television programs are all good ways to start. If traveling is out of the question, one can still gain a similar experience by getting involved with non-profit organizations that serve Hispanic neighborhoods such as the Boys and Girls Club of America.

Just think! The young Hispanics that you may one day be asked to manage or train, are probably living right around the corner from you today. Learning to mingle with them now, while they are still young, could teach you language and cultural skills that can be applied in the workplace for years to come; hence, helping you become a more desirable candidate.

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: College Student Enrollment should Reflect our Changing Workforce

Although the Hispanic population is growing faster than any other ethnic group, the number of annual Hispanic graduates from top-level colleges continues to lag behind. Who then will fill the key positions that are now being held by some of the 78 million baby-boomers expecting retirement within the next 20 years?

Human resource department heads at several Fortune 100 companies have noted that the number of qualified Hispanic candidates is too small to fill their current job openings. These directors blame the scarcity of qualified candidates to the large young Hispanic population that currently fills our public high schools but not our colleges. While public high school enrollments have exceeded 50%, top-level colleges show only single-digit percentages for Hispanic enrollments. Without taking into account those colleges located within our southern States, the data suggests that the number of Hispanic students who are first time degree candidates will be too low to meet the increasing demand for job openings left behind by our retiring baby boomers.

A study presented by the White House last year stated that for every six pensioners, only one wage earner would be available to support their monthly pension if the supply of minority professionals (i.e. Hispanic) were to remain at current levels. With a growing need for more wage earners, one can expect the forces of supply and demand to coerce universities to seek out more Hispanic candidates.

Although college web pages talk up their recruiting efforts for Hispanic candidates, the actual enrollment numbers from year to year continue to show slow progress. For example, at Colgate University located in Hamilton, NY. the student body includes a mere 1.7% of Hispanics. Other similarly prestigious institutions are as follows: Rensselaer Polytechnic Institute (RPI) at 6.3%, Boston University 6.7%, University of Virginia 4.4%, Georgia Tech 4.2%, and Yale University 5.7%.

These surprisingly low Hispanic enrollment numbers should be cause for alarm. If high schools are bulging with Hispanic students, when will their presence become more prominent at college levels nationally? Also, if colleges fail to integrate more Hispanics within their student body, how prepared will their students become when they enter a far more diverse workforce? ...and finally, where will qualified Hispanics get the funds to attend these top-level colleges?

Unless businesses and government agencies work together to fund programs for qualified candidates, top-level colleges will continue to have difficulty meeting their target numbers for Hispanic enrollments. In addition, with the level of tuition rising faster than inflation, funding for both tuition and board will eventually require a sustainable contributing Hispanic alumni base.

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.

Opinion: Hispanic Data Sources may no longer be Reliable

Just when you thought you had a solid grasp of the statistics available on the growing Hispanic population, new numbers emerge. The new statistics support the same direction of growth but at a faster rate. If what has been said about the numerous opportunities to be gained from selling to Hispanic consumers, has not yet impressed you, perhaps the adjusted numbers will.

Recently, three Latin American Associations (Venezuelan, Colombian, Ecuadorian) organized a Hispanic Market Forum in which Jeff Passel, a Senior Research Associate for the PEW Hispanic Center in Washington DC, unveiled the 2008 adjusted numbers for Hispanics. According to Mr. Passel, these new numbers may be telling us a different story.

For the past year experts believed that by 2050, 25% of the US population would be of Hispanic descent for a total of 100 million Hispanics. The upwardly adjusted numbers - according to the PEW Hispanic Center - are now closer to 30% with an expected 128 million Hispanics. The 28 million difference from this years projections as compared to last year’s numbers presents a potential red flag for Hispanic data source favorites (i.e. U.S. Census Bureau and Nielsen Research.)

If in one year experts readjusted their projections for the Hispanic population in 2050 from 100 million to 128 million (a 28% increase), what additional adjustments can one expect to read by next year? ...another 28% increase? Perhaps these data experts who make their predictions based on data and trends available to them today, may need to re-evaluate their assumptions more carefully before releasing their predictions. Underestimating projections by 28% should encourage data buyers to demand an explanation that details their data collection methodologies.

The implications of underestimating population growth ultimately affects wealth generation and living standards. For example, with more Hispanics predicted by 2050, economists have had to readjust their numbers to reflect more wage earners and buying consumers. Economists projections for the Hispanic purchasing power has been readjusted from the previously accepted $1 trillion by 2010 to $1 trillion by 2008 and $2 trillion by 2015 (PEW). This aggressive timetable is quite startling and further supports the unpredictability of Hispanic consumer markets going forward.

To put these numbers into perspective, one should consider that for the 50 or so years that it took Hispanics to achieve the first $1 trillion of purchasing power, the projected next $1 trillion will take only seven years. Does this trend suggest that subsequent $1 trillion increases in Hispanic purchasing power will take less than seven years? What will be the Hispanic purchasing power in 2020? ... and 2030? Should we expect more data revisions from the experts? Could it be that the data available regarding Hispanics today is no longer reliable?

Tom Kadala is the president of ResearchPAYS, Inc., a strategic business consulting firm dedicated to the development and expansion of Hispanic consumer markets. - (www.researchpays.net). Mr. Kadala can be reached at tom@researchpays.net.