Summary
US Hispanics represent a rapidly growing and yet as is the case in their traditional media usage a unique, multi-faceted and segmented demographic segment in terms of their new media and mobile usage.
Analysis
The broadband and mobile usage of the US general market population is quite different, yet surprising when examined carefully.
According to the Pew Research Center's Internet and American Life Project., the U.S. broadband adoption rate rose to 63% of adults as of April, a nearly 15% increase from a year before.
In spite of the economic downturn and the adoption rate grew even though the price of home broadband increased, the study found. The monthly cost of household Internet service rose an average of nearly $5 since May 2008.
But consumers seeking to balance their budgets preferred to leave their Internet connections untouched, choosing instead to cut back on other items.
While internationally, the U.S. is still well behind in the broadband race, according to a report released late last year by the Organization for Economic Cooperation and Development, an international policy organization. Denmark, the Netherlands, Norway and Switzerland rank highest, with the U.S. placing 19th among the 35 countries listed in that study.
Still, though the U.S. broadband penetration rate of 63% might seem like a lackluster number, the progress is more obvious when compared with where the nation was nine years ago.
At that time only 6% of Internet users had high-speed connections. For US Hispanic users broadband penetration is even lower than the US in general.
According to the Captura Group US Hispanic broadband users reach critical mass in 2008 with 20 million user or about 44% of the overall US Hispanic population. As would be expected because of the lower base US Hispanics who came on line grew by 21% vs. 6% for the general US market in 2008.
Various studies, including the one published in March of this year by the Insight Research Corporation demonstrates that Hispanics are one of the most social groups online. Hispanics online today and they continue to grow fast. Hispanic online market growth will continue to outpace the general market growth into the foreseeable future.
The Insight Research Corporation study outlines a series of findings and nuances that are of value to telcom and other businesses which target US Hispanics. Among these are:
Hispanics are leading the charge on the social web. Part of the explanation is that Hispanics are young and what is more fascinating is that culturally Hispanics are, well, more social. They have a desire and drive to stay connected to friends and family.
Additionally, Hispanics regardless of language preference, are turning to the social web to consume and create their own content. There is a lack of high quality, culturally relevant content in English and Spanish, so, Hispanics are creating their own.
This represents a great opportunity for savvy marketers who can figure out how and where to reach these online Hispanics.
The US has a de facto second language: Spanish. Businesses and marketers recognize this as fact and no longer ignore the use of Spanish in communicating to mass audiences.
It has become a general business practice for companies wanting to maximize their bottom-line profitability to target and communicate with the US Hispanic market in-language and in-culture.
At present time, however, the Hispanic marketplace is bifurcated, with foreign born and third generation Hispanics at the poles of the cultural spectrum and a great deal of market fluctuation in between. A shift from immigrant growth to that of native-born children will change perceptions about the US Hispanic market and how telecommunications companies reach them.
Unlike historical Hispanic population growth patterns, Latino population growth in the 21st century will be a product of the natural increase between births minus deaths of the existing population, rather than the addition of new net Hispanic immigration.
Of the 10.2 million increase in the Hispanic population since 2000, about 60 percent of the increase (or six million) is due to the natural increase and 40 percent is due to net Hispanic immigration, according to the US Census Bureau.
This trend will continue in the decades ahead. By contrast, more of the Hispanic population increase in the US during the 1990’s was the result of immigration (56 percent) rather than births over deaths of existing residents (44 percent), according to Pew Hispanic Center estimates of October 2008. Hispanics are the youngest of any of the major race/ethnic groups.
In the year 2010, when the Hispanic population is projected to be 49.7 million, over one-half of all Hispanics will be under the age of 29. This is a significant market for the wireless carriers, as well as other companies in technology and communications.
Carriers might well consider paying a bit more to establish the brand or service in the Hispanic community, since this group of consumers are more youthful than other ethnic segments and thus offer the possibility of a longer customer relationship.
By 2010, the median age gap between Hispanics and the general population will actually widen to 10.5 years. In 2006 the median age of the US population as a whole was 36.4 and in 2010 it will rise to 38.0, while the Hispanic median age in 2006 was 27.4 and will increase to 27.5 in 2010.
Even in the midst of the current recession, telecom providers are going to continue to increase their spending to reach the Hispanic market—though they should guard against treating this sector as mono-linguistic and homogeneous.
Hispanic consumers differ in terms of language preference and media use, based on differences in education, occupation, income and nativity, as we detail in the chapters that follow.
New data indicates that second and third-generation Hispanics tend to favor English over Spanish. As a result, ad spending growth in some sectors of the US Hispanic market is slowing as telecom providers and other advertisers try to figure out which Hispanic demographic to target.
Yet it is clear that carriers—and especially cellular providers—will continue to pursue the Hispanic market with all the vigor they can muster. MTV Networks’ Silvered Screen research cites that 63 percent of Latinos own media-capable phones versus 46 percent of non-Latinos and are 23 percent more likely to use their cell phones to watch video content.
Hispanics over-index in mobile content consumption. They are more receptive to targeted advertising and are also more tech-savvy and active users of advanced mobile features.
Since Hispanics have lower PC-ownership, the mobile phone serves as their primary access to email and the Internet.
Marketing to Latinos through their cell phones seems a fertile marketing approach. For all carriers, telephone calls remain the most common form of cross-border exchange. Amongst foreign-born Hispanics, 75 percent call someone in their native land at least occasionally, and 66 percent do so at least once a month.
About 41 percent call at least once a week, with about 20 percent calling more than once a week. These statistics explain why US carriers have been and continue to be interested in this Hispanic sub segment.
Despite the falling international calling rates and the increasing availability of mobile phones, many Latino immigrants do not even make an occasional call—so there is still plenty of headroom for growth in this segment.
One in four Hispanic immigrants say they never call, 14 percent say they almost never call and four percent report that they have no family or friends in their country of origin to call. Latino immigrants use email to a much lesser extent (15 percent) to contact friends and family in their native lands, primarily because only one-third of them report using a computer on even an occasional basis, compared to three-quarters of US born Hispanics.
Economics play another major role in this arena, because PC ownership in Latin America amongst the masses is much lower than in the US. The use and presence of Internet Cafes and telephone “casetas” are still prevalent in many US Hispanic barrios and in Latin America.
Among Latino immigrants who do not have access to a computer at home or at work, only three percent report having email contact with home country relatives or friends. By comparison, roughly a third of immigrants who have access at home or on the job say they have email contact. Dominicans again show strong ties to their home country, with 27 percent reporting that they send emails. Colombians, however, are the clear leaders, with almost half saying they use email to contact friends and family.
Corporate America—and telecommunications companies in particular—are cognizant of the importance of multicultural marketing because of the country’s changing demographics.
Of the three major ethnic groups, Hispanics offer the greatest market opportunity because of their sheer numbers, population growth rate, youthfulness, buying power and now their technology adoption rates.
As telecom products and services become more ubiquitous, and as competition and alternative networks drive down profit margins, targeted marketing strategies— specifically those targeted at Hispanics—are essential for telecom companies to maintain profitability and to sustain growth.
The growing importance of ethnic telecom expenditures should pique the interest of even the largest of the telecom providers. At $110.0 billion, ethnic expenditures will represent over one-third (36.7 percent) of all residential telecom expenditures in 2014.
Now that the US market penetration for wireless service is approaching maturation, the US Hispanic market takes on added importance for the wireless carriers. For the forecast period of 2009-2013, Hispanics will be the growth engine for new wireless subscribers, and based on early observations they will also be heavier users of enhanced services.
Future-oriented marketers are well aware that by 2050 one of every four Americans will be of Hispanic descent, meaning that this market is destined to become even more important.
Hence, the US Hispanic market represents a rapidly growing, but challenging market for telcom, traditional and new media entities which want to maximize their position in that market.
