President & CEO of Pinta, a leading multicultural marketing firm with clients including Amex, Dr. Seuss, Heineken, Microsoft, NFL & T-Mobile.
As we emerge from a global pandemic that has decimated industries and brought our economy to its knees, we must collectively explore new avenues for growth from previously ignored sectors. Simply doing things the same way won’t be sufficient to maintain momentum and hyper-charge the next 10 years of economic prosperity. One surefire contributor to our growth will be the U.S. Hispanic market, which presents an immense and largely untapped opportunity.
According to the Pew Research Center, the domestic Latino market comprised 18% of the U.S. population, or 58 million people, in 2016. This group “has been the principal driver of U.S. demographic growth, accounting for half of national population growth since 2000.” If it were a country, this segment would be the second-most populous Spanish-speaking nation on earth.
Although Covid-19 disproportionately impacted the Latino population and unemployment rates spiked, it’s still an enormous sector that is poised to rebound quickly.
The fundamental problem has never been the market’s sheer size, but rather some intractable and incorrect assumptions most people make about this community. Chief marketing officers and other decision-makers too often commit the mistake of believing several misnomers.
Many assume that the entire Latin community is Mexican and/or Spanish-dominant when nothing could be further from the truth. While Mexican-Americans still represent the largest country of origin, the Hispanic demographic also ranges from first-generation, recently-arrived Central Americans on the West Coast to third-generation, English-dominant people of Caribbean descent on the East Coast. In fact, most Hispanic immigrants live in two worlds and make purchasing decisions based on a wide gradient of assimilation.
For this reason, marketers should bring nuance and segmentation to their campaigns, engaging pockets of Latinos in English via digital tactics, while employing traditional media such as Spanish-language television commercials in others.
Another misguided assumption is that the Latin market is lower-tier, economically speaking. According to a 2019 study, Hispanic GDP currently tops $2.3 trillion. This makes it the eighth-largest economy in the world, ahead of Brazil or Russia. As stated in the study, “Comparing compound annual growth rates, Latino real consumption grew 72 percent faster than non-Latino in that time period, and share of U.S. Latino households with income between $150,000 to $199,999, nearly three times the average American household income, far outpaced the general market.”
Furthermore, while the total number of Anglo-owned businesses shrank by 5% in the past several years, the number of Latino-owned businesses increased by 46%.
Platforms have been created to shine a much-needed spotlight on these positive trends, attracting promising partnerships from several Fortune 500 brands. In short, as the research suggests, what will significantly drive this demographic forward will be more education, a continued increase in population, high participation in the labor force and income growth.
Marketers of luxury and high-end products, in particular, should not shy away from engaging the Latino community, as these data points indicate virtually any commercial segment could benefit from tapping into nearly 20% of the population.
Similarly, there still pervades a belief that Latins can easily be targeted by simply translating one’s corporate message, or by appealing to antiquated symbols and irrelevant holidays (e.g., Cinco de Mayo). Culture is fluid, and it’s critical to lead with insights rather than stereotypes.
Companies that don’t commit the time and resources can get it wrong — at best, not generating ROI from their efforts, and at worst, opening themselves up to accusations of typecasting and condescension. Interestingly, marketers used to discuss how to adapt American culture to engage Hispanics. Today, the Hispanic culture is permeating the broader American psyche. Tortilla and salsa sales continue to give white bread and ketchup a run for their money, while the most downloaded song in the summer of 2019 on Spotify was “Señorita” by Camila Cabello and Shawn Mendes.
The Hispanic market is already fueling our growth and is ripe for engagement from virtually any company that wants to reach one-in-five Americans. To get it right, organizations should do their homework, hire experts and invest in this growing market. Investing a bit more time, care and resources will pay huge dividends in the short- and long-term. As we emerge from an unprecedentedly challenging year, this sub-segment will prove enormously beneficial to a company’s own bottom line and also the next decade of American success.
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Author: Mike Valdes-Fauli, Forbes Councils Member