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America’s 10 Hottest Growth Markets

Ops in the Fastest Growing Hispanic Markets Detail Their Strategies To Ride the Wave

By George Winslow -- Multichannel News, 10/10/2004 8:00:00 PM

Over the past two years, cable operators have finally become aggressive in targeting Hispanic communities in many major cities. But how are they doing in the fastest growing markets — areas that often have relatively new Hispanic communities and smaller Latino populations?

The answer to that question can be found in the following profiles of 10 cable systems in the states where Hispanic purchasing power grew fastest between 1990 and 2004, according to the Selig Center for Economic Development.

These systems don’t necessarily operate in the fastest-growing city in their state, but they do illustrate how local systems owned by a variety of major MSOs were working to target the Hispanic community and many of the challenges they face.

North Carolina

In North Carolina, where the economic clout of Hispanics is increasing faster than any other state, the 2000 census “was a wakeup call that our audience was changing,” says Paul Starkey, the marketing manager of the Time Warner Cable Greensboro division, which has over 340,000 subscribers.

The system responded in March 2002 by rolling out its Canales Latino package with a total of 12 Spanish-language networks. The tier cost only $2.99 per month, but subscribers had to buy up into the standard basic, which includes Univision, and digital tiers. That brings the total number of Spanish-language networks up to 13, but it means the cheapest entry point for Hispanics costs $52.90.

Starkey says the system has not tried to compete with the much lower-priced offerings from satellite, but has worked to position itself as “the provider who can offer a wide range of both English- and Spanish-language services.”

Still, he and other Time Warner Cable executives admit that the system needs to improve its programming. To solve that problem, corporate executives are currently working to sign additional programming deals. “Once we add the additional programming, we will be a very, very viable competitor,” Starkey says.

About a year ago, as part of a larger effort to consolidate and improve their call centers, the division began hiring more Spanish-speaking agents, according to Diane Blackwood, vice president of customer care at Time Warner Cable Greensboro Division.

“We didn’t just want to have people who had learned some Spanish in school and had to translate everything in their head,” says Blackwood, adding that about 10% of the call center employees speak Spanish. “Because we have a really good mix of people from different countries, we’ve held onto some customers we might have lost because they like having someone they can speak to.”

On the marketing side, Starkey has relied heavily on Spanish-language media, establishing close relationships with local newspapers. But the system has also turned to billboards and mass media, running Spanish ads in both English and Spanish newspapers. “I think we’ve been one of the few systems to use mass media,” says Starkey.

To further boost community awareness, Time Warner sponsored its first event in April 2002 in a local Hispanic community. The MSO provided entertainment and free food. Since then, Time Warner has supported about two events a year, and they sponsor a weekly Spanish-language show covering the local Hispanic community.

Greensboro is also aggressively pushing high-speed data and phone service, which it has been rolling out this year. When the telephony rollout is complete, he expects the $39.99 low cost package with free U.S. long distance calling “to make a lot of inroads in the Hispanic community,” Starkey says.

Arkansas

Comcast Cable Communications Inc. broke new ground in the spring of 2003, when it became the first major MSO to roll out low-cost Hispanic programming packages. But that launch was merely the beginning of its aggressive strategy to target the Hispanic community, notes Mauro Panzera, senior director of multicultural marketing for Comcast Cable.

Following months of negotiations with programmers and consumer research, the MSO is now in the process of revamping its offerings. It is reducing its Hispanic packages from three to two, providing new programming that will give local systems the option of adding six to 12 new Hispanic channels, and it will be rolling out free Spanish-language video-on-demand offerings.

Over the last 18 months, these corporate initiatives have had a major impact on the way Comcast’s Little Rock, Ark., and Middle Arkansas systems target Hispanic consumers, says Ronnie Colvin, vice president and general manager of Comcast’s Central Arkansas division.

About 3% of Little Rock’s population is Hispanic, but it is growing rapidly, says Mike Wilson, vice president of government affairs at the system, which serves about 85,000 basic subscribers. “We are making a much larger effort to target the Hispanic community,” he says.

To that end, the operator rolled out a Cable Latino package on Cinco de Mayo of 2003. This offering included 19 basic channels and 18 Spanish-language services for $19.95, says Colvin. Subscribers also received a digital set-top box, which allows them to add on additional services, such as HBO Latino.

But programming is only one part of its efforts, which range from new marketing campaigns to hiring more bilingual employees. Currently, about 5% of the system’s employees are Hispanic, and existing employees can take free 12-week Spanish classes, notes Colvin. Employees who are bilingual get a shift differential that adds 5% to their pay.

Comcast employees have been working to establish closer ties to the Hispanic community, contacting local organizations and advertising in Spanish-language media. The system also worked with MTV en Español to bring 2002 Latin Grammy Winner Jorge Moreno to Little Rock for a concert.

Recently, the system added Gol TV and Fox Sports World to a new sports package of nine channels that will cost $5.00, a move that reflected customer requests for more soccer Colvin notes. Additional changes to the package will occur in the first quarter of 2005.

Georgia

When Comcast Corp. executives in Atlanta first began sending street marketing teams to important events in the Hispanic community, the response was guarded, admits Michael Hewett, vice president and general manager for Comcast Atlanta’s Metro System, which covers the downtown Atlanta area and certain nearby suburbs. Metro is one of three Comcast systems in the larger Atlanta metropolitan region. “Now, however, the marketing teams are getting hundreds of leads to potential customers.”

That change reflects over 18 months of hard work to revamp the programming and marketing tactics of the three Atlanta systems. A major step in their Hispanic strategy occurred in May 2003, when the trio rolled out a low cost Cable Latino package, according to regional vice president of marketing and customer case for the Atlanta Region Gene Shatlock. That has made the operator more competitive with satellite’s low-cost offerings, he contends.

Currently, Atlanta offers a $22.99 Cable Latino offering with 25 basic channels, including 10 Spanish-language video services, eight Spanish music services, seven English channels and a digital set-top box that allows subscribers to get VOD programming. In the first quarter of 2005, Shatlock expects that they will add 10 to 12 channels to the lineup.

Shatlock also hopes to continue to expand their programming in other areas. During recent National Football League games, Comcast worked with the local NBC affiliate to air Atlanta Falcon games in Spanish on Comcast Sports Southeast.

Promoting programming has also been the focus of their marketing strategy, which relies heavily on Hispanic media and the use of local direct-sales companies with close ties to the Hispanic community, Shatlock says. But supporting community organizations, sponsoring events and deploying street marketing teams at festivals, have also been extremely important, says Hewitt.

To better gauge community reaction, the Atlanta system has done extensive research into the ethnic makeup of the community, discovering that 64% were Mexican, 8% Central American, 6% Puerto Rican and 5% South American, with a variety of other groups making up the rest. It also divided the three systems up into small nodes of 250 to 500 homes so they could better target their marketing and track it’s effectiveness, Shatlock says.

Tennessee

With systems passing nearly 3 million Hispanic homes, Comcast Corp. has a number of systems in areas with large Latino populations. But the company is also putting a lot of emphasis on smaller, fast growing markets. Mauro Panzera, senior director of multicultural marketing for Comcast Cable Communications Inc., notes “Markets like Nashville that have small but fast growing communities will be very important to our future.”

Virgil Caudill, area vice president and general manager for Comcast Middle Tennessee/Nashville, agrees. While Hispanics made up only 3% of the population in the city of Nashville in the 2000 Census, this group’s population has been growing much faster than the overall population. “Even in the last two years we’ve seen tremendous growth,” Caudill says. Some estimates suggest that Hispanics now make up about 5% of the population in the areas served by the Middle Tennessee systems, which have about 333,000 basic subscribers.

Targeting that community has meant major changes in the system. While the Nashville system had to use some outside contractors with bilingual employees when it first launched its Cable Latino tier in 2003, it has been hiring bilingual employees and can now handle installations and service calls in-house, Caudill says.

The company is also in the process of revamping some of the programming in the package. “We plan to replace three channels with three of the new programmers [that have just signed deals with corporate],” says Will Jefferson, marketing manager at Middle Tennessee/Nashville Comcast Cable. “These changes will give us a better mix of programming to serve our community,” which is 65% Mexican but also has a sizeable population from Puerto Rico and a variety of countries in South America.

Further changes will occur in the fourth quarter as the company evaluates its current package and programming mix. At that time they will begin offering free Spanish-language video on demand and new networks.

Having new programming options and getting marketing support from corporate have played a crucial role in the system’s ability to target Hispanics, Jefferson notes. “Because of our corporate focus on the Hispanic market, we can give local systems, the tools and resources they need,” Panzera says.

But Jefferson and Panzera both stress the importance of local efforts. The Nashville system relies heavily on Spanish-language media, particularly newspapers and radio, to reach a relatively dispersed population, and it has stepped up its community involvement, sponsoring music festivals and events. “If you go back 30 years, cable’s strength has always been responding to community needs in a local ways,” says Caudill. “That has been why we have working so closely with local organizations and businesses.”

Nevada

After eight months of research and negotiations with programmers, Cox is now rolling out a new offering, Paquete Latino. The package, which includes up to 35 Spanish-language channels, “will more than double the Spanish-language programming available,” explains Cesar Cruz, the director of multicultural marketing at Cox Communications Inc., who has been spearheading the effort to radically revamp their Hispanic strategy since he was hired earlier this year.

In Las Vegas, where 27% of the population is Hispanic, consumers are getting their first look at the package this month as Cox’s system, which serves about 371,000 basic subscribers, introduces a package of 26 Spanish-language channels, 14 basic services and five Spanish-language movie channels for $21.33. Customers also get a digital set-top box that will allow them to get on-demand programming, including about 20 Spanish video-on-demand titles. With HBO Latino, the Paquete Latino will cost $34.99.

Because of the size of the Hispanic population in Las Vegas, “our efforts to target the community go back at least four or five years,” says Steve Schorr, community public and government affairs at Cox Las Vegas. He adds that they have been sponsoring the Latino Youth Leadership Conference for four years and that they provide a number of scholarships to students in schools with large Hispanic populations.

With a relatively widespread Hispanic population — with about 40% of it spread across two ZIP codes — reaching the whole community can be challenging. “Southern Nevada is not like some other communities with large established Hispanic communities that are concentrated in a few areas,” says Schorr. “Here we have to find innovative ways to market to the whole community.”

That has made grassroots community efforts particularly important, according to Cox Las Vegas senior communications liaison for government and public affairs Tony Timmons. “Grass roots community involvement has been as important as our marketing,” he adds.

To reach this relatively diffused population, Cox uses local Spanish-language media, including networks Univision and Azteca America, says Gina Jewhas, director of product development at Cox Communications Las Vegas. But it has also turned to some less conventional tactics, such as mobile billboards mounted on trucks and sophisticated software programs that allow them to identify potential customers. Such tactics, along with its grassroots community involvement, helped the system earn a Cable & Telecommunications Association for Marketing award for excellence in multicultural marketing in 2004

Inside the company, Cox has also been working to improve its operations. It created a bilingual team at its call center and “has been aggressively recruiting bilingual employees,” notes Schorr. It also created a task force of Hispanic employees to help advise them on how to target the Hispanic community. “Drawing on the expertise of our own employees has helped us better understand the community’s needs,” he says.

Minnesota

Minnesota’s Twin Cities area provides one graphic illustration of how increased Hispanic marketing can pay dividends. “Since we started the campaign [four months ago], we have more than doubled the number of customers taking the Hispanic tier,” says Brad Elbers, the area director of sales and marketing for Comcast Corp.’s Twin Cities division.

The marketing campaign is part of a multi-pronged effort that also involves improvements in programming, call centers, customer service and ties to the Hispanic community.

Currently about 8% of the population in the areas served by the system is Hispanic, but according to Elbers, research suggests the Hispanic population will increase by 24% in the next three years — much faster than the overall population, which is set to grow by 5%.

The system, which serves 344,000 basic customers in St. Paul and 86 other communities stretching across 60% of the Twin Cities, currently offers a Cable Latino tier of 10 Hispanic networks. The tier is available for $6.99 as part of the digital package, or sold as an entry-level package with some basic broadcast services, including Univision, for about $20.

Brian Krogstad, the telemarketing supervisor at the system, notes that they have set up a trilingual menu at the call centers to serve their English-speaking, Hispanic and Cambodian populations and that they have been hiring more bilingual employees.

Comcast Twin Cities is also ramping up its community outreach, establishing closer ties to community organizations and sponsoring events. As part of that effort, the operator combined its efforts to target Cambodian refugees — a particularly large group in the area — as well as the Hispanic community by creating a fishing tournament for both groups.

All of these efforts have helped them in the overall battle with satellite, Elbers says. In 2003, the Twin Cities had one of the best records among Comcast systems for winning customers back from satellite. And that they have done even better in 2004, particularly since they ramped up their marketing efforts, Elbers says.

Still, Elbers and Krogstad admit their Hispanic programming needs improvement. This fall, the system will begin offering 100 to 200 hours of free Spanish-language on-demand fare and will drop three Hispanic channels so it can add History en Español, Cine Mexicano and Casa Club.

The system has also heavily promoted its secondary audio program channel offerings and worked to inform existing and potential customers that this gives them “hundreds of hours of Spanish programming,” Krogstad says.

But the biggest change will come in 2005, when they launch a new package that will add 10 to 12 new Spanish-language services. “Once we do that we’ll be able to provide much more choice and dramatically improve our numbers,” says Krogstad.

Alabama

This summer, Charter Communications Inc. joined the ranks of major MSOs revamping their Latino programming lineup by launching two new packages for Hispanic consumers: an inexpensive $24.99 Charter Latino package and a $54.98 offering that bundled the basic and Spanish-language programming with a 384 kilobits-per-second Internet service. The full 3 megabit high-speed data offering is available for an additional $10.

The new services are part of a larger, ongoing initiative to better target the Hispanic community. “There is no doubt that the Latino community offers a huge opportunity for us,” for video and the high-speed data, says Bill Sweeney, vice president of marketing and sales at Charter’s Southeast Division, a region that includes the Birmingham, Ala., system serving about 150,000 basic subscribers. “Because of its growth, we realized that we had to make an effort to really focus on getting the products and the pricing they wanted.”

Mark Adams, marketing director for Charter’s Southwest division, says the company decided to roll out the packages in Birmingham at the beginning of August even though only 2.2% of the population was Hispanic in the 2000 Census. “Markets like Birmingham are important [to our Hispanic strategies] not so much because of the size of the existing population but because of its high-growth rates,” he says.

Since the launch of the new package, Charter executives in Birmingham have worked to reach out to the local community, sponsoring local events and working with local organizations. On a corporate level, Charter has hired a new ad agency that will help the local systems aggressively market the new packages in upcoming months. The marketing blitz will rely heavily on Spanish-language media, Adams notes. “Using in-language media is important, because they want to hear the message in their own language.”

In the meantime, Charter’s corporate executives are negotiating additional deals with programmers so that local systems have the flexibility to add programming that more closely targets the background of their local Hispanic community, notes Sweeney.

Sweeney also says that Charter is trying to build up its distribution channels in the Hispanic community in Birmingham. “We have a good presence at national retailers,” but they are working to establish outlets at stores in the Hispanic community and to recruit Spanish-speaking people who can directly market the service. He expects to have the retail distribution deals in place before the holiday season and the direct-marketing effort up and running in the first quarter of 2005.

Until those distribution deals are squared away, Sweeney says it is difficult to quantify the impact of the new Hispanic tiers on recruiting new Latino subscribers. Even so, he says the more competitive programming package “has already been a huge win” in terms of retaining existing subscribers in Birmingham who might have otherwise switched to satellite.

Nebraska

Long before Cox Communications Inc. began rolling out new Hispanic packages, the company’s local system in Omaha began targeting the Hispanic community. “When I arrived at the system several years ago, we started looking at what we could do better, and we found that the Hispanic community [in Omaha] was clearly underserved,” says Percy Kirk, the vice president and regional manager of Cox’s Omaha division.

“We realized, quite frankly, that we didn’t have the programming to compete with satellite,” says the system’s marketing manager, Jessie Boulay. “But we wanted to get out there in the community and establish our brand. In the 2000 Census, the Hispanic community accounted for much of the population growth in Nebraska. We just couldn’t wait until we had the right programming.”

Cox executives estimate about 7% of the population in Omaha is Hispanic, a higher average than the rest of the state.

To lay the groundwork for a more effective Hispanic sales effort, the system moved on several levels. Two years ago, it began buying ads in Hispanic media and getting involved in community events such as Cinco de Mayo. About a year ago, they also formed a partnership with Order Express to sell Cox cable services at one of their locations in a Hispanic area. Since then this alliance has been expanded to three locations.

Cox executives have also hired more bilingual employees, recruiting on a Spanish-language radio station and attending that station’s job fair. In February 2004, the Cox system set up a group of Hispanic employees that offered advice on how improve its strategies. “I can’t over emphasize the importance of the employee group [that advised us on marketing, programming, community outreach, tech support and call centers],” Kirk says. “It really helped us avoid a lot of missteps.”

While most Cox systems are launching the new packages in October, the Omaha system — which serves about 185,000 basic subscribers — began offering the package in September. Paquete Latino includes 23 channels Spanish-Language programming including HBO Latino for $36.40, a price that includes $14.00 for 27 channels on limited basic, $12.45 for Paquete Latino and $9.95 for HBO. This is a big improvement over the previous Tele Latino tier, which had only 12 channels of programming including HBO for the same price. To further boost the value of the offering, Cox Omaha also bundles the video offering with its phone service, offering free long distance minutes to Mexico.

So far, the new programming and the company’s longstanding branding efforts have paid off in better-than-expected results, Boulay says. In the first two weeks of September, the system set a sales record, quadrupling the number of new Hispanic subscribers it had ever recruited in a full month. “Our goal is the double the Hispanic penetration,” Boulay says. “If we keep up this pace we will easily do that.”

South Carolina

Cable’s biggest advantage in competing with satellite for Hispanic customers may very well be the ability of local systems to adapt their programming and offerings to the needs of a very diverse community, says Mark Adams, marketing director of Charter Communications Inc.’s Southwest Division, which oversees systems serving about 200,000 basic subscribers in Greenville, Spartanburg and Anderson, S.C.

“Unlike satellite, cable has the ability and the flexibility to tailor our packages to the needs of a local community,” Adams says. In communities like Greenville, where the largest proportion of the Hispanic community is Mexican, that flexibility allows them to add more Mexican programming. “We can even add programming from a specific region of Mexico,” Adams says.

The operation can also add programming from the Caribbean and South America to serve other parts of Hispanic community where it’s appropriate, Adams says.

Charter enlisted a number of focus groups in South Carolina earlier this year to help the MSO understand the Hispanic population’s needs while it was considering how to program and price its Charter Latino package. That offering launched in Greenville Spartanburg area in June. “During [the Greenville] focus group, Hispanics asked for a specific network that we will be adding to the system,” says Adams. Charter is currently working to finalize a programming deal with the network, which Adams declines to name until the deal is signed.

More lineup changes are in the works for Charter. Adams and Charter Southeast division vice president of marketing and sales Bill Sweeney say they are going to grow the number of networks in the $24.99 Charter Latino package. “We wanted to stake our claim to this new market, and we didn’t want to wait until we had everything in place,” Adams says. “In a few weeks we will be announcing more additions. It is an incremental rollout that will become more and more compelling as we go along.” He adds that they are also move Spanish broadcasters into the Cable Latino tier.

The Greenville/Spartanburg/Anderson system has also set up a group of bilingual reps in the call center, customized its direct-marketing efforts for the Hispanic community, and established closer relations with local businesses and community organizations. “In Greenville they’ve done a very good job of building community relations, getting involved in the local adult soccer league and the Colombian festival,” says Abrams.

“We realize that making our offering attractive to the local Hispanic community involves a whole range of things,” from having the right programming to having bills and direct marketing campaigns in Spanish, adds Sweeney. “Even though we haven’t finalized the programming changes, our customers are chomping at the bit. We’ve gotten a lot of interesting feedback that we’re now using to improve what we’re doing.”

Kentucky

While Kentucky has the smallest percentage of Hispanics among the 10 fastest growing states, executives at Insight Communications Co.’s Lexington systems knew that there was a much higher percentage in their community and that Latinos would become an even bigger force in the future. “For quite some time, we were getting a lot of inquiries in Lexington for more Spanish-language programming,” notes Cindy Reynolds, the marketing manager at the operator’s Lexington district. “It was clear that Hispanics were a rapidly growing part of our community, and we had to respond.”

Corporate executives at Insight began working on a Latino plan in the fall of 2003, crafting the Insight Para Tí package that the Lexington system launched in June.

It allows existing digital customers to get the Para Tí package for under $9.95. For under $30, new customers can get the basic digital package of 23 channels, the Para Tí tier of 23 channels, (18 of which are in Spanish) video on demand, a digital box, the interactive programming guide and 45 digital music channels — including eight Spanish music channels.

Marketing that package has been a challenge. “Five years ago, the Hispanic community was really confined to a few specific areas,” says Will McDuffie, commercial properties supervisor for the Lexington division. “Today they have spread out all over the community. There isn’t really one area where you can go door to door and reach just Hispanic homes.”

That demographic reality makes “direct mail a much less effective tool, and we’ve stayed away from it,” Jackson says. Instead, she has turned to billboards and the three Spanish-language newspapers to reach the relatively dispersed population.

Providing good customer service has been another challenge. Andy Stricklin, the customer-service manager, notes they already created a Spanish- and English-speaking menu for incoming calls but that they still lack enough bilingual representatives. And some callers must wait for someone to call them back. To improve that, Insight will increase the number of bilingual employees to four by the first quarter of 2004, he says.

The system is also planning to get more active in the Hispanic community and it has been working to improve the programming lineup. Recently, it added Telemundo. “We’re learning more all the time,” says Reynolds, adding that the system has signed up about 260 new customers for the Insight Para Tí package, most of whom were existing subscribers.

So far reaction to the package has generally been positive, notes Lisette Caliguiri, a bilingual customer-service representative. “In the past they had to go to Dish to get the programming, but a lot of people lived in places that didn’t allow a satellite dish,” she says. “They really love the fact that they can get a lot of programming from us now.”

Source: States are ranked according to the increase in Hispanic purchasing power based on data from Selig Center for Economic Growth. Population data for 2003 and 1990 is from the U.S. Census Bureau. The Hispanic population data was computed from its percentage of the total population and does not represent an exact count.

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