Big-Box Retailers Still Lag in Retail Advertising Investments

Retail is the bread and butter for the print and digital media industries and Hispanic media executives are increasingly aware of the important role they can play in connecting retailers with Hispanics, the fastest growing demographic in the U.S.

Both Viva New York (English, Daily News full run, monthly) and Hora Hispana (Spanish, circ. 
250,000, weekly) are geared for retail advertising. Hora Hispana, which includes all the
supermarket/drug store and retail store circulars, provides those
Hispanic households with a
shopping mall of sales opportunity,” says Rudy Zaccagno, Hispanic Publications Director at
Hora Hispana/Viva New York. Both publications are published by the New York Daily News.

Examples of retailers adapting their store formats and launching Hispanic-specific marketing campaigns abound: 

Wal-Mart publishes a custom magazine called Viviendo, a quarterly publication written in Spanish and English. Targeted to “Moms” with young families, the editorial content offers something of interest for every member of the family – from recipes, home and health information, the latest in entertainment and sports, interviews with Latino leaders, children’s activities and more. With a circulation of more than 500,000, Viviendo is available free only in Hispanic-frequented supercenters and Division 1 Stores.

Some retailers only cater to Hispanics. Los Angeles-based La Curacao exclusively targets Hispanics in California and has plans to expand into other states.  The company's slogan: "Un poco de su pais" ("A little of your country") reflects their commitment to make Latino consumers feel at home.

Convenience store operator Circle K Stores recently implemented what it calls its "Authentic Hispanic" program. The convenience store chain is working with Inca Products and Core-Mark International to execute the program in its Southwestern store locations. The new program offers a number of options, including displays of over 70 SKUs from brands such as Jumex, La Costena, Hershey Lorena, Nestle and El Azteca.  Grupo Famsa, a Mexican furniture and household – products retailer, opened 10 U.S. stores last year and plans to open another 10 in 2007.  The chain currently has 21 U.S.-based stores with locations in California, Nevada and Texas. It is looking at Arizona, Florida, Illinois and New York as potential new markets and its goal is to have 300 stores in the U.S. 

Another large retailer, Winn-Dixie Stores Inc. recently announced that it has added 55 stores to 
its Hispanic Neighborhood Merchandising program, including an additional 30 in the Miami market
and expansion into 25 Orlando-area stores. The 522-store chain now
has 103 locations that are
specifically marketed to the Hispanic consumer.


Small but growing

The investments large retailers make to reach Hispanics are still very low, particularly in print and digital media. However, large retail chains are becoming increasingly cognizant that they need to expand their advertising budgets in order to drive Hispanics to their stores.

In 2005, Downers Grove, IL-based Newspapers Services of America, a print media planning and buying agency whose clients include Home Depot, Mervyn's, Sears, Michaels, Safeway, Linens N-Things, and Bed Bath & Beyond, only bought $13 million worth of advertising in Hispanic newspapers. In 2006, that figure increased by more than 25% and the number of Hispanic newspapers used increased from ninety-five to 112.  Hispanic print is still a tiny portion of NSA’s total print buy. NSA buys more than $1.6 billion in newspaper advertising, and its newspaper preprint buys account for approximately 20% of the total preprint market (Free Standing Insert) market.

The expansion of Spanish-language websites (see article on page 1 of this issue) is also helping large online retailers, such as Crutchfield, Puma and Sears attract Hispanic shopping dollars. Many of these companies implement online advertising campaigns to attract buyers to their websites.

One reason for retailers’ low expenditures in Hispanic print and digital media properties is that many have not yet been able to provide in-depth research about each publication’s use by shoppers, according to Marsha Lawrence, print media manager at Best Buy Corp (see box on page 16).


Zoning, where it all starts for retailers

Zoning of newspaper editions or of direct mail programs is paramount to FSI (free standing insert) advertisers, who distribute coupons in FSIs in order to drive traffic to retail locations in a particular neighborhood. According to research by the Newspaper Association of America, 83% of Hispanic adults use newspaper Inserts (Preprints or Free Standing Inserts-FSI's).

Direct mailers, (e.g. ADVO-Valassis, Latin Pak, Harte Hanks) also offer zoning capabilities be it in shared direct mail (co-ops) programs or in solo mailings. “In the newspaper industry, there is a trend toward using preprints that has been going on for about five years now. I don't have the numbers to back it up, but I would guess that the same is true for Hispanic newspapers,” says Rachel Stayduhar, media buyer at Los Angeles based ACG Communications Group, whose clients include Factory T stores and Armstrong Garden Centers.


Are print media properties targeting Hispanics really doing their job?
General market publishers that distribute Hispanic papers in addition to their mainstream editions
tend to offer fewer zones for their Hispanic publications than for their English-language dailies.
This is mainly due to the higher cost of zoned distribution. El Sentinel, a weekly Spanish-language
newspaper with a circulation of 95,000 published by Fort Lauderdale, FL based Sun-Sentinel
(Tribune), offers advertisers two zones (Broward county, circ. 70,000 and Palm Beach county,
circ. 25,000). Dividing a circulation area in two zones is pretty good for a Spanish-language
newspaper. However, the Sun-Sentinel, El Sentinel's parent newspaper, divides its distribution
area into 13 zones.
Hispanic newspapers owned by major general market print media properties, such as the 
New York Daily News, have been improving their zoning capabilities. Examples include the
New York Daily News’ Hispanic weekly Hora Hispana as well as Tribune’s Hoy Fin de Semana
and Impremedia’s weekend home delivered Domingo. The Daily News’ Rudy Zaccagno notes
that one of the benefits of Hora Hispana is its capability of zoning inserts down to the block group
level. “If an advertiser is looking to reach households in a certain Hispanic area of NYC they can
pick and choose what areas they want.” Hora Hispana is delivered in a bag with all the weekly
circulars for the supermarket, door to door to block groups within a zip code in NYC and Hudson
County. NJ. 

Domingo, published by Impremedia, micro-targets households in high-density Hispanic zip codes that are traditionally under-delivered to by general market newspapers. This offers advertisers penetration into Hispanic households with minimal duplication when used in combination with the mainstream dailies. For national advertisers, Domingo provides a large print vehicle in the top three Hispanic markets (New York, Chicago and Los Angeles). For local advertisers, each publication has five or more zones allowing for low-cost advertising programs that are affordable for even the smallest businesses.


Direct to door

Direct to door programs can also be an interesting alternative for retailers.  One of these programs is the recently-launched “La Canasta,” which is home-delivered in high density Hispanic neighborhoods.  The La Canasta package is a colorful poly-bag that will include inserts, product samples and our new publication, La Buena Vida. The program for 2007 calls for distribution of 2,000,000 per drop, including delivery of 1,000,000 in California and 1,000,000 in Texas.  The program drops 4 times per year and may have special editions upon request.

Dub Doyal, CEO of ADS Media Group, the publisher of La Canasta, notes that, “the program was originally developed in the early 90's for Walmart/Sam's Club in Mexico. 
It was a replacement for direct mail and newspapers, which had challenges for us and the customer at that time.  It was eventually delivered direct to the door and was unique in that it carried the customers circular, as well as product samples from their vendors and non-competitive offers from other companies.”
 

He adds, “We felt that a product that is home-delivered in the U.S. Hispanic market would have 
even greater value.  We developed the “La Canasta” brand several years ago and launched it
with the sponsorship of a large telecommunications company under a trial period. 
All the expectations were high, and indeed the trial delivered results exceeding the sponsor's ROI
objectives by more than 30%”

 

Questions Publishers Must be able to Answer when “selling” their publication to retailers:

ü      How does the distribution geography of the publication align with store locations?

ü      How does the Hispanic market spend in the advertiser's product/service categories?

ü      How does the advertiser currently serve the Hispanic market (In-store, shopper demographics?

ü      Audience reach vs. other media (TV, radio etc…), Audience reach vs. non-Hispanic newspapers.

ü      Show why Hispanic publications should be primary buys (over general market newspaper) in zip codes that are heavily penetrated by Hispanics.


For more information: Check out www.portada-online.com and look for the following articles:

- What you need to know about the Spanish-language FSI market
/html/article/paid/10thissue/2004070102.aspx

-  Big Box Retailers Only Give Pocket Change to Hispanic Print
/productdetails.aspx?productID=1168

- Retailers push into Hispanic print, more research needed
/productdetails.aspx?productID=1411


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