Online advertising has experienced exponential growth in the last few years, and with the falling prices of computers making it easier for low and middle-income families to access the internet, more Hispanics are online than ever before. The number of Spanish-dominant Hispanics accessing the Internet has increased by 40% during the last twelfe months. “1.3 million new Hispanics came online. Of those 1.1 million were Spanish-dominant”, Lee Vann, founder and president of San Diego, CA, based Captura Group tells Portada®. The recently announced joint venture between Telemundo and Yahoo en español (http://telemundo.yahoo.com) is an attempt to shake up the Hispanic online market and increase the online advertising inventory targeting Spanish-dominant Hispanics. Up till now the Spanish dominant segment of the market has clearly been dominated by Univision.com.
To understand how best to optimize one’s online media buying efforts, it is important to understand which approaches are available and what advantages and disadvantages each one holds.
The most important question to answer in deciding what approach to use is: What is the objective of this campaign? Is it for branding purposes or to drive sales? Different objectives are more readily reached by tailoring one’s online marketing approach to fit that objective.
Cost per Impression (CPI) is the most common form of advertising in both the general and Hispanic market. This approach relates to placing banner ads on product/servicerelated websites, with a graphic pertaining to the advertiser’s product or service. This type of approach is particularly useful for brands that are trying to get the word out about their business. In this model, the advertiser pays for the amount of times that their banner is viewed by a visitor, regardless of whether the ad is clicked on or not. Rates are measured by the thousand (CPM), like in print media buying. According to Rabinovici, the average click-thru rate for banner ads is about 0.38%: “A campaign with a 0.5% click-thru rate would be considered quite successful.” Banner ads are ideal for targeted marketing, and for US advertisers targeting Latin American markets, the return on investment can be quite favorable as a result of lower CPMs (cost per thousand impressions) and a favorable exchange rate. Sellers of print and online advertising space such as Miami based Grupos Diarios America (GDA) currently provide a host of options to advertisers looking to reach Hispanic markets.
The advantage of online campaigns is that they can be very targeted. For instance, when the Central American Airline TACA did a Hispanic online advertising campaign last year, advised online media agency Latin 3. TACA bought online advertising in Univision.com’s El Salvador’s country channel and in websites of Salvadoreans newspapers. CPM’s vary a lot in Hispanic online advertising. “Univision.com charges a CPM of approximately US$ 15, while a Bolivian newspaper websites, which can be a useful vehicle to reach Bolivians living in the US can be as low as US $5,” says Juan Silvera of Miami based Latin 3.
Cost Per Click Advertising (CPC) is an approach whereby, as the name suggests, the advertiser pays a fee for each click that leads the consumer to their website. These are prevalent on search engine sites such as Google or Yahoo! Typically the advertiser places a bid to be placed at or near the top of the search results for a particular keyword or phrase. The implementation of a CPC campaign is relatively easy and does not necessarily require any specialized knowledge. The advertiser simply needs to choose keywords that pertain to their particular product and make sure that those keywords lead to their client’s website. The principal aim of a CPC campaign is sales generation. Due to the fact that CPC ads are text-based, they are not geared toward building brand awareness. Instead, they are directed at consumers who already know what they are looking for.
Of course, there are limitations to this type of advertising: New bids by competitors can lower the position of one’s listing, although CPC tend to be lower in the Hispanic market compared to the general market due to lower competition. As such, it is very important to constantly monitor one’s place in the search engine listing, and a bidding war can result among competitors, thus raising advertising costs. Another drawback is the potential for “click fraud,” whereby a competitor or someone else sets up a program to click on the link repeatedly to artificially drive-up costs to the advertiser. (For more information see “Marketers search for keywords that will make Hispanics click” page 35, Portada® No. 20, March/April 2006).
Cost per Action (CPA) is a marketing approach whereby the advertiser only pays if the consumer actually purchases the product, putting all of the risk on the publisher’s side. For this reason, it is not very popular among publishers, and is often used merely as a filler banner. This type of advertising is favored by those selling hard product, such as bookseller. Amazon pays a 4-7% CPA rate on Hispanic Digital Network for any sales generated from HDN’s banners. So a book selling for $35.00 at a CPA rate of 5% will garner the publisher about $1.75.
Cost per Lead (CPL) is an approach that is popular among car dealerships and other companies that rely heavily on having a strong database of potential customers. In this model, the advertiser pays for each lead, as the name suggests, and pays regardless of whether the lead generates a sale. One example that Bill Gato of Hispanic Digital Network points to is Ford’s CPL campaign on HDN’s website: “The Ford Direct banners on our network are from LinkShare, a well-known general market affiliate ad network. This is a typical CPL advertisement. They pay a $4 CPL for each person that registers after clicking on the banner.” The advantage of this type of advertising is that it generates sales-leads of consumers who have an interest in the product that you are selling. The advertiser is also free to market to this individual for as long as they wish, through email and direct mail offers. The downside of this approach is that even if one’s information is obtained, there is no guarantee that this information will precipitate a sale.
In terms of pricing models, CPM is the most prevalent, followed by CPC. According to Bill Gato of HDN, the CPA and CPL models are on their way out: “CPA/CPL – the performance- based models used mostly by direct marketers and affiliate ad networks – are an endangered species that will soon become extinct. It’s simply too risky for publishers.”
A good website is paramount
No matter how good a website is, it’s useless without visitors; therefore SEO (Search Engine Optimization) is always required in some form. As Boris Rabinovici, Executive Director of Miami-based Rabinovici & Associates says, “Having an excellent website is paramount, because even if you generate a lot of traffic to your site, visitors won’t stay to look at your product if the site is underdeveloped or poorly constructed. You could have the best website out there, but without web traffic, it doesn’t matter because no one is seeing it. So the key is really to have both a first-rate website and a great campaign.”