By Nancy Cook – www.nationaljournal.com
By combining entertainment, news, and a rising political presence, the Spanish-language TV network has charted a course for success in a demographically evolving nation.
Awakening (Despierta) America to its majority-minority future, on the set at Univision
MIAMI—In a cavernous television studio in an office park far from downtown, Cesar Conde fumbled at the teleprompter. The 37-year-old wunderkind and brains behind Univision, the nation’s preeminent Spanish-language television network, is not normally an on-air personality. In a dark suit, white shirt, and red tie, he dresses more like a politician than a star. But on a springtime afternoon, before an audience of producers, cameramen, and policy wonks, Conde was introducing a three-part public-service program on the future of education. His short, impassioned speech in Spanish spoke of the consequential role that Latinos could play in the United States if they armed themselves with diplomas.
After the taping, Conde air-kissed a producer, nodded good-bye to the crew, and quickly exited the studio into the hallway. Before he rushed off to his next meeting, though, he couldn’t help but express his earnestness about the role he wants Univision to play in the new, emerging economy. “It’s our responsibility to help connect viewers with resources,” he said. “We believe in our core responsibility of empowering Hispanics.”
Ordinarily, Univision seems too slick a media company to concern itself with “empowerment.” This April, the network surpassed both NBC and CBS in weekly primetime ratings with adults ages 18 to 34. Its steamy telenovelas regularly occupy the top 10 rankings of the most popular primetime Spanish-language programs, according to the Nielsen ratings. And, in the past two years, Univision’s digital team has created 70 websites for local radio and TV affiliates while also experimenting with new digital forms of entertainment, such as soap operas made expressly to be viewed on mobile phones.
Conde’s ambitions for the network seem decidedly American: He hopes to increase revenue, grab more market share, and crush his competitors. “We believe Univision can be the top TV network regardless of language,” he explained while sitting in his utilitarian office. His plans include a political role for Univision in running public-service programs, sponsoring voter-registration drives, and hosting presidential debates for the 2012 election.
Yet Conde doesn’t envision Univision as simply another American network, one that mimics CNN or CBS. He has a defined audience in mind. There’s a certain diversity among viewers born in Mexico, elsewhere in Central America, in South America, or in the United States. But they’re united by language and culture. The network has thrived by catering to Spanish speakers rather than worrying about the broader society’s whims. “Our laser-like focus is U.S. Hispanics,” he declared. “The census results show we are 50 million strong and exponentially growing.”
Get used to this: Univision’s success may presage America’s economic future. The nation’s demographic future, for sure. By 2042, demographers at the Census Bureau predict, racial and ethnic minorities will make up more than half of the U.S. population. Roughly 30 percent will consider themselves Hispanic, nearly twice the 16 percent in 2010. The number of Asians living in the United States is also expected to double, while that of people who identify themselves as multiracial more than triples. Meantime, the non-Hispanic white demographic will grow older on average, and its projected share of the population will decline from 64 percent in 2010 to 46 percent in 2050. The proportion of non-Hispanic youngsters who are white is expected to plunge from 54 percent to 38 percent.
Univision’s future faces an even deeper threat: assimilation.
William Frey, a Brookings Institution demographer, speaks of the “pivotal decade” to come, as the definition of being a minority in this demographically evolving nation may drastically change. In certain parts of the country, he said, such as Arizona and the Southeast, demographers—and residents—may find it hard even to identify the minority population. Will Caucasians be considered the new minority, or will the term “minority” refer to socioeconomic class instead of to ethnicity or race? “At some time in the future,” Frey suggested, “the term ‘minority’ could become obsolete.”
Welcome to the United States as a “world nation.” Inevitably, these demographic shifts will influence the sensibility, color, and culture—indeed, what constitutes the mainstream—of the United States. “In the past, we thought of assimilation as conforming to a core of WASPs,” Frey noted. “There will be assimilation to an American lifestyle, but that lifestyle will not be the one we thought of in the past.”
Instead, your tired, your poor, and your huddled masses will represent a culturally distinct and growing market—or series of submarkets—to which businesses would be wise to pay heed. “Companies have realized their bread and butter—the traditional, white, Middle American household—has gone away with Ozzie and Harriet,” said Rohit Deshpandé, a marketing professor at the Harvard Business School.
The challenge for businesses, of course, is to figure out the best way to cater to the growing numbers of Hispanics, Asians, Muslims, and the fastest-growing group of young Americans, the 4.2 million under 18 who call themselves multiracial. Even playing to the African-American population—which demographers expect to remain fairly stagnant in terms of its numbers over the next few decades—will require corporations to shift strategies, as blacks increasingly leave cities for the suburbs and gain buying power.
No longer can American businesses get away with chasing a single group of consumers—that is, whites. Large or small, white- or minority-owned, corporations will need to create new products and pursue segmented marketing strategies. “The idea of the mass market,” Deshpandé said, “has disappeared.”
Corporate America should have noticed a red flag in 1980. It was in preparing for that year’s census that government officials coined the term “Hispanic” as a category for the burgeoning number of U.S. residents who trace their roots to Spanish-speaking places.
Thirty years later, 50 million-plus Hispanics were living in this nation of over 308 million souls—43 percent more than just a decade before. The number of Asians also jumped by 43 percent, to nearly 15 million. The only major racial group to see its share of the population decline was non-Hispanic whites, from 69 percent to slightly less than 64 percent of all U.S. residents.
Businesses that hadn’t been paying attention were caught off guard. “The  census numbers woke up a lot of folks,” said Phil Colón, a former marketing executive at Coca-Cola North America who’s now CEO of Project 2050, a multicultural marketing firm in New York. “It’s freaked out big brands.”
A handful of corporations, such as Procter & Gamble and McDonald’s, have courted Hispanic customers for years. But for the late bloomers, last year’s census provoked “a feeding frenzy on marketing to Hispanics,” according to Jeanne Vaughn, a former executive at GlobalHue, a multicultural advertising firm with offices in New York City and Detroit. “Companies are all trying to suddenly rush in and do something.”
No longer can American businesses get away with chasing a single group of consumers—that is, whites.
No wonder: There’s plenty of money to be made. Last year, according to the Selig Center for Economic Growth at the University of Georgia, Hispanics controlled $1 trillion of the nation’s $11 trillion in buying power, a leap of 108 percent since 2000; they are expected to control $1.5 trillion by 2015. Much of the wealth is concentrated in a few states—notably, California, Colorado, Florida, New Jersey, New Mexico, New York, and Texas. The buying power of other racial and ethnic minorities also rose dramatically during the past decade. The white majority’s buying power grew by 49 percent since 2000 (adjusted for inflation), the Selig Center estimated—less than Asians’ 98 percent or African-Americans’ 60 percent.
This power, naturally, has prompted new consumer demands. Hispanics spend less of their money on alcohol, tobacco, health care, entertainment, and education than do non-Hispanics, according to the Selig Center’s research; they spend more instead on groceries, apparel, and phone services. African-Americans, meanwhile, tend to spend a relatively large share of their incomes on housing, gasoline, phones, footwear, and children’s clothing. Hispanic families also tend to be larger, with twice as many children under the age of 18 in the household than non-Hispanic families. Because of these differences in demographics and taste, companies must adjust their product lines—and use their marketing savvy—to peddle their wares in each disparate, ever-more-inviting submarket.
SEEKING AN ETHNIC MICROSOFT
In this nation of immigrants, demographic submarkets are nothing new. The B. Manischewitz Co. began baking its Passover matzo in Cincinnati in 1888, and today’s company continues to corner the market on cloyingly sweet kosher wine. Then there’s Rao’s, another ethnic business that’s gone national. The Italian-American company started out in the late 1800s as a New York City neighborhood restaurant run by successive generations of a large immigrant family. But in 1977, a gushing restaurant review in The New York Times turned it into one of the hottest reservations in the Big Apple—and, shockingly in fickle and fast-moving Manhattan, it still is. Rao’s has also opened a second restaurant in Las Vegas and has expanded its business to shipping specialty foods—extra-virgin olive oil, roasted eggplant Siciliana sauce, and the like.
But how can we identify, here in the early 21st century, the emerging Microsoft of a soon-to-be majority-minority nation? Look for a company that, after catering to a demographic submarket, finds its consumer base broadening.
Maybe it’ll be a business like H Mart. In 1982, an immigrant family in the Queens borough of New York City opened an Asian-influenced grocery store. Now a chain with 34 superstores in 10 states, H Mart sells Asian foods of every description as well as fresh produce at prices cheaper than Whole Foods. When the first New England branch opened in Burlington, Mass., in 2009, The Boston Globe told of customers who couldn’t wait to enter the 51,000-square-foot store sporting “more than 20 kinds of the cabbage dish kimchi. An entire aisle just for noodles. A refrigerated section dedicated to the popular rice snack mochi ball.”
Or why not a business catering to a freshly self-conscious, religious submarket—domestic Muslims? The U.S. population includes roughly 1.4 million Muslims, the Pew Research Center reported in 2007, and many marketers see them as a small yet promising commercial target. Saffron Road, based in Stamford, Conn., is selling its line of Halal (comporting with Islamic law) frozen entrees in Whole Foods supermarkets. And Amana Mutual Funds, which invests according to Islamic principles, has drawn an increasing number of clients, only a fifth of them Muslim American. The rest are attracted in the recession’s wake by Amana’s less-risky financial products, deputy portfolio manager Monem Salam explained. Islamic law, he noted, forbids investments in casinos, tobacco or liquor companies, financial institutions, or companies that carry too much debt.
Let’s consider Carol’s Daughter, which started selling high-end skin creams, hair products, and fragrances to black women in the early 1980s. Entrepreneur Lisa Price opened her first dedicated store in the late 1990s in Fort Greene, a middle-class black neighborhood in Brooklyn. Now, Carol’s Daughter has nine stores in five states, sells its wares at Macy’s and Sephora, and employs actress Jada Pinkett Smith as the brand’s spokeswoman.
And let’s not forget Black Entertainment Television, a pioneer in broadcasting to a specific demographic market. In the early 1980s, businessman Robert Johnson proved the power of a racial audience with a cable-television channel specializing in black-oriented news shows, sitcom reruns, and music videos. Johnson sold BET to media giant Viacom in 2000 for $3 billion.
Far bigger and more powerful than any of these ethnic-based companies, though, is Univision. Started 50 years ago as a Spanish-language television station in San Antonio, what is now Univision Communications (held since 2007 by a consortium of private-equity companies) owns one cable- and two broadcast-TV networks, 62 television affiliates, and 70 local radio stations—reaching 95 percent of the nation’s Hispanic TV households. Univision Network, the company’s most-watched offering, boasts the most popular primetime lineup in Spanish-language shows and consistently routs Telemundo, its chief competitor, in ratings. Week to week, Univision ranks anywhere from third to fifth in the national television ratings by making sure that its appeal is broad. Edward Rincón, the president of a multicultural market research firm in Texas, noted, “Univision offers a little something for most Spanish speakers, from the telenovelas to soccer to news.”
UNIVISION’S SECRETS TO SUCCESS
Cesar Conde exudes confidence. And why not? A native Floridian, he’s from a family of overachievers—the son of a cardiologist and a college educator—holds a bachelor’s degree from Harvard and an M.B.A. from the University of Pennsylvania’s Wharton School, and was a White House fellow in 2002-03. And now, still a few years shy of 40, he serves as the president of Univision Network.
And by all accounts, a successful one. He has raised the network’s profile through public-affairs programs and secured lucrative broadcast deals for soap operas and soccer, including acquiring exclusive Spanish-language rights to the men’s World Cup in 2010 and 2014. Univision coproduces telenovelas—soaps that run for several months and have a set end date—to bring in 70 to 75 percent of the network’s revenue. Next year, Univision plans to launch separate channels for sports and telenovelas and a documentary unit to produce more serious fare. The network’s strategists are also planning a 24-hour network to cover domestic and international news for Spanish speakers who live in the United States.
Your tired, your poor, and your huddled masses will represent a culturally distinct and growing market to which businesses would be wise to pay heed.
Univision has bulked up its roster of advertisers, adding about 90 new brands. Conde has also established a staff to assist Univision’s advertisers in tailoring their messages for Latino viewers. This 50-person team works with advertisers on everything from market research about the types of cars that Hispanics favor to the actual production of TV ads for a Spanish-speaking audience. Already, this in-house ad agency has helped Univision land accounts such as Dr. Pepper, H&M, Samsung, Starbucks, and Microsoft Kinect for Xbox 360. The team has started to conduct 14 research projects on consumer preferences, proprietary information Univision intends to sell to advertisers. The first study will examine how Hispanics differ from non-Hispanics in using medical products. In mid-May, the company announced plans to expand this team into what Randy Falco, the chief operating officer at Univision Communications, described as the company’s very own McKinsey & Co.
Conde waxes optimistic that Univision can keep its momentum as Latinos’ population and buying power continue to grow. “When you look under the hood and you look at the younger demographic, Univision is already the No. 3 network in the country among adults under the age of 34, regardless of language,” he said. “You’re beginning to see a foreshadowing of what you’ll see down the road.”
Even with all of these efforts, much of corporate America has still been slow to catch on to the nation’s shifting demographics. In 2008-09, according to the latest figures from the Association of Hispanic Advertising Agencies, more than half of the nation’s top 500 advertisers spent less than 1 percent of their advertising budgets on print, radio, and television ads designed to reach Latino consumers. Overall, the top 500 advertisers spent just 5.4 percent of their budgets on Hispanic media in 2009. This is despite the fact that buying a commercial on Univision has historically cost less than on a major English-language network, although the gap has shrunk.
“Not all companies have the desire to reach Hispanics,” multicultural researcher Rincón said, listing the banking, finance, and legal communities among the least interested in pursuing minority consumers. In many large consumer companies, he said, the multicultural marketing offices are little more than corporate backwaters; they’re typically poorly funded, lack support from the top, and work apart from the main advertising and marketing staffs. “It’s not that they’re blind to the potential opportunity” Latino consumers present, Rincón said, but “companies may feel like they can’t serve them properly, or they might need to first develop new products.”
The trick for businesses may be to simultaneously play to consumers’ roots while carving out a separate cultural identity palatable to a broader audience. “How do I keep 80 percent of my customers happy while speaking to emerging markets? Companies will need to create a sub-brand that speaks to new people,” former Coca-Cola executive Colón suggested. “No one has that yet.”
Though Univision may, for it is poised to benefit from a majority-minority America. Its desire, according to its COO Falco, is that advertisers devote 15 percent of their budgets to attracting Hispanic consumers and that big-box retailers set aside 20 to 25 percent. Whether they will, of course, remains to be seen.
Still, Univision is hardly alone in seeing dollar signs in the growing Hispanic population. Success breeds competition—from Telemundo, English-language networks, and local Spanish-language stations. Just as Univision plots a possible cable news channel, Rupert Murdoch’s News Corp. has unveiled plans for a joint venture with National Geographic on a Spanish-language channel called Nat Geo Mundo. Other companies may find ways to target minority customers online and on smartphones.
“The new census is both a blessing and a curse for us,” Falco said. “It will give us a bigger audience, but it’s a curse in that it will finally wake up our competitors.”
Univision’s future faces an even deeper threat: assimilation. Traditionally, the network has appealed to native Spanish speakers and to recent immigrants, and its challenge is to stay in touch with its viewers. More of the Hispanic population’s projected growth is expected to come through births rather than immigration. This means that the network must find ways to appeal to second-, third-, and fourth-generation Spanish speakers, many of them bilingual and thus tempted by other options for entertainment and news.
Yet Falco is hopeful that culture—and language—will long continue to provide a route to Latinos’ hearts. “Our research shows that 75 percent of Hispanics still speak Spanish in their homes,” he said. “We’ll figure out the right way to reach people.”
BY POLITICAL MEANS
One way in which Conde plans to grab the attention of advertisers—and of Univision’s competitors—is by building up the network’s political influence. During the 2008 presidential campaign, Univision hosted debates for Republicans and Democrats, and it plans to do so again next year. Conde wants to add more correspondents and resources to cover the 2012 GOP presidential hopefuls. Part of the benefit will likely fall right to the bottom line. The network took in $27 million in political advertising in the 2008 presidential campaign, according to Falco. He hopes to double that next year, when Latino votes will prove crucial to the outcomes in California, Florida, Nevada, New Mexico, and Texas.
Univision’s public-affairs campaigns in recent years have positioned the network as a force in mobilizing Spanish-speaking voters. Since 2007, when it launched a voter-registration campaign, Univision has held naturalization workshops around the country and helped more than 1.4 million immigrants apply for U.S. citizenship. Early last year, it ran public-service announcements urging viewers to fill out census forms.
This, then, is Conde’s vision: a network that combines popular television shows with a political presence and an internal marketing arm that finds a competitive advantage by constantly collecting data on Hispanic consumers. If Conde succeeds, he’ll have created a hugely profitable business with a loyal audience, an ethnic company in an evolving economy that succeeds by keeping its customers in mind even as they meld into American society—and thereby change it. This suggests a new model for U.S. business, one that treats minority consumers as more than an afterthought—even before they become a majority of Americans a few short decades hence.
The writer is a business writer and editor in New York City.
HalalFocus Partner Event:
These issues regarding the Muslim community will be discussed at the 3rd American Muslim Consumer Conference, 29 October 2011, Hyatt Regency New Brunswick, New Jersey – www.americanmuslimconsumer.com