The news last week that Tecate and Tecate Light will consolidate all its advertising with Mexico-based Olabuenaga Chemistri continue to make waves, with U.S. Hispanic shops fearing other marketers will take their business elsewhere, mostly motivated by a cost-cutting mandate. Is creative work developed in Mexico for the Mexican audiences efficient to engage U.S. Hispanics? Are the savings worth a potential creative risk? Does Tecate plan to go after the general market? To answer this and other questions regarding the marketing move, Portada spoke with Félix Palau, VP of marketing for Tecate, the fourth-largest U.S. import behind Corona Extra, Heineken and Modelo Especial. An edited excerpt follows:
P: Was dropping your Hispanic creative shop (Ramona) in favor of your Mexican one (Olabuenaga Chemistri) done purely for cost-cutting purposes? Are the potential savings good enough to contain a potential creative risk?
FP: That is a key question. Sure, we’ll be saving money, but that is not the only goal here. As you know, Heineken in 2010 acquired Cervecería Cuauhtémoc Moctezuma and with the acquisition, the company kicked off a search for consolidation… All Heineken brands have the mandate to look for synergies and efficiencies… This, of course, has to be done if, and only if, the move doesn’t jeopardize your brand at the local level.
P: What would you tell people who think the move threatens the very raison d’être of U.S. Hispanic advertising?
FP: To begin with, this is not something we did to provoke the industry. We realized we don’t need a strategy, nor a dedicated staff to specifically target the U.S. Hispanic consumer. Tecate’s insight is so universal, that where an advertising agency is located is totally irrelevant.
P: Why did you decide to consolidate your advertising in Mexico?
FP: If you had asked me the same question, say, six months ago, before making the decision to broaden our target, I would have told you that ‘yes’ we do need a U.S.-based shop. But that is not the case anymore.
P: Why? What changed?
Before 2011, Tecate had a strategy of targeting the newcomer; the recent Mexican immigrant to the U.S. Our campaign [vía Adrenalina, which then morphed into Ramona] targeted Mexicans that had lived in the U.S. less than ten years and who had a very specific situation. Through our U.S. creative, we told them, ‘hey, your life here is pretty miserable; nobody recognizes that, but we do… Tecate does.” That was our message; and that was our strategy from 2007 to 2010. And it was very successful because it was very targeted and connected well with the target.
However, we realized that in the long run this strategy was not going to work, as our target [recent immigrants] was eventually going to shrink in size. As you know, the 2010 Census shed light on the importance of the second –and third-generation Hispanics. We figured that in the long run, speaking only to the recent immigrant was going to limit our brand. So we decided to broaden our target and speak to both, the recent Mexican immigrant and the more acculturated Mexicans.
P: Does this mean you will be doing spots in English?
FP: Yes. Some of the spots that will be launching in April via Olabuenaga will actually include a voice in off that will be in English. If we really want to reach third-generation Hispanics, Tecate needs to do English-language communication.
P: Will you be speaking to the so-called general market, too? I mean, you’ll have ads in English already…
FP: No. It is important to clarify that Tecate is not a brand that targets the general market. One hundred percent of our marketing budget in the U.S. is dedicated to target the Hispanic consumer. And this will stay unchanged.
P: How will you be handling the media allocation now that you’ll have spots in Spanish –and English?
FP: We are going to do a national media buy in Spanish-language national networks like Univision and Telemundo; and then we’ll buy time at a local level for the English-language spots. We are not going to do a national buy effort right now, because there would be a lot of spill over. The idea is to first target key markets with high concentrations of English-dominant Hispanics, including San Antonio, Austin, Houston, Albuquerque, Phoenix, etc. Ideally, both campaigns will be ready to air this spring.
NOTE: Media planning and buying for Tecate and Tecate Light is currently being done through MediaVest. However, as Heineken has confirmed, the company aims to consolidate media planning and buying for its brands worldwide into one media agency. Two agencies, Publicis’ Starcom MediaVest and WPP’s MindShare, have been shortlisted. A decision is expected by the middle of 2012.