Latin market soaring as ad slump pummels networks
Latino media companies are resisting current industry woes as ad revenues continue to grow substantially at many outlets.
The trend illustrates a traditional resilience of the Latino market to economic downturns, a factor being watched closely by media executives and marketers.
Telemundo Communications Group Inc., a network of 28 stations including KVEA-TV Channel 52 in Los Angeles, had first quarter ad revenues of $179.2 million, compared with $71.7 million for the like period a year ago, according to Nielsen Monitor-Plus.
First-quarter ad revenues at Los Angeles-based Univision Communications Inc. were $245.7 million, from $222.2 million a year ago. By comparison, ABC, NBC and Fox all saw ad revenues dip during the same period.
A recent report by Standard & Poor’s DRI showed that while the overall economy is in go-slow mode, the Latino market is weathering the downturn better than most.
The reasons include:
– Industries with a high concentration of Latino employment such as landscaping and service industries are the fastest growing and were the least impacted during the last recession.
– Latino families tend to be larger and younger, which means they devote a higher share of their spendable income to basic necessities such as food and clothing, which are less likely to be curtailed during an economic slowdown.
Even durable goods purchases are less likely to be postponed because in younger households durable goods are often first-time buys rather than replacements.
The percentage of employed Latino family members remains consistently higher than families in the general population. In 1998-99, nearly 85 percent of Latino families had an employed member, compared with 82.6 percent of all American homes.
All this comes as little surprise to Rochelle Newman-Carrasco, chief executive of Enlace Communications, a local ad agency that specializes in the Latino market.
During the recession of the early 1990s, Enlace did well because many of the agency’s clients were advertising day-to-day staples such as soap.
Easy access to market
Businesses also recognize that tapping into the Latino market can be done economically. “The Hispanic market continues to be a good value for getting new consumers at an efficient cost relationship,” Newman-Carrasco said.
She noted that advertising on a local English-language TV station will cost about $2,400 per ratings point for the adult consumer, ages 18-49, compared with $800 per point to advertise on Channel 34, KMEX-TV, the No. 1 local Spanish-language station in L.A. A point is an industry standard used to measure a station’s audience.
During the last slump, La Agencia de Orci & Asociados, another local advertising agency specializing in the Latino market, saw annual revenue gains of 10 percent. This year it expects to increase its revenues by 22 percent over last year.
“If you looked at the Latino market as an economy all by itself, it moves at a different rate as does the general economy,” said Hector Orci, co-chairman of the 15-year-old agency. “One of the reasons is that more people work in a household. If one person loses a job there is always another adult to help with the budget. You usually have two or three generations living in the same house.”
Cushioning radio downturn
A recession-resistant Latino market has helped the five local Spanish-language radio stations owned by Hispanic Broadcasting Corp.
While their ad revenues are down 5 to 6 percent from last year, said Ken Christensen, vice president and general manager, the rest of the radio market is down about 11 percent.
La Opinion, the local Spanish-language newspaper owned by Lozano Communications and Tribune Co., also is holding its own. Classified ad sales are relatively unchanged from last year, said spokesman Miguel Pereira. By comparison, classified ads sales at the Los Angeles Times, also owned by Tribune, fell 21 percent during the second quarter compared with the like period a year ago.
