Analysis: Mexico-U.S Hispanic Market – A romantic relationship?
The recent news that Tecate and Tecate Light will consolidate all its advertising with Mexico-based OlabuenagaChemistri continue to make waves, with U.S. Hispanic shops fearing other marketers will take their business elsewhere, mostly motivated by a cost-cutting mandate. Tecate (distributed in the United States by Heineken) decided to leave it’s U.S. agency Ramona de Kirshenbaum Bond Senecal & Partners, for its Mexican agency, Olabuenaga Chemistri. This means that all advertising for Tecate and Tecate Light (traditional and digital) in the United States will be handled now from Mexico City, with new campaigns created both in Spanish (for their main consumers) and English (to target the rest of the U.S. market). With this move, Olabuenaga Chemistri enters the U.S. market, and with accounts such as Bacardi and General Motors in Mexico, it would not be surprising if it soon added new clients to its roster in the United States.
Mexican companies continue to set their sights on Hispanics in the U.S., with several of them investing in advertising to reach this market segment. Meanwhile, several U.S. Hispanic media have established a presence in Mexico to sell advertising to companies who want to target their northern neighbor. Two of these are Univision and Batanga.
Mexican companies who market to the U.S.
The first Mexican companies, although not the only ones, to have established a presence in the U.S. are Mexico’s most global companies, led by America Movil, Cemex, FEMSA/Cuauhtemoc Moctezuma (Heineken) and Grupo Bimbo. With 31.7 million potential consumers at stake, other companies joining this list are: Gruma, Alfa, Grupo Modelo, Herdez, Chedraui, Famsa and Genomma Lab.
As noted in a previous article in Portada, geolocation is allowing digital media properties to monetize their content with country-specific ads for its users. This is also serving as a gateway for foreign companies, in this case Mexican companies, seeking to target the U.S. Hispanic market.
Grupo Liverpool (Liverpool department stores), Grupo Elektra (Elektra, Salinas and Rocha stores, among others) and Grupo Posadas (Fiesta Americana Hotels and others) are good examples. Even without having a U.S. presence, the three groups are now targeting Hispanics of Mexican descent in the United States with media campaigns aimed at that market.
According to research firm Kitelab, every Hispanic family in the U.S. can potentially earn $37,000 annually, creating a market estimated at $1.3 billion in 2012. And considering that 65% of Hispanics are of Mexican origin (according to the U.S. Census Bureau), Liverpool, Elektra and Grupo Posadas’ interest in this market is understandable. These Hispanics are likely to return to Mexico to visit and spend money on their companies’ goods and services. The two department store chains also have e-commerce sites that enable any Hispanic in the U.S. to buy products that offer direct delivery to Mexico.
Geographical barriers fall, opening business opportunities…
The purchasing power of the U.S. Hispanic community is being increasingly recognized in Mexico. In an interview with Portada, Gabriel Richaud (the new Managing Director of IAB Mexico) said: "We have a great opportunity because geographical barriers no longer exist in terms of commerce or communication. We are getting campaigns in Mexico for products that are not even being distributed, but which are in demand because geographical barriers no longer exist. We will see more Mexican companies seeking to reach Latino consumers on a more emotional level and from a closer perspective, taking advantage of digital platforms to encourage not only sales and leads, but also brand presence. We’ll be seeing Mexican companies entering the U.S. Hispanic market, which already represents the largest minority group in the country and has increasing economic and political power. "
…Airlines, Hotels, Lifestyle
Richaud identified three main areas with the greatest opportunity: "There will be great opportunity in terms of airlines, hotels and products related to the Latin culture lifestyle, which will have a major impact in terms of business opportunity."
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