L'Oreal Sees Growth in US Hispanic Market

The Hispanic market in the US is large and growing. The most recent census data suggest that the numbers are approaching 50 million. As the following article by Barry Silverstein in Brand Channel points out, this segment is underserved because of misunderstandings about its size, buying power and aspirations. The implication is that companies are missing an opportunity to sell into a high growth, increasingly affluent demographic. This is also true for Europe, where immigration has created smaller target segments of similar potential:

"Hispanics accounted for half the growth of the total U.S. population in the last decade, and they are expected to exceed 50 million in number, according to the most recent wave of census data.

That's why "Hispanic consumers are a very, very important target," according to Marc Speichert, chief marketing officer at L'Oreal USA. "We see it as a growth opportunity for the future," Speichert tells the New York Times.

One way L'Oreal USA is reaching Hispanic consumers is through a promotional tie-in with Telemundo, a television network known for broadcasting telenovelas.

These serialized shows are not unlike the early daytime "soap operas" popularized by Procter & Gamble, who both produced them and initially supported them with commercials for soaps and laundry detergents. Now L'Oreal USA is updating the P&G strategy in a collaboration with Telemundo, assisted by digital agency Moxie Interactive, to form an online club for fans, "Club de Noveleras."

The club has all the classic elements of both a fan and loyalty club -- photos, videos, articles, and an interactive community, plus a loyalty program consumers can use to accumulate points and redeem them for various telenovela and L'Oreal-related merchandise. Jacqueline Hernandez, COO at Telemundo's New York office, tells the Times the new website is "novela fantasy league... We're creating a community, a virtual community online" that will "turn viewership into a relationship."

Moxie Interactive chief executive Joel Lunenfeld adds that the club Website will help L'Oreal to learn "what fans opting in like, and we can see trends in real time... we're creating content as a brand."

L'Oreal USA's Speichert says, "This is the first time we're creating such a platform. There are a lot of things that are innovative and new, a lot of experimentation." One of the possibilities L'Oreal is considering is product integration within the telenovelas and possibly other Telemundo programs.

While television is an important medium, the online world is particularly fertile ground for reaching Hispanic consumers. "Hispanics go online to socialize, research new products and find good deals — more so than many other groups," according to a report issued by online research firm eMarketer. Nearly 60% of the U.S. Hispanic population went online at least once a month last year, says eMarketer, and by 2014, that will increase to 70% — about 39 million people.

The mobile market is increasingly important as well. In the past five years, cellphone use among Hispanics increased 26%, compared with 18% for the general population, according to Scarborough Research. About 82% of Hispanics currently use mobile phones. The Pew Internet & American Life reports that Hispanic adults lead all other groups in wireless Internet access.

Despite such promising statistics, L'Oreal USA is on the leading edge of marketing such brands as Garnier and Maybelline to Hispanics. The "2010 Hispanic Marketing Trends Survey," conducted at the beginning of last year by Orci, a California ad agency, reports that only around 50% of U.S. advertisers include Hispanics in their marketing efforts.

Survey respondents included senior marketers at business-to-business and consumer Fortune 1000 companies. According to the survey, 51% of respondents did not market to Hispanic consumers, and 82% had no plans to "begin or increase existing efforts" to market to Hispanics in the next twelve months. In fact, 78% of respondents' companies did not use social media to engage Hispanics.

Hector Orci, chairman of the agency that conducted the survey, told Hispanic Market Weekly that companies are missing a major opportunity. "It's about not understanding how important that trillion-dollar income really is. Boards of directors have to understand that they are leaving money on the table by not targeting this consumer."