The U.S. Hispanic marketing industry has been growing at an average of 10% since 2003, as more clients are spending more money targeting this segment. But when it comes to online marketing, not all clients are online, spending only $132 million or roughly 3.5% of the total Hispanic media advertising expenditures in 2006.
Redefining the Hispanic Market
Despite the common held belief that the U.S. Hispanic market can be effectively reached by a Spanish-language marketing effort, marketers today have to deal with a different, more nuanced Hispanic marketplace.
As discussed in previous columns, the U.S. Hispanic market is culturally and linguistically diverse. 40% of the Hispanic population is foreign-born and predominantly Spanish-speaking, while 60% is second- and third-generation and largely bilingual and English speaking only (Suro and Passel, 2003). Sixty-four percent of the segment is Mexican, 15% Caribbean, 9% Central American, 8% South American, and 4% Other (Spaniard, etc.). As we will see, the diversity in the Hispanic market composition will have significant implications on what marketers do to target U.S. Hispanics effectively in the future.
Online Marketing Findings
In 2001, the Pew Internet & American Life Project conducted a study on the Internet activities of English-speaking Hispanics in English. In the summer and fall of 2006, the Pew Hispanic Center conducted a follow-up study in English and Spanish, talking to more than 6,000 Hispanic adults regarding their online habits in the United States. The results were quite interesting.
The most important finding in this study was the online penetration of U.S. Hispanics. The study found that 56% of U.S. Hispanics use the Internet, compared to 71% of non-Hispanic whites and 60% of non-Hispanic blacks in this country.
Much of the difference in Internet usage between Hispanics and non-Hispanics is explained by socio-economic differences. These factors are often times intertwined, especially in the Hispanic foreign-born population, making it difficult to isolate one variable from another. However, the study concluded that two factors—education and language—were important in explaining the gap in Internet usage between Hispanics and non-Hispanics in the United States.
Specifically, the study showed that those who had not graduated from high school were much less likely to use the Internet regardless of their racial or ethnic background. With 40% of Hispanic adults not having completed high school, compared with approximately 10% of white adults, the study found that the low rate of high school completion among Hispanics was correlated to their relatively low use of the Internet.
In addition, only ten percent of U.S. Hispanics have a college degree, and of that small group, 89% go online. Roughly half of U.S. Hispanics (49%) have finished high school, and of those, 70% use the Internet. Conversely, 41% of Hispanics have not finished high school, and of those, 31% use the Internet.
By comparison, 28% of whites are college graduates, and of these 91% report using the Internet. Twenty percent of African Americans are college graduates, and 93% report using the Internet. About 60% of white and African American respondents are high school graduates, with 69% of the whites reporting using the Internet, and 62% of the African Americans. Only 12% of whites and 21% of African Americans have not finished high school, and their rates of Internet usage are 32% and 25% respectively.
The study also showed that language was significant in predicting a wide range of attitudes and behaviors (i.e., Internet usage). The study showed that 78% of English-dominant Hispanics and 76% of bilingual Hispanics use the Internet compared with 32% of Spanish-dominant Hispanics.
But does Internet usage vary across generational levels? Seventy-six percent of U.S. born Hispanics use the Internet versus 43% of foreign born Hispanics. Second-generation Hispanics are the most likely group to go online. Eighty percent of second-generation Hispanics use the Internet, compared to 71% of third-generation Hispanics. This finding is significant because the native born segment of the U.S. Hispanic population is projected to grow more rapidly than first-generation Hispanics, and has the potential to grow Hispanic marketing in the future.
The Offline Hispanic Segment
Forty-four percent of the total Hispanic adult population does not use the Internet. As discussed, the offline Hispanic population is characterized by lower educational attainment and a lower likelihood to speak English. 69% of Hispanics who did not complete high school and 68% of Spanish-dominant Hispanics are offline.
Interestingly, 68% of the offline Hispanic segment is Spanish-dominant, compared to 22% who is English-dominant. 57% of the Hispanic offline segment is foreign born, compared to 24% who is U.S. born. Only 11% of Hispanic college graduates are offline versus 69% who do not have a high school degree.
Of U.S. Hispanics who do not go online, 53% say they simply “do not have access.” 18% of non-user Hispanic adults say they are “not interested in going online,” 10% say going online is “too difficult or frustrating,” 6% say it is “too expensive to get access,” and 5% say they are “too busy or do not have the time to go online.”
Implications on Hispanic Marketing
A common approach companies take in their sense making process is to attribute factors to a demographic group, applying internal attribution, which assigns causality factors within the person. I argue that companies should also identify factors external to the individual that may help explain the cause for the digital divide among the Hispanic population.
It’s important to note that education and language do not cause the lower penetration of online usage among U.S. Hispanics. They are factors that are associated to online Hispanics, which can be used to develop a profile of the Hispanic online user. These factors can be used as predictors, which help identify what characteristics are likely to explain for variances in the dependent variable.
Regarding online marketing, research has pointed to one critical factor— access—and I think, this insight is right on. I do not believe there are significant cultural issues that prevent Hispanics from getting online. If more Hispanics had access to more computers, and more companies built their online business models around Spanish-language, do you not think we would see a change in the penetration of Internet usage among older, less educated U.S Hispanics? In the end, it is largely a supply and demand issue. Companies must first address the supply problem (access) before Hispanic marketers can affect consumer demand.
I am not sure it is as easy as building an online business model in Spanish and expect Hispanics to come. But I do know this; Hispanics respond to innovation—products and services that will make life in the United States easier or better. Imagine if every online Hispanic were to show an offline Hispanic friend or relative how easy it is to use the Internet, and if companies were to partially subsidize computers, would you not see a world of difference in how many Hispanics go online?
Reducing the digital divide in the U.S. Hispanic market will require a digital revolution—on two fronts. Companies must first address the issue of access, before we can expect to see a significant increase in the number of Hispanics online. In the end, companies that are willing to take a leap of faith with this demographic and are the least path-dependent may find themselves alone in this endeavor … but then again, is that a bad thing?
Hispanic Market Research 