Ad categories-Telecommunications: Telcos have barely scratched the surface of print advertising

Hispanics are big spenders when it comes to telecommunication services, but so far telecommunications companies haven't spent much on them. This is particularly true when it comes to print advertising.

During the first eight months of this year, SBC Communications spent US $2.4 million on advertising in Hispanic newspapers tracked by CMR and only US $12,000 in magazines tracked by Hispanic Magazine Monitor. Hispanic ad spending by wireless companies like Verizon, which spent US $1.569 million in newspapers and US $795,935 in magazines, and AT&T (wireless and landline – US $1.712 million newspapers, US $52,000 magazines), wasn't impressive either (See article “Ad-tracking: Telecommunications,” page 18 of this issue). According to market researcher Santiago Solutions Group, telecommunications companies spent a combined US $241.3 million on Hispanic advertising (TV, broadcast and print) in 2003 – about 8 percent of the industry's total ad spending that year.

According to figures from TNS Media Intelligence/CMR, Verizon, which spent $1.18 billion, and AT&T, which spent $1.04 billion, were the big spenders in the telecom industry in 2003. Overall, telecommunication brands in the top 200 advertisers spent a combined total of US $5.4 billion. Of that amount, US $2.1 billion went to newspapers. More importantly, advertising expenditures by telecommunication companies were the driving force behind a 19% increase in newspaper ad expenditures by the top 200 brands.

While tiny compared to the general print advertising market, the telco ad category has shown strong growth in some Spanish-language newspapers. Carlos Olea, associate publisher at La Raza (Impremedia, weekly, circ. 200,000, Spanish) in Chicago, tells Portada® that telecommunications ad spending in his newspaper has grown by about 20% this year. Mike Cano, general manager at Al Día in Dallas (Belo Corp, circ. 45,000, Spanish) reports a similar trend. AT&T, Verizon and SBC buy space in Al Día. In Hispanic magazines, ad spending by telcos grew by 71.4% during the January-August 2004 period, compared to the same period of 2003.

There are good reasons for telecommunication companies to increase advertising in Hispanic print. For one, telcos are required by law to print the details of their offers. No medium fulfills this requirement as well as newspapers and magazines. There are also very strong demographic and economic rationale. “Hispanics index higher in telecommunications expenses,” says Al Día's Cano. Hispanics who are recent immigrants or have strong ties to their countries of origin spend 10 percent more than the average U.S. citizen on cell phones and US $6 more on monthly long-distance phone service, according to Scarborough Research. Verizon has profited from the telco services consumption habits of Hispanics. Sixty percent of Verizon's Hispanic customers are recent immigrants and heavy users of international calling cards. They spend about 18% more for Internet and telecommunications services than other customers.

Tough battle

Last year, the Association of Hispanic Advertising Agencies (AHAA) recommended that telcos spend about half of their marketing budgets, including DRTV, customer services, and telemarketing resources, on Spanish-speaking and bilingual Hispanics in the top 10 Hispanic DMA's (Designated Market Areas). So far, telcos companies have not taken their advice. “It's a tough battle to fight,” said Shirley Brendlinger, new business development manager at Al Día (independent, weekly, circ. 50,000, Spanish) in Philadelphia. Many large companies are under the assumption that Hispanic newspapers do not offer enough reach for national advertisers. Last April, when the mobile-phone company Nextel launched marketing efforts in Miami, Los Angeles, Chicago and San Diego, it didn't run a national print campaign. Instead, Nextel opted for local and in-store advertising.

It put Spanish-speaking staff in its stores and translated brochures and contracts into Spanish. Nextel also skewed advertising to Spanish radio stations in areas where Spanish-language newspapers aren't as heavily circulated. Small to mid-size Hispanic publications offer national telecommunications firms relatively small advertising opportunities. An annual program can cost US $40,000-$50,000Día's Brendlinger, there are two ways for a publisher to go after telecommunications ad dollars. “On the one hand, there are national brands with long term contracts and commitments, and on the other, retail locations within the newspaper's footprint,” she explains. “Right now in Philadelphia there are 4 or 5 Verizon stores opening up.” National ad-campaigns emphasize branding and lifestyles (freedom, independence) associated with their products, and usually have larger budgets than local retailers. Some of the national brands' ad budgets go to national magazines. Nokia Corporation and Cingular Wireless are relatively large advertisers in Hispanic magazines. According to figures from HispanicMagazineMonitor, each has spent over US $330,000 during the first eight months of this year.

Retailers of telecommunications products also advertise. They are usually promised a certain amount of advertising by their franchiser (the national company). Cano of Al Día notes that “dealers want immediate results that will drive traffic,” while national brands aren't as interested in promotions.