Money in the Middle: Ad-Sales Representation Companies Enable National Hispanic Print Buys
As growth in Hispanic print continues to outpace that of the general market, more newspaper ad-sales representation companies are catering to the Hispanic market. Portada® Ad-tracking estimates that national advertising channeled via Hispanic newspapers amounted to $75 million last year, while the figure for magazines was $160 million. Ad sales representation companies brokered a substantial part of that volume (particularly for newspapers) for a commission that generally lies around 15%.
Publishers, particularly smaller newspaper publishers, benefit from exposure to advertisers that might not have been familiar with their publications, while advertisers can take advantage of the ad-reps' national reach and scale, streamlining the media-planning process and saving valuable time and energy. So are rep firms really all they are cracked up to be for everyone involved? Portada® takes a look inside to find out...
THE CURRENT PICTURE...
Estimates regarding the extent to which print ad-reps are used vary, though industry insiders contend that as much as 50% of all national Hispanic newspaper advertising is intermediated through these companies.
Growth in the industry is steady, although there is some question as to how many new Hispanic print ad-representation companies will survive amidst the fierce competition.
In the last five years, there have been many new entrants to the field, including general market players like Metrosuburbia, big international networks like Publicitas, which in 2005 launched Publicitas-Leading Hispanic Media, as well as San Diego, CA-based Ethnic Print Media Group.
Some of the Hispanic print rep firms are very niche focused, like Santa Barbara's Independent Publishers Representatives, a company that sells advertising for custom publications that target Spanish-speaking audiences.
Metrosuburbia’s VP of Marketing, David Feldman, notes that, “There always seem to be a few upstarts in addition to the 1/2 dozen or so established representation companies out there. Metrosuburbia has been establishing itself in the Hispanic market over the last 5 years.” According to Feldman, Metrosuburbia has an exclusive representation deal with Impremedia to handle all of its national newspaper ad-sales for El Diario/La Prensa in New York, El Mensajero in the San Francisco Bay Area, La Opinión in Los Angeles, La Prensa in Central Florida, and Chicago’s La Raza. In all, Metrosuburbia represents some 120 general market and Hispanic publications
There is some doubt, though, as to the staying power of some of the newer companies. As Kirk Whisler, President of Carlsbad, CA. based Latino Print Network, which represents over 400 Hispanic newspapers & magazines nationwide, puts it, “There is a lot of activity in this area because Hispanic print advertising is in some ways the ‘flavor of the month.’ Some will probably move on as time goes on.”
But with some such as David Feldman predicting that the industry’s growth is set to double within the next five years, there is likely to be a considerable spike in Hispanic print Ad-sales representation companies (ASRCs) before there is a leveling out of competitors.
WORTH THE COST?
The question is this: is going with one of these ASRCs really worth it? There are, logically, two perspectives on the matter. From the publishers’ perspective, the question of whether it is worth going with representation companies is a bit more complicated due to the added expense involved.
In addition to the 15% ad-agency fee, they also have to cover the rep firm’s fee, which depends on a number of factors including depth of involvement and volume, and can range anywhere between 5% and 25%.
Even so, given that the rep firms work strictly on commission, whatever they bill the publisher for is technically already paid for, as it is the result of revenue that they have generated through their sales efforts.
Gustavo Godoy, publisher of Vista magazine, notes, “We haven’t come across any disadvantages associated with using ad reps. In general, they save valuable time and money by directing certain advertisers where they should be advertising.” By going with an ad rep, a publisher benefits from not wasting time and money pitching to advertisers who aren’t interested in them. The rep knows what the advertiser wants and works with them accordingly.
From the ad-sales representation companies perspective the answer is an easy yes. “The best way to illustrate this is with an example,” says American Multicultural Media’s Greg Anthony. “If you are a Kansas publication pitching Pepsi’s advertising department in New York, you have to pay to fly someone over there and all of the costs associated with that. And that is just for one account. By contrast, working with a representation firm effectively takes the place of having a national sales division.” Mr. Anthony also points out that big companies are going to be much more interested in meeting with a rep firm, who can offer a twentymarket buy, than with a single publication, offering just one market.
Raphael Romero, of the New Yorkbased Romero Group ad representation firm says: “Hispanic print ad representation is definitely a challenging business. The vast majority of advertising dollars aimed at the Hispanic market are allocated to broadcast media. In addition, there are more Hispanic publications than ever creating more competition in the print market. As a result, one has to be extremely creative and aggressive to meet and exceed the goals of one’s clients.”
Romero also points out that big advertisers are still not keeping pace with the growth of the Hispanic market in terms of their advertising budgets. “Hispanic advertising budgets comprise just slightly over 2% of overall advertising budgets. When you consider that Hispanics account for 14%-16% of the total US population, it becomes obvious that there is a real disparity between Hispanic ad-spending and the market’s potential.
As Juan Pablo Suarez of the internationally established Publicitas Promotion Network, whose U.S. Hispanic arm is called Publicitas-Leading Hispanic Media, points out, one benefit of ASRCs is that they can often offer considerable discounts to advertisers who use them. “One group we represent is the GDA (Grupo de Diarios América) and we are able to offer advertisers a 10% discount by going through us, as opposed to negotiating an advertising agreement themselves.” Thus advertisers benefit not just from the convenience of a one-stop pan-regional buy, but also from a considerable discount offered by the ASRC.
One such example of one-stop print shopping here in the U.S.A. is the deal that Ethnic Print Media Group put together for Heineken – and later McDonald’s – earlier this year.
AN INNOVATIVE APPROACH...
In what was a departure from traditional print advertising approaches, EPMG, the multi-cultural ad-agency, facilitated a four-color wrap campaign with Hoy and Houston's Rumbo, to coincide with the March 3rd release of Heineken Premium Light. The advertisement was presented in vivid colors on the front covers of the newspapers.
The campaign focused on New York, Chicago, and Houston, and included street teams handing out copies of the papers. Between the retail, home-delivered, and street-team distribution, about 300 housand copies were circulated.
The Heineken's false front covers are examples of how Hispanic publishers are seeking new ways to boost their bottom lines (see article on page 41).”
EPMG´s VP of Sales and Marketing Trevor Hansen stated, “Before we launched that campaign, a lot of the Hispanic publications we deal with didn’t have the capability to do a four-color wrap. Since we orchestrated that program I’ve probably had 6-8 major papers let me know that they now do have the capability to do that. So the pressure has really been on the newspapers to adjust their format and production abilities, and as a result I think we’ll see more of that in the days to come.”
Particularly smaller Hispanic publications benefit from exposure to advertisers that might not have been familiar with them.
Going forward Hansen also sees a lot of potential in the Pharmaceutical/Healthcare and Financial services categories.
THE BIGGER THE ADVERTISER’S FOOTPRINT...
Advertisers with a national or at least regional footprint are the ideal candidates to buy print media “wholesale” through an ASRC. Retailers are particularly interested in newspaper advertising because they use Free Standing Insert Coupons in order to drive Hispanics to their stores.
However, many retailers are not yet aware of the opportunity of using newspapers and magazines in order to market to Hispanics. (See “Big Box Retailers are still small advertisers” page 1, Portada® No. 11, November-December 2004).
Large telecommunications companies also use ASRCs to buy print and digital media. Heavy competition among large brands (e.g. Verizon vs. Cingular) should be a factor driving increased ad-spending. However, telecommunication companies are only now really starting to buy Hispanic print media (see “Telcos have barely scratched the surface of print advertising,” see page 1, Portada® No.10, November-December 2004).
...THE BIGGER THE NEED FOR AN ASRC.
Oftentimes, national advertising decisions are taken in a decentralized way (e.g. Macy’s divides the U.S. in four different sectors). In this model, the need for an ASRC becomes less as the complexity of media buying and the campaign’s footprint is reduced.
This is particularly true with locally owned retailers, like cell-phone shops or car dealerships, which just advertise locally in their zip code or even at the sub-zip code level. In short, ASRCs can be very helpful when orchestrating a multi-market, national campaign.
However, for the small business just looking to get the word out, it makes more sense to call up the local paper and take out an ad.
At present, EPMG has no plans to run similar campaigns with other brands, although Hansen did not rule it out: “Now that the ground has been broken, it is quite possible that we will see more advertising opportunities such as this in the future.
This is truly an exciting new development in how print is used to bring the message straight to consumers.”
One increasingly important factor in the way ad sales representation is done is technology. As Latino Print Network’s Kirk Whisler puts it, “Technology plays a huge role. It really drives all aspects of the business, and aids in giving better quotes and more details. It is no longer sufficient to tell an ad agency, ‘Well this is the publication and this is its circulation.’
Technology and database management allows instant access to valuable information such as what editorial sections comprise a publication, what geographical footprint it covers, etc.”
Publicitas’ Suarez also echoes the importance of upto-date databases in daily business dealings. “Oftentimes, particularly in Latin America, there is an information backlog. When you request readership demographics and other essential information from the publications, it can take up to a couple of weeks for them to get back to you. As a result, the task of updating the databases is a neverending one, so that when a client approaches us about a buy, that information is at the ready.”
Suarez’s colleague Amelie Ferro describes the role of technology in the industry as such: “Ad sales representation firms such as LHM maintain a detailed inventory information regarding publications and have the software that enable management of multiple insertions and campaigns with utmost efficiency and accuracy. We also provide all back office support such as Tear Sheets, Billing/ Collections, and Accounting services, in addition to sales.”
With the same goal in mind of streamlining the media-buying process, the full service Atlanta-based Echo Media recently launched Echo-Latino a website ( http://www.echo-latino.com ) devoted wholly to Hispanic-oriented print media vehicles, 450 of which are accessible through the new website. The service is free, although subscribers can access 40%-60% more content than non-subscribers.
PRINT VS. DIGITAL
While the Hispanic print media landscape has proven to be highly active, the online sector is also quite robust, so it is interesting to look at how traditional ASRCs are adapting to the growing online presence that many of their clients are developing, and tailoring their approach for exclusively online entities.
Publicitas’ Amelie Ferro says that they are currently at work developing a special online division:
“Regarding the growth of online digital medium with its enormous impact on how consumers interact and consume media, we are really embracing change and are currently engaged in developing an online Interactive Marketing Solutions Division targeting Hispanic consumers in both US and Latin America. This division will count with the proprietary technology and resources to deliver digital ad-messages to the intended consumers and interact with them wherever they are.”
However, as Papel Media’s Kent Kirschner points out, whereas there are scores of established Hispanic newspapers that ad-agencies need help placing in, the online landscape is less difficult to navigate, as there are considerable fewer outlets. Therefore there seems to be less need for assistance in placing for solely online entities as exists for placing in newspapers and their websites.
As to the fundamental question of whether it is worth it for publishers to spring for the extra expense of hiring an ad-rep company to complement their advertising revenue, all sides seem to be in agreement that it is. Rep firms can typically generate more advertising profits than a publication could by itself, can obtain discounts that individuals often cannot, and can free up resources for the magazine to devote to other vital aspects of production.
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