Look Who's Tuned In

American Demographics, Oct 1, 2002 by Sandra Yin

Byline: SANDRA YIN

Blanca Franco, a 19-year-old Mexican living in Los Angeles, listens to the radio at least 10 hours a day. Whether she's just waking up, cleaning house or working at the local Los Tacos restaurant, she's tuned in - but almost always to broadcasts in Spanish. "It reminds me of my home country," she explains.

Franco is one of 12 million people who avidly listen to Spanish-language radio. These stations cater to Hispanics by playing regional music and by offering in-language programming that includes news from their home countries. Spanish-language radio, also referred to as Hispanic radio, is so popular, in fact, that the format shows up among the Top 5 ranked stations in all leading Hispanic metro markets, according to Arbitron. "If you want to connect with Hispanic consumers, you do it in the language and the media they prefer," says Aida Levitan, CEO of Publicis Sanchez & Levitan, a Miami-based marketing agency that targets the Hispanic community.

Indeed, Hispanic radio is growing in popularity. Although Spanish-language-format radio stations account for only 5.6 percent of all commercial stations in the U.S., their ranks are increasing at a far faster clip than the general market. In 2001, there were 603 such stations in the U.S., up 82 percent from 1992, compared with all commercial radio stations in the U.S., which grew by only 10 percent during that time, according to M Street Corp., a Littleton, N.H.-based publisher and data supplier for the broadcast industry. Spanish-language stations also capture a small but increasing portion of all U.S. radio listeners - 7.6 percent, up from 6.5 percent in 1999, reports Arbitron.

However, despite the rapid growth of the Hispanic population and the popularity of Hispanic radio, ad spending is not keeping pace. The share of Hispanics in the U.S. has almost doubled between 1980 and 2000, according to the U.S. Census Bureau, and Hispanic consumers represent 13 percent of the U.S. population today. Yet Hispanic radio received only 3.3 percent ($607 million) of the $18.4 billion ad dollars spent in 2001, according to Hispanic Business magazine and the Radio Advertising Bureau.

Why aren't big firms advertising on Hispanic radio? Patricia Suarez, president of Suarez/Frommer & Associates, Inc., a Pasadena, Calif.-based advertising and communications firm, says large companies don't advertise on Hispanic radio because they believe Hispanic consumers can't afford to buy their products.

What's more, a report by the Civil Rights Forum on Communications Policy, a Washington, D.C.-based nonprofit, found that some advertisers avoid ad buys on radio stations that have a Spanish format, believing that targeting Hispanics could erode their elite brand status. Some firms want to "disassociate their company's image from minority consumers," according to the report. In addition, companies have incorrectly stereotyped minority consumers as inappropriate targets for certain luxury products or services. As a result, some stations that program to minority listeners "are excluded [from ad buys] based on average listener income, regardless of data about consumption patterns," states the report.

In other cases, Hispanic radio stations lose out because some advertisers don't target by ethnic background. And the national advertisers who do target Hispanics often prefer television spots because of TV's greater reach, says Jessica Pantanini, managing director of Tapestry, the media arm of San Antonio-based Bromley Communications.

There is some basis to marketers' belief that Hispanic radio audiences tend to be less upscale than the overall radio audience. The average household income for Spanish-format-radio listeners is $45,532, compared with an average of $64,568 for all radio listeners in the U.S., according to Mediamark Research, Inc. The average for Spanish radio is likely to be even lower given that the survey was conducted in English only, eliminating less affluent and less assimilated Hispanic consumers.

"[Hispanic radio listeners] are good for almost everyone, but not high-end vehicles, financial planners or beer," says Ingrid Otero-Smart, president of the McLean, Va.-based Association of Hispanic Advertising Agencies. Pharmaceutical and financial services companies in particular have been slow to recognize the appeal of bilingual, acculturated consumers, says Levitan.

What don't these companies know about this market? For one thing, Hispanic buying power is on the rise. The Selig Center for Economic Growth, a research group at the University of Georgia in Athens, estimates the buying power of Hispanics at $581 billion in 2002. That's up 161 percent from 1990, compared with total U.S. buying power, which rose only 74 percent over the same period. In addition, Hispanic radio listeners are particularly receptive to packaged goods, automotive products, health-care services and insurance and real estate promotions, according to Levitan. During the next 12 months, the mostly Hispanic households that tune in to Spanish radio stations are 64 percent more likely than the average listener to plan on buying a primary residence or new condo, reports Scarborough Research, a New York City-based consumer market research firm. Hispanics also tend to buy more in categories such as entertainment and communications purchases. Hispanic radio listeners have a propensity for buying high-end electronics, including TVs and sound systems and components that cost $500 or more. They are also more likely than average to spend between $250 and $499 a year on CDs, cassette tapes and other music.