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Mario Carrasco

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What: We talked to marketing experts at research agencies and media about the recent acquisition of Geoscape by  Claritas.
Why it matters: The market for multicultural research and data has changed tremendously over the last few years. The Geoscape move provides clues for what’s coming next.

Much time has passed since the last Geoscape merger…

More than ten years have passed since Goldman Sachs Urban Investment Group announced in June 2007 that it was merging  Latin Force LLC, a Hispanic marketing strategy firm, with multicultural intelligence and data analytics company Geoscape International (with the new company to be called Latin Force Group). The new company was called LatinForce. Back then, Goldman Sachs Managing Director Kevin Jordan said, “The merged company will provide its existing and future customers with a clear competitive advantage in reaching America’s fastest-growing demographic.”

What has happened since is clear. A few years later, Latin Force Group was renamed Geoscape and just a week ago, it was sold to Claritas, a portfolio company of the Carlyle Group: Geoscape by New MainStream Capital (a spin-off of the Goldman Sachs Urban Investment group).
Six things you need to know:

1. Major Investors are Betting on Data and Market Research

The Carlyle Group, one of the world’s largest private equity and asset management firms, bought Claritas from Nielsen early last year. Claritas is focused on consumer segmentation insights. It provides marketers with a comprehensive view into consumer behavior patterns through proprietary segmentation analysis powered by broad access to data sources. Multicultural research and data now also comes into the picture with the Geoscape acquisition. “Marketers must find ways to connect with these high-growth consumers in relevant ways.”, said Claritas LLC’s CEO Mike Nazzaro when the provider of consumer segmentation analysis announced a few days ago the acquisition of Geoscape, a firm dedicated to the in-depth understanding of multicultural consumers.

2. The Pendulum Swings Back to One-Stop-Shop

While multicultural audiences continue to be coveted by corporate America, the audiences and media to reach them are not specifically multicultural or Hispanic. In other words, most multicultural media buying decisions are no longer taken by multicultural specific agencies but by general market agencies. Similarly, multicultural research is increasingly demanded by major general market agencies who tend to have better connection with general market shops such as Claritas. It is in this context that Geoscape’s acquisition by Claritas has to be analyzed.

 

Martin Cerda, founder of Encuesta, Inc. [Photo: Hispanic PR Blog]

3. Comprehensive Services Demand More Capital…

Claritas’ acquisition of Geoscape is perhaps not that surprising as it could have been a few years ago. When multicultural research industry veteran Martin Cerda, founder of Encuesta Inc., joined Cheskin, a WPP shop, in 2011, everyone in the industry was surprised. When Portada asked him about his decision back then, he predicted that small marketing research firms wouldn’t be able to deliver the level of services required in view of the more and more complex media, marketing, and advertising conditions. “Specifically, fast used to mean taking a week to deliver results, now overnight or even real-time results are expected,” he said. The Geoscape acquisition is a sign that predictions like this are the new norm.

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General market research agencies will begin to bolster their multicultural capabilities through strategic acquisitions creating a new multicultural marketing research model.

 

4…. because Technology is Crucial.

“Today, marketing is mostly about data.  Research and insights that are culturally unique and relevant to Hispanics is more important than ever,” says Ballas-Traynor. “ However, the data sources and the way that we mine data has to align with the sources and the tactics used in the general market.” The research space answers to an ever-evolving market that becomes faster and more data-driven every day.

Today, Marketing is mostly about data.
Mario Carrasco

Companies will need to make sure they’re able to access those data. “Navigating in the new mainstream is going to require a big ship”, said Cerda back in 2011. And it would seem Claritas and Geoscape will be showing others on the right path, as explains Mario Carrasco: “The acquisition, I believe, marks a shift into the 3.0 multicultural marketing research era; general market research agencies will begin to bolster their multicultural capabilities through strategic acquisitions creating a new multicultural marketing research model”.

 

 

5. Hispanic Consumers Are No Longer Defined by Language

The key to how drastically multicultural marketing research has changed over the last decade, says Mario Carrasco, co-founder of Think Now Research, is that the first multicultural marketing research firms were able to easily differentiate themselves from general market agencies through language: “Hispanic ad agencies had the Spanish language as their key differentiating factor from general market agencies”.

The Hispanic consumer is no longer defined by language but by culture.
Carlos Cordoba

But what happened once immigration slowed down and U.S. born Hispanics accounted for most of the Hispanic population growth? In the words of Carlos Cordoba, marketing expert at Vision Strategies and Insights, “the Hispanic consumer is no longer defined by language but by culture, which means we need to communicate with them in the language of their choice.”
With their most obvious differentiator gone, suddenly small agencies don’t have enough resources to connect to Hispanic consumers and need powerful allies. “I need more and better resources, increased scale to execute new and emerging research methodologies,” said Cerda when he joined Cheskin.

 

6. Large Firms Need Multicultural Expertise

Lucia Ballas-Traynor

However, the need goes both ways. For Lucia Ballas-Traynor, Media and Marketing Executive at Hemisphere TV, “Today, marketing is mostly about data. Research that is culturally unique and relevant to Hispanics is more important than ever.” Big companies will need to find a way to get through to the ever-growing Hispanic population, and, as she explains, “it makes sense to acquire a company that has been doing this for decades rather than trying to build this discipline from scratch.”

 

 

 

What: Sprint and T-Mobile continue to drop hints that they will indeed merge, with the latest rumors asserting that T-Mobile majority owner Deutsche Telekom would be the primary owner of the new company, with Sprint’s SoftBank Group Corp controlling 40 to 50 percent.
Why It Matters: Aside from reshaping the mobile landscape through combining two of its largest players, how would the merger affect major (and minor) carriers’ ongoing battle for the loyalty of Hispanic consumers?

Rumors about a possible merger between third-largest US wireless carrier T-Mobile and fourth-largest Sprint have intensified as unnamed sources come out to drop hints about how the deal would look.

On Friday, Reuters cited unnamed sources that claimed that while T-Mobile majority owner Deutsche Telekom would be the primary owner of the new company, SoftBank Group Corp, which controls Sprint, would come out with 40 to 50 percent ownership.

A brand shaped by its focus on innovation and offering new kinds of value through mobile technology, T-Mobile has been targeted for merger deals by both Verizon and AT&T, the first and second-largest carriers in the country, in the past. With its focus on offering flexible, low-cost plans that appeal to Hispanics, Sprint could offer T-Mobile a deeper reach into this key growth market while the new company chips away at Verizon’s pricing advantage.

For Mobile Carriers, Hispanics Are Key to Growth

The numbers don’t lie: According to Nielsen, there are 56 million Hispanics (and counting) in the United States, and 72% of them own a smartphone (10 percent higher than the national average).

And so it is no surprise that both T-Mobile and Sprint have made Hispanic marketing a priority in their own way. According to Ad Age, as recently as 2013, T-Mobile ranked seventh among the top 10 advertisers to Hispanics, with $98.7 million spent on Hispanic marketing alone in 2013 compared to Sprint, which came in at #18 on the list spending $68.6 million.

But when Bolivian Marcelo Claure took over as CEO of Sprint in 2014, things began to change. It started with him  starring in a Spanish-language Sprint commercial on Univision during the Latin Grammys broadcast that November that opened with him saying “Hola, soy Marcelo Claure.”

From there, Claure went on a hiring spree to create a team capable of leading Sprint’s battle for the Hispanic market. He started by hiring Manuel Campos, the T-Mobile account director at Hispanic agency Conill, as Hispanic marketing director for the company, and a few months later, Claure hired current marketing chief, Spaniard Roger Solé, who came to Sprint from TIM Brasil, Telecom Italia’s mobile operator in Brazil, where he was CMO.

Sprint’s Hispanic marketing strategy was to give the demographic an option that was built for their preferences and behavior: For just $100 a month, a Sprint family plan included 20 gigabytes of data. Sprint’s Boost Mobile division also released rate packages custom-designed for Hispanics: one combined calling and unlimited messaging from the U.S. to Cuba and was offered exclusively at Boost Mobile dealers in the Miami area.

In the meantime, T-Mobile launched Univision Mobile, which offered customers monthly plans that include 100 minutes of international calling to countries in Latin America and unlimited text messaging to phone numbers in more than 200 countries around the world. The service has since been absorbed into the Ultra Mobile service but was the first in a number of ambitious moves by the brand to capture this key demographic.

Merger Will ‘Coalesce Their Hispanic Efforts’

Tru Multicultural’s founder and CEO Yousef Kattan, whose past clients include T-Mobile, added that the mere amount of data they will be combining will “create an environment of intelligence” that will allow the combined company to be “smarter, efficient and ultimately more effective will be sizable.”

We’ve seen AT&T and Verizon be very aggressive in the tech environment and I would imagine this merger would allow TMO and Sprint to play in a very similar space.

“We’ve seen AT&T and Verizon be very aggressive in the tech environment and I would imagine this merger would allow TMO and Sprint to play in a very similar space,” Kattan added.

Mario Carrasco, Co-Founder and Principal of ThinkNow Research, highlighted that “Sprint has been focusing on targeting the Hispanic market seriously since 2015,” and that “their main rival in this space has been T-Mobile.” As the Hispanic demographic has been key to their battle for the third spot, Carrasco asserted that their unique strengths will complement each other with regard to Multicultural. “This merger will coalesce their Hispanic efforts by combining Sprint’s low-cost plans with T-Mobile’s branding will lead to a more effective Hispanic targeting effort overall,” Carrasco said.

Merger Will Make Space for Minor Carriers, Unconventional Services Popular Among Hispanics

One of the biggest questions surrounding the merger is how reducing the number of major carriers will affect the mobile landscape. With regard to the Hispanic market, experts seem to agree that the merger would create a unique window of opportunity for prepay segment, minor carriers, and unconventional mobile services, all of which are popular among Hispanic consumers.

Carrasco of ThinkNow predicted an increase in the adoption of simple mobile and TracFone, options that are particularly appealing to the Hispanic market. “Adoption of Wi-Fi phones is increasing, and unconventional services such as Google Fi will begin to take more of the market share,” Carrasco said.

Kattan added that prepay will likely continue to evolve and become a focus for major carriers trying to reach growing numbers of Multicultural consumers who prefer non-traditional mobile plans. “This merger will definitely give them a tight hold on the prepay segment and could create an environment where their focus in prepay is wholly focused on growing and owning multicultural targets, specifically Hispanic,” Kattan said.

This merger will definitely give them a tight hold on the prepay segment and could create an environment where their focus in prepay is wholly focused on growing and owning multicultural targets, specifically Hispanic.

Carrasco echoed that sentiment: “I believe these nontraditional services and carriers have more appeal to Hispanics who tend to adopt emerging technologies at a faster rate than the general population.”

With so few major carriers in the event that the merger occurs and is approved by US regulatory bodies, data and pricing wars would intensify as the “big three would fight even harder for these gross adds,” Kattan said. “Device offers will also get more competitive to help entice consumers to leave their current carriers.”

In the End, T-Mobile and Sprint ‘Are Going After Very Similar Segments’

Aligning the strategies of two large and complex operations with unique branding and identities like T-Mobile and Sprint is never a simple endeavor. “Coming out of the merger with a new set of core values will be critical in aligning their marketing efforts overall and with the Hispanic market,” Carrasco said.

Coming out of the merger with a new set of core values will be critical in aligning their marketing efforts overall and with the Hispanic market.

But their core values may be more aligned than we think. “Both T-Mobile and Sprint and their prepay services MetroPCS and Boost respectfully are going after very similar segments that value price first, but don’t want to sacrifice quality and flexibility,” Kattan explained. Aligning Verizon and T-Mobile’s core values? That would be more complicated, Kattan admitted.

In the end, both brands have unique advantages that should serve each other well as they grow. T-Mobile is a “game changer and innovator in the space; a brand truly built around the consumers’ needs that can provide value,” Kattan said. On the other hand, Kattan pointed to price, devices, and distribution as Sprint’s key claims.

If the deal goes through, an already evolving mobile market will be shaken up yet again, and Hispanic consumers will be key as carriers build strategies to adapt to the demographic’s quick adoption of new, alternative mobile technology and preference for flexible, price-conscious mobile plans.

What: Multicultural market research firm ThinkNow Research revealed its latest study, the ThinkNow Media™ Report 2017, which found that TV viewing habits among multicultural consumers are dramatically shifting.
Why It Matters: The study found that 61% of Hispanics prefer Netflix for watching television programs (up from 46% in 2016 and 36% in 2015) and that one-third of total market anticipates streaming most or all TV shows in near future.

Multicultural market research firm ThinkNow Research’s latest study, the ThinkNow Media™ Report 2017, spoke to 1,261 consumers ages 18-64 (including a representative sample of U.S. Hispanics, African- Americans, Asians and non-Hispanic whites) regarding media habits, consumption, preferences and delivery methods.

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According to Mario Carrasco, cofounder and principal at ThinkNow, there are “three main assumptions” that brands need to let go of: “that Spanish language broadcast is the golden ticket to Hispanic audiences; that millennials don’t consume Spanish content, and that cultural connections are more relevant than acculturation or generation.”

The report found that Hispanics, particularly Millennial Hispanics, are turning to streaming services for their TV viewing. According to the study, 61% of Hispanics prefer Netflix for watching television programs (up from 46% in 2016 and 36% in 2015). Additionally, Hispanics prefer to binge watch TV programs, with 60% viewing an entire season in one weekend.

How Surprising Are The Study’s Findings?

Interestingly, Millennials are increasingly selecting Spanish-language programs via OTT services. This may come as a surprise to many brand marketers. “We’re seeing this trend as a result of more options with Spanish language original series like Club de Cuervos on Netflix,” Carrasco said.

Lionsgate and Hemisphere Media have picked up on this trend, and recently announced a premium Spanish-language streaming service called PANTAYA. “This trend will continue and other content leaders need to get on board to provide Hispanic consumers with a way to connect with their culture and language,” argued Carrasco.

What do these changing preferences mean for brands that have traditionally invested significant ad spend in networks like Telemundo and Univision under the assumption that they are safe bets for reaching Spanish-dominant Hispanics? According to Carrasco, as streaming services become more popular among Hispanic audiences, marketers will likely begin putting more of their budgets into streaming services and online video for Spanish-language campaigns.

For brands, Carrasco argued, it will be key to begin advertising with Spanish-language programs before it gets expensive: “Getting in now is cost effective as prices have yet to reflect the ROI they represent and you can establish yourself now on streaming as an advertiser before it becomes more competitive,” he said.

This is not to say that Telemundo and Univision do not have their place in Hispanic targeting strategies: “Telemundo and Univision are both great at creating content and can partner with streaming services to provide Spanish language or culturally relevant content to be streamed exclusively on a platform,” Carrasco said.

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