Valassis’ Advo Acquisition May Tip Scales in Hispanic Direct Mail/FSI Landscape

The acquisition of ADVO by Valassis for $1.3 billion creates a new print advertising behemoth by pairing the nation's largest direct mail media company (ADVO) with one of the country's largest newspaper-coupon distributors (Valassis). The deal also has interesting implications for the Hispanic market in which both companies have a relatively strong presence.

ADVO uses its weekly ShopWise shared mail program, which is distributed to approximately 60 million households nationwide, to target Hispanics. The Windsor, CT-based company uses census data to determine which neighborhoods have the highest Hispanic penetration. Advertisers - generally retailers or CPG companies - ask for around 80% Hispanic penetration. ADVO is building a model that takes into consideration geographic barriers, ethnicity and economic factors, and targets Hispanic households down to areas containing approximately 3,500 households (The average zip-code has 15,000 households). By targeting below the zip code level, ADVO can target the desired demographic more precisely.

To provide a more appealing advertising vehicle, publishers targeting Spanish-speaking audiences are adopting direct mail strategies while some direct mailers are adding editorial content to compete with publishers. Last year ADVO and TodoBebe, a producer of multimedia Spanish-language pregnancy and parenting content, partnered to do direct mail drops in several large Hispanic markets, including Los Angeles.

Not all ADVO's forays into the Hispanic market have been successful. In 2002 it rolled out “ShopWise Valores,” a small Hispanic-focused program in the Houston area which was distributed to 128,000 households twice a month inside the ShopWise wrap. To promote ShopWise Valores, ADVO partnered with the Spanish Broadcasting Corporation. ShopWise Valores had mixed results, partly because it lacked a large Spanish-speaking sales force, and was suspended last year. ADVO has also published several studies about the behaviour of Hispanic shoppers and restaurant patrons.

FSI-Valassis's strength
Valassis main activity in the Hispanic market is through its newspaper insert program. The Hispanic Co-op Insert is delivered via Spanish-language newspapers in major Hispanic markets. The four-color, multi-page, free-standing booklet reaches over 4 million Spanish-speaking households.

Valassis also works on customized programs for the general and Hispanic markets. “Our Hispanic direct mail programs start with a few 100,000, for instance a section of Los Angeles, and can go into the millions,” a Valassis executive recently told Portada®. “We have done programs for CPG companies, grocery retailers, automotive, and franchise food retailers,” he said.

An expanding market
Direct mailers are increasingly searching for ways to get closer to Latino Homes. The US Army uses direct mail for roughly 25% of its Hispanic recruiting effort. According to Simmons Research, while the average consumer receives 350 pieces of English-language direct mail per year, Hispanic consumers receive only 35 pieces – or one-tenth as much. The scarcity of direct mail envelopes in Hispanic mailboxes tends to improve responsiveness. According to a study by NFO World Group, 59% of Hispanics reported making a purchase in the last 7-days based on a piece of printed ad mail, compared to 51% in the general market. This does not mean that direct mailers should expect a 59% response, but that 59% of respondents indicated that direct mail drove a purchase decision during a 7-day period. TV and radio had substantially lower response rates.

Both Hispanic-focused mail companies, such as Latin-Pak and Carmen's Cupones, and general market giants (ADVO, Harte Hanks, and Valassis) are optimizing their products in order to convince advertisers of their ability to target Hispanics. Retailers and CPG's are increasingly betting on coupons to reach Hispanics.

Harte Hanks, another direct mail giant, targets Hispanics via a monthly insert called “Pensando en Ti” (Thinking about you), which can be found inside the PennySaver weekly shopper in Southern California (1.1 million households) and in its flyer product in South Florida (400,000 households). “Pensando en Ti” can target customers down to a few mail carrier routes. Earlier this year, Harte Hanks expanded its Florida (Hispanic) Direct Mail product.


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