Hardly a week goes by lately without H Code Inc. announcing a deal with a Hispanic media publisher.

“No one has doubled down and invested into the digital U.S. Hispanic space in the last 18 months more than H Code,” declared Parker Morse, chief executive officer of the Santa Monica-based company.

H Code is a matchmaker that connects digital platforms such as lifestyle website HipLatina – which it bought June 26 – with advertising agencies. The connection provides the ad shops options to place creative content suited to a Hispanic-focused platform – with Hispanic defined as people in the U.S. with a Latin American ancestry.

The emergence of H Code and similar companies – including Santa Monica-based television and radio station owner Entravision Communications’ Pulpo –comes with a tinge of irony.

Hispanic-focused, matchmaking companies might be an emerging force, but Hispanic-focused advertising agencies – the companies who make the ads – are on the decline.

“The specialization in Hispanic advertising now is on the back end, rather than the front end,” said Mario Carrasco, principal of ThinkNow, a Burbank-based research and consulting firm.

Carrasco and others immersed in the Hispanic advertising market in Los Angeles give a number of reasons why growth in the Hispanic advertising market is not coming from traditional advertising agencies, with demographics, a paradigm shift among marketers and advertisers, and consolidation chief among them.

Bellwether market

Los Angeles County is a bellwether for the Hispanic market. About 48 percent of the local population is Hispanic, a share that has risen steadily since the 1980s.

A closer look at the population, though, suggests why the need for ads that are created specifically to appeal to the Hispanic population here is down. The number of U.S.-born Hispanics in L.A. is now almost double the total of immigrants, according to Pew Research Center’s Hispanic Trends division.

Los Angeles Hispanic advertising shops that were opened in the ‘80s – La Agencia De Orci & Associates and Acento Advertising Inc., among others – offered a niche service that appealed to first-generation, Spanish-speaking immigrants.

They “advertised in Spanish and in Spanish local newspapers, Spanish local TV stations, and Spanish local radio,” explained Isaac Mizrahi, the executive director of the Culture Marketing Council, formerly the Association of Hispanic Advertising Agencies.

One of Orci’s early accounts was with the U.S. Immigration & Naturalization Service, explaining the 1986 immigration reform law to Spanish-speaking immigrants.

Los Angeles Hispanic advertising agencies increased as immigration from Latin America grew. The trend was reliable for more than 20 years according to Jose Villa, president of Sensis Agency, who pegged 2006 as the peak year for Mexican immigration.

The foreign-born segment of the Hispanic community in the Los Angeles area has fallen on a percentage basis since then, according to Pew. The relatively smaller pool of immigrants is also more diverse by country of origin, thanks to increased numbers from El Salvador, Honduras, and Guatemala.

The shifts have brought a more nuanced approach on advertising targeting Spanish speakers, Villa said. His agency, for example, breaks down its Hispanic advertising by level of acculturation.


The 20-year-old, downtown-based Sensis Agency’s Hispanic-focused ad revenue keeps going down, Villa said, and is now a quarter of their business.

A key reason for the decline is what Villa and others called “total marketing.” Total marketing is a shift in which fewer companies want different ads for different cultural segments, but instead attempt a cross-over approach that aims to strike chords with multiple ethnic and cultural market segments.

“What’s happening now is creative that is inclusive of all multi-cultural audiences,” Carrasco said, explaining that it is a response by marketers to Hispanics being the largest single segment in a market where no ethnic group has a simple majority.

Roberto Orci, president of Acento and brother of the Orci agency’s founder Hector Orci, is more sanguine.

“We partner with other agencies to do ads that also appeal to Asian Americans and African Americans,” Orci explained.

Orci said his business went from nearly 100 percent Hispanic-focused to 75 percent in the last five years, and the adjustment has kept revenue and margins steady.

Acento had about $10 million in fiscal year 2017 revenue, according to Orci.

Acento works on larger accounts with advertising titans. It does Hispanic-focused ads for Wells Fargo & Co., an account otherwise handled by advertising giant BBDO Worldwide Inc.

Other Hispanic shops joined the total marketing approach through consolidation. The largest Southern California agency, Costa Mesa’s Casanova, is now part of New York City-based McCann Worldgroup Inc.

Villa said that ad consolidation “has meant less demand for Hispanic-specific assignments.”

Ad agency consolidation and the total market approach might not hurt H Code.

Facebook, Google

H Code is similar to an advertising exchange, like Playa Vista-based Rubicon Project, companies that hold ad placement auctions for digital platforms.

It’s a market that was staggeringly consolidated before H Code’s entry. Alphabet Inc. subsidiary Google and Facebook Inc. rake in 90 percent of digital ad revenue, according to an Interactive Advertising Bureau Inc. study.

Companies such as Rubicon Project have had ups and downs, but H Code’s niche-focused strategy is somewhat different.

H Code strikes deals with Spanish-language media publishers in which they provide a fixed revenue stream for the publisher, and find ads for the publisher’s website appealing to the U.S. Hispanic audience. In turn, H Code collects advertising revenue.

H Code could, “attract advertisers who want to sell to the Spanish market, and don’t want to deal with each one of those small publishers,” Carrasco said.

More digital platforms also mean more information for HCode’s data analytics technology. It may be more cost effective to discern from the data what total marketing ads work, Carrasco noted, than to make said ads.

Polpo is offering a similar value add. Entravision purchased the company in 2014, and last year Pulpo acquired their own proprietary technology to analyze ad performance.

“It points to a change in the industry, in that these companies are about audiences, not creative,” Carrasco said.

For reprint and licensing requests for this article, CLICK HERE.