Direct Marketing Reaches An Otherwise Elusive Target

April 01, 2005
By Cara Marcano

As marketers prepare to attend early April's Directo Days conference in New York, which will focus on direct marketing to Hispanics, there is increasing evidence that this area is poised for solid growth.

The direct-marketing efforts are taking off, experts say, simply because U.S. Hispanics have not been overwhelmingly burdened by direct messaging yet. For example, direct response television efforts have had success in the Latino community, and surveys show that Hispanics are less likely to sign up for do-not-call lists.

Alberto Ferrer, vice president and director of direct and digital marketing at The Vidal Partnership, explains that because Hispanic television is far from fragmented in the way it is in the general market, marketers are able to reach more Hispanic consumers with TV buys than would ever be possible in the general market. Besides, most Hispanics never received regular mail in Latin America, so "they tend to be more welcoming to direct mail," says Ferrer, adding, "Some [of them] even use DM to inform themselves of what's out there for them in this country."

Internet, phone or coupons?

Michael Saray, founder of New York-based Michael Saray Hispanic Marketing Inc., says that only about 4 percent of Hispanic households throw away their direct mail advertising and printed promotional materials without looking it over or opening it. Meanwhile, in the general market, this is the case in more than 35 percent of households.

Despite a fertile field of opportunity, direct marketing to Hispanics differs greatly from the general market. For one, direct marketing on the Internet or via e-mail — an inexpensive and effective option widely used in the general market — is not as effective in the Hispanic market, says Kevin Downes, regional vice president of sales and operations for Staples in New York. He says Staples prefers to focus its direct marketing efforts on free standing inserts in Spanish-language newspapers such as ImpreMedia's El Diario-La Prensa in New York and La Opinión in Los Angeles.

Similarly, direct mail music vendor Columbia House attributes only 6 percent of its sales within the Hispanic market to marketing through the Internet, compared to more than 50 percent in the general market.

Marketing by telephone, on the other hand, seems to work well. When given a choice, surveys show, Hispanics are more likely to call 800-numbers than to send back a response card or go online, making bilingual call center support more important for the market.

Another less-expensive option that is popular with Hispanic marketers is the so-called cooperative mailing, which allows marketers to insert their direct mail promotions into envelopes with other noncompetitors. Carmen's Cupones y Consejos of Aliso Viejo, Calif., offers this service for clients, including Staples and MoneyGram. "Clients use the Carmen's Cupones y Consejos program and reach Hispanic consumers for as little as 3 cents per home," says Shayne Walters, founder and president. "In the direct mail world, that is a tremendous value. Solo direct mail [promotional material from a single company], while it can be effective, can cost 10 times as much," he says.

dealing with the unbanked

Another issue to consider when creating a direct marketing campaign is the lack of credit in the Hispanic market. According to Vince Adaloro, founder of St. Louis-based direct marketing firm Latin-Pak, 40 percent of Hispanics are unbanked, which means they don't appear on many database lists. Hispanics who receive direct-marketing messages are also more likely to be unbanked, meaning they will be unable to pay with a credit card or to meet certain credit history requirements.

One way around this is to concentrate efforts on the most loyal customers, the top 20 percent, explains Eduardo Urreta, director of Columbia House's Club Música Latina, whose members are mostly newly arrived, Spanish-dominant immigrants.

Six years ago, Urreta says, Columbia House devoted its marketing budget almost entirely to print and TV. While the ads increased the company's client base to 2 million, they also attracted a lot of customers who didn't pay their bills and left the company spending a large portion of its profits on collections. The company, which also rents its lists of U.S. Hispanics, particularly to consumer goods companies, now sends out its Club Música magazine in Spanish and English to loyal members who spend more. Word of mouth has proved invaluable. Columbia House has capitalized on free-standing inserts in its magazine, basically pasting another free copy of the magazine to be given out to friends of current members.

"If it's a good member, chances are their friends are going to be good members," he says. The company's newest lists features only about 200,000 Hispanics, but they are the best 20 percent of the market, Urreta says.

Also effective has been direct marketing linked to popular media. Spanish-language parenting media company TodoBebé Inc. offers companies the chance to send direct mailings with its publications, thanks to a new partnership with ADVO, a general-market direct marketing service provider.

Other companies, such as satellite TV provider DIRECTV and telecom giant Sprint, say they have seen their Hispanic direct marketing efforts surpass general-market results.

And Bank of America, which conducts its direct marketing through the new multicultural division of general-market direct agency DRAFT, which is based in New York, saw positive results when it included photos of "real" people on the top of its mailings soliciting credit card account holders, says Larry Harris, executive vice president and director of cross-cultural communications for DRAFT. The practice, which he says is warmer and less intimidating, has reaped so much success in the Hispanic market that Bank of America now uses it for its general-market mailings.