This week marks the beginning of New York's Advertising Week. The five-day gathering is put together by an industry keen on showing the world that it's (slightly) more than the cigars, cocktails and witty scripts of Mad Men. Speakers and attendees will attempt, between dizzying networking breaks, to solve the perennial challenge of brands getting customers to like them and buy them.
This takes place as the ad industry battles multiple challenges, including a moribund economy making customers and clients iffy. To this you add a hyper-dynamic media environment where once omnipotent agencies now yield to a more powerful and connected consumer, digital and social media that have redefined innovation and creativity, client procurement departments squeezing agency profit margins, and brand managers that just don't trust agencies to identify the next big thing and engage consumers.
One of the biggest challenges and opportunities for the advertising industry is the changing face of a multicultural America. Behind this change is a Latino population tidal wave that, according to the most recent Census, is driving over half of the nation's population growth. This group is of critical importance for advertisers not just because of its size, but because it controls over $1 trillion in purchasing power and growing, a significant boom in a dwindling consumer market.
The Latino experience in the U.S. is not new, what is new is its numerical scope and the related assertiveness of a group confident in its numbers and contributions. Also new is that the growth of U.S. Latinos is being driven mostly by domestic-born vs. foreign-born Latinos, making their experience more relatable to the mainstream, and hence more apt for a crossover.
This heralds the arrival of what I'll call "Latino boom 3.0." The first full boom was witnessed during the pop culture explosion of the nineties with Jennifer Lopez and Ricky Martin as poster girl and boy. The most recent watershed boom took place after the 2000 Census and the political participation of Latinos. 2012 will signal a trifecta when the 2010 Census and the upcoming elections put Latinos at the center of growth.
This Latino boom 3.0 should witness a media environment that taps more into Latino culture. General market networks will need to do this to stop the ratings hemorrhaging and to steal some of the ratings thunder from Spanish language networks like Univision and Telemundo. Spanish language television will also need to evolve to engage a more bicultural Latino. At the core will be the search for new Latino talent that can best deliver the most engaging form of Latino-influenced storytelling.
For brands managers, this Latino boom should serve as a mind-set shift to put culture at the forefront of product innovation. I foresee Latino culture continuing to have a transformative impact in key areas such as food, music, sports, and entertainment. The Latino boom should also serve as a broader exercise to open the product innovation exercise to reflect the greater influence coming from the rest of the world. Taking this step is critical to connect with a younger consumer that is already looking cultural cues beyond their borders.
Latino boom 3.0 has already presented tough new challenges to the advertising agency industry. It has forced some of the leading mainstream ad agencies to tackle their infamous low number of Latino and minority employees. The solution for these agencies will be to partner with more specialized Latino entities and to hire and train more bilingual Latinos and Latinas to help frame global strategies with Latino insights incorporated from the onset. Overcoming the old way of operating will be the biggest challenge but the opportunity should drive towards this goal.
As mainstream advertising agencies try to get their act together to reach Latinos, specialized Latino ad agencies will need to evolve. These shops, many of which began during days when the Hispanic market was not as significant in size and mostly Spanish-dominant, will be forced to develop campaigns leveraging Latino culture to speak to all Hispanics as well as the general market. Their point of differentiation will continue to be the specialized focus on Latino culture, giving them a depth of insights hard to replicate in mainstream agencies.
But the cultural focus of specialized Latino agencies might not be enough to compete with mainstream groups with greater reach and resources. The true game changer for Latino agencies will be in using culture to address head-on the bigger challenge facing all ad agencies, and that is in finding ways to become more entrenched with clients.
Latino agencies will need to evolve to become Latino culture business experts as opposed to just ad agencies, bringing products and services that only a specialized Latino entity can create, including product ideas, branded content, as well as the power of their networks such as connections to community and civic leaders and more.
The challenge around Latino boom 3.0 is one around understanding culture. The opportunities will be for those that can best tap into the uniqueness of the varied Latino experience to come up with exciting products and stories that will frame the experience of subsequent generations. And that's a cocktail for success for which both Mad Men and Mad Women will be happy to cheer.