The last few years have seen an explosion in public discussion and thought leadership around best practices in Hispanic marketing. Yet none of the hundreds of articles, white papers, presentations or blogs written by countless experts and pundits have delved meaningfully into determining the right investment level to enter the Hispanic market.
While there are numerous studies and discussions around the right investment level for Hispanic marketing – the so-called “right spend” topic – none of these discussions deal with this fundamental first question for all new Hispanic marketers. Like the right spend, the right level to enter the market is not an easy question to answer with variation by industry, company size, geographic market, etc. However, there are some heuristics that can help marketers think this through.
Before I get into them, let’s dispel three common approaches to the initial “right” investment level that are antiquated at best and misguided at worst.
1. There is no magic percentage – It doesn’t exist upfront or when you’re a few years into your Hispanic marketing journey. Using a percentage of your overall marketing spend, whether based on the ratio of Hispanic population to the general market or some other formula, is overly simplistic and no better than picking a random number.
2. The cost of Spanish TV campaigns – Many initial entrants into the Hispanic market base their investment decision on the cost of producing a Spanish-language TV spot and running it on Spanish TV for some short-to-medium flight. This is problematic on so many levels, not the least of which is that an initial Spanish TV campaign is an increasingly limited medium to reach large swaths of the Hispanic market.
3. The emerging market analogy – The U.S. Hispanic market is often referred to as a domestic emerging market. This analogy focuses on communicating the significant growth potential and under-investment that exists in the U.S. Hispanic market. But it has the unintended consequence of creating the expectation that Hispanic marketing investments will be relatively low cost, like in actual emerging markets. Unfortunately, large percentages of the U.S. Hispanic market are concentrated in some of the most expensive media markets in the world – LA, New York, Chicago – making this analogy and approach to determining initial investment a non-starter.
Here are three recommended approaches to determining your initial investment level for entering the Hispanic market:
1. Hispanic Pilot Approach – This is a proven means to launching any new marketing initiative and particularly appropriate for the Hispanic market. The underlying concept is to start with controlled market tests or test campaigns, measuring success with actionable data. Maybe you pick a few optimal Hispanic test markets. Maybe you test response and effectiveness using digital.
2. Minimum Investment Levels – You should be willing to invest at least six figures and a few months in market or it’s probably not worth trying. It is difficult to enter a market, even with a pilot, if you’re not willing to spend that amount.
3. Hispanic Business Case – Having a sound case should be the foundation for identifying an appropriate initial investment level. This business case should not only identify a well-defined Hispanic target segment and a market potential, but also include an ROI projection. This type of demand-based modeling is the best approach to guide initial resource allocation and it’s the way the best Hispanic marketing programs start.