What you should know about the Spanish-language FSI market
“Just a few years ago there wasn't much interest in FSIs for Spanish-language newspapers, now people are scrambling to get into the market,” says Jason Hicks, director of new business development at American Communications Group, a print media analysis and placement firm based in Los Angeles that buys FSIs for retailers including JC Penney, Dollar Tree and Tower Records.
FSIs (free standing inserts) are promotional pieces loosely inserted into a newspaper or magazine. In the general market, FSI advertising accounts for roughly US $1.5 billion, or approximately 20%, of the total national advertising volume. In the Spanish-language newspaper market FSI advertising accounts for approximately US $25 million. Although this is a relatively small number, the market is expanding at an annual rate of 50% per year.
Who are the protagonists in this amazing growth story? “As with general market FSIs, CPGs (consumer packaged goods companies) account for over 90% of the activity,” says Wallace Marx Jr., director of marketing at Minnesota based Marx Promotion Intelligence. The ten largest advertisers account for 87% of the activity (see box on page 18), and the two largest for 73%. The two clear leaders in advertising volume are Procter & Gamble (46% of total activity) and Colgate Palmolive (27%). Marx cautions that his data is for Spanish-language FSIs only. “English-language FSIs do appear in Hispanic newspapers, but those vehicles are not targeted,” he explains.
According to Joe Mattessa, who works for Newspaper Services of America and places FSIs in Spanish-language newspapers for companies like Mattress Giant and Qwest, FSIs offer the advantage of being placed in vehicles which consumers pay for or at least make an effort (rack pick-up) to read. These publications, which offer an attractive editorial environment, have a higher perceived value. However, Matessa cautions that the attractiveness of the paid product varies depending on the market and type of product advertised. “Some advertisers prefer a vehicle with saturation or total market coverage like California's Impacto USA, while others, who target a more specific audience, might prefer a newsstand oriented, paid vehicle like Los Angeles' La Opinión.”
American Communications Group's Jason Hicks says that when it comes to FSI ad-placement, media buyers have to take into account important differences be-tween the Hispanic print media market and the general market. While in the general market the Sunday newspaper is by far the most important vehicle for FSIs, weekdays are very strong for the Hispanic market because Latinos tend to pick up their papers at racks on their way to work. “The problem with free rack distribution is that you can't be as certain as you can with subscriber based home-delivery how many people you are reaching,” Hicks explains, adding that “Retail advertisers are more used to home-delivery.”
Another critique of Spanish-language newspapers as advertising vehicles is that their reach is low compared to general market vehicles. However, Robert Armband, publisher of Chicago based La Raza weekly, says “advertisers who say that, do not really know the marketplace. In the top 20 Hispanic markets, there is not one [market] where combined circulation does not exceed 80% of the total number of Hispanic households. In some cases, just one publication will cover 50% of the market, which is more than TV or radio.”
Higher prices, but going down...
Because the Hispanic FSI market is much smaller than the general market, where a national drop means a circulation of at least 40 million, there are less economies of scale and prices (CPMs) tend to be higher. While a Sunday general market FSI can have a CPM of as low as US $6, Papel Media-Valassis, one of the most efficient providers in the Hispanic market, offers a CPM of US $10 to its clients. However, the increasing number of print ad vehicles targeting Spanish-speaking audiences is driving CPMs down. “La Opinión owned the market for 75 years, but now papers like Impacto USA, Hoy-LA and others are competing in the same market,” says Hicks.
...due to competition from direct mailers
Competition between FSI advertising providers and direct mailers, who deliver mail directly to Latinos' mailboxes, is also driving prices down. One of these providers is Windsor, CT based direct mail giant Advo. Matthew Drinkwater, national sales advertising director at Advo, tells Portada® that Advo's Shopwise hits 8-9 million Hispanic households through bilingual ads placed in neighborhoods with high Hispanic populations. Advo is looking to develop more Hispanic specific products.
Harte Hanks is another direct mail giant competing for Spanish-language print ad dollars. “Pensando en Ti,” Harte Hanks main Hispanic campaign, is a Spanish-language insert in the Californian edition of its Pennysaver flyer, which is used mostly by CPG national advertisers. Like Shopwise, Pennysaver contains 100% advertising, with no editorial content.
Direct mailers' largest cost is postage, so the newspaper delivery method used by newspaper inserts (FSIs) reduces costs. In fact, direct mail companies sometimes partner with publishers to achieve a more cost effective distribution. An example of this is Advo's partnership with Media News in Southern California. Advo entered a partnership in August 2003 with Los Angeles Newspaper Group LANG, publisher of eight daily newspapers located in and around the Los Angeles market, as well as Impacto USA, the largest home-delivered Spanish-language newspaper in California. Through this partnership newspaper subscribers receive the Shopwise inserts on top of their Wednesday newspaper. Those who do not receive a LANG newspaper get the inserts in their mailboxes. Advo has a similar relationship with Media News Group (LANG owner) in the Denver, Connecticut, San Francisco and Detroit markets. According to Advo, some partner newspapers saw their weekly inserts grow six-fold because of the program's ability to reach more homes.
Despite their marketing clout, direct mailers are limited in their capacity to reach Hispanics. “Thirty-three percent of Hispanics are not listed on any direct marketing lists. For the general market this figure is only 11%,” Vincent Andaloro, president and CEO of Los Angeles based Latinpak, tells Portada®. “That's why FSI in newspapers are a very important part of any print advertising strategy that hopes to reach a large portion of the Hispanic population.”
Trackback from your site.