It’s the same story almost every year: Media buyers downplay their interest and networks talk up their appeal in the weeks ahead of the mid-May upfront, during which the bulk of Hispanic television advertising goes on sale. But this year is different. At the top of the list of reasons why: Univision and ratings.
“Univision is for sale, but no one knows if that should or might impact the speed or pricing of the upfront. Everyone is aware and cautious and guarded on that issue,” said Isabella Sanchez, vice president and director of media services for The Bravo Group. According to Sanchez, the other hot topic is Univision and Telemundo’s switch from being measured by the Nielsen Hispanic Television Index to the Nielsen Television Index.
Additional factors shaping this upfront include the significant drop in Telefutura’s ratings and the continued strong growth of Latino cable channels in English as well as Spanish. The latter is due to the steady increase in networks, penetration and viewership.
There is nothing media buyers can do about the impending sale of Univision Communications Inc., but they are actively contesting the use of NTI ratings as the basis for buys in this upfront. Univision announced its switch in December and was quickly followed by NBC Universal-owned Telemundo.
MAINSTREAMING THE NIELSENS
The move by both networks to the mainstream audience-measurement service used by the English-language networks has generated a great deal of interest, but only a few months of data. Depending on the daypart and the network, it has also generated sizeable variations in ratings.
In some dayparts, there can be more than a 10% difference in results between NHTI and NTI. The differences might eventually be accounted for by perfectly normal statistical variations or could be the result of problems with either sample. With only a few months of data to study, it is difficult to know which may be the case.
“I think we’ve got a quality Hispanic sample in the NTI. That being said, it is not identical to NHTI, and we are going to be running them in parallel so we have time to learn and understand the differences,” said Doug Darfield, senior vice president of Hispanic services for Nielsen Media Research. Both services will be measuring Hispanic audiences through September 2007.
“NHTI is still the coin of the realm,” said Kathy Alexander director of national media for Spot Plus y Más. “It is too early to push everyone off the cliff without knowing the differences between the samples. We will be negotiating and buying based on NHTI [and] we don’t necessarily have to buy in the upfront.” Alexander believes the results from the two measurement services will “blend out over time and by September 2007, we’ll have the data we need.”
Others prefer not to discuss the ratings issue.
“I don’t even want to go there,” said Nancy Tillet, vice president of media for Siboney USA.
WILL BUYERS BUY IN?
“If Univision becomes very arrogant on the NTI issue and inflexible, we may just say we’ll wait a while or your share won’t be as great,” said one Hispanic media buyer who requested anonymity. There is a widespread perception among media buyers at Hispanic agencies that Univision is actively pushing the use of NTI.
Dennis McCauley, Univision’s co-president of sales, responded, “We think [NTI] is the better service, and we are going to try and convince our advertisers and clients that is the way to go.”
“[Telemundo] will be working in both [NHTI and NTI],” said Steve Mandala, senior vice president of sales, marketing and distribution. “As a sales organization, we are much more focused on how to meet clients’ marketing needs than on which currency we use to transact business.”
As for Azteca America — the fourth and smallest Spanish-language network, after Univision, Telemundo and Univision-owned Telefutura — president Adrian Steckel said: “We are thinking about joining NTI. … We probably will. We’ll make a final determination and make an announcement at the upfront.”
Despite the uncertainty surrounding the measurement service used to measure the Hispanic market, it is clear Spanish-language broadcast advertising will definitely show growth this year.
“This year’s market will grow faster than either one of the previous two upfronts. Spanish-language television’s growth far outstrips any other type of broadcast media,” said Steve Mandala, Telemundo Networks’ senior vice president of sales, marketing and distribution. “The reason for that is advertisers are increasingly recognizing the value of this consumer. New advertisers are seeing the opportunity and continuing advertisers see the need to exploit the opportunity further.”
Telemundo expects to add five new pharmaceutical brands, two to three additional retail clients and one or two new wireless companies. This plus increased spending by existing wireless clients. Telemundo, along with its English-language cable network mun2, is benefiting from significantly higher ratings during the past season.
THE MARKET LEADER
Telemundo’s ratings, while much improved, still pale in comparison to market leader Univision. The bulk of television spending in the Hispanic market still goes to Univision, which provides by far the biggest and broadest Spanish-language audience. Univision routinely places fifth and often fourth in the 18-to-34 demographic among all networks, regardless of language.
However, Univision’s second broadcast network has been weak. Telefutura has experienced significant ratings declines and has already promised a programming revamp will be announced at the upfront.
“That’s a big problem … They took their eye off the ball and, as a result, their numbers have just tanked,” said Alexander. “Between NTI and the Telefutura drop and some viable frequency alternatives in cable, I think Univision is going to be disappointed in their revenue increases. I think they are nervous, especially in view that they are for sale.”
Still, there are a limited number of marquee properties in Spanish-language broadcast television, and a fair number of mass-market advertisers that must be there for the reach. Furthermore, Univision has doubled its business development staff and made plenty of presentations to agencies and brands that have not yet taken the plunge into the Hispanic market.
“You are looking at numbers that are so large today, so large and geographically concentrated, that how can you do business in the top 10 markets unless you have a good Hispanic strategy?” asks Nielsen’s Darfield.
And a good Hispanic strategy generally includes a Spanish-language broadcast buy. The reason is simple. “The Hispanic media universe is not as fragmented as the general market ... That is a competitive advantage of Spanish-language media,” said Mark Stockdale, T-Mobile’s director of Hispanic marketing.
Before or after the sale, with or without NHTI and whether in the upfront or during the course of the year, Univision is very likely to both attract new clients and extract additional revenue from existing clients. Certainly, it has had great success selling this summer’s World Cup soccer tournament. It has only one thirty-second commercial available in each of the 64 matches.
The World Cup inventory sold for more than $180 million, which includes long-term advertising commitments.
Overall, Univision’s sales increase is very likely to be enough to make its slower-growing English-language broadcast counterparts green with envy. But it may not grow so fast as to please its eventual new owners.
Spanish-language television viewing patterns are shifting — and there is more cable viewership — but Hispanic TV watching remains strongly concentrated in broadcast, with an 86 share among those 18 to 49.
A THROWBACK MARKETPLACE
“It is miraculous. It is incredible. It is a dinosaur from the era of the three networks,” said Javier Escobedo, managing partner of Ole. Escobedo is convinced this won’t last and believes cable offers interesting opportunities.
Despite obvious strengths, Spanish-language broadcast networks and Hispanic media buyers are not immune to the pressures facing the overall market and particularly the devaluation of the thirty-second spot.
“It is interesting. A lot of clients have asked us to do zero-based planning for ’07,” said Oswald Mendez, vice president of media at The Vidal Partnership. “Let’s not cut and paste the same deals as last year. Let’s do an overhaul of the contact point and determine the ones that are going to drive the right ROI.
“It is an interesting year for network TV. They are going to have to step up to the plate and offer more flexibility, more opportunity to measure ROI, more integrated solutions. A lot of them preach integration but don’t practice it very well.”
A CABLE CONSENSUS
Unlike with Spanish-language broadcast, where buyers and networks have contrasting viewpoints, when it comes to Hispanic cable there is a widespread consensus. English- and Spanish-language cable is showing growth and becoming much more appealing to advertisers. And buyers typically point to the success of direct-broadcast satellite programming packages — DirecTV Inc.’s “DirecTV Para Todos” and EchoStar Communications Corp.’s “Dish Latino.”
“I find cable some of the most interesting turf because of all the expansion. I think there is a lot more specific programming if I want to reach specific targeting,” said Tillet of Siboney USA. “There is just a lot more niche opportunity, so I can go from a mass Hispanic audience to a more-targeted one, and that is good from my perspective.”
In a World Cup year, it makes sense that Spanish-language sports networks such as ESPN Deportes, Fox Sports en Español and GolTV should get particular attention.
Colgate-Palmolive advertised for the first time on ESPN Deportes this year and PepsiCo Inc. on GolTV, while Nissan increased its commitment to Fox Sports en Español. All of the buyers cite their interest in a specific demographic: Latino men. They also cite the accommodating attitude of cable channels sales departments.
“They gave us huge amounts of flexibility,” said Mendez, in reference to FSE. Mendez’s agency represents Nissan in the Hispanic community and had a specific mandate from the client to come up with something innovative.
What he devised, along with production company Animus Group, was a reality show inspired by the VH1 program Bands Reunited, except with a soccer motif designed to maximize its appeal to Latinos and particularly Mexican-Americans.
The show’s premise is the reuniting of the members of U.S. and Mexico teams that faced off in 1997 as part of the World Cup preliminaries. The result was a scoreless match and an obvious disappointment for fans of both teams. Over the course of four hour-long episodes, the presenter conveniently drives a $26,000 Nissan Titan scouring the U.S. and Mexico to track down former players and persuade them to play in a rematch sponsored by Nissan and scheduled for May 21.
The latter episodes will feature the training and practice sessions of the players ahead of the game to be played at the 27,000-seat Home Depot Center in Carson, Calif.
Given the large base of fans who watch Mexican league soccer on Univision and Azteca America, there were at least two viable broadcast options for this program. “As a matter of fact, we shopped it around,” said Mendez. “Univision is the mother ship. We did think about it, but we wanted a partner that would allow us to have more of a say when it came to the content.”
FSE paid for the programming and, in return, got a year-long commitment from Nissan. “I think broadcast has to fight to stem the erosion and cable will continue to benefit from the migration of viewers to cable,” said Tom Maney, Fox Sports en Español’s senior vice president of advertising sales. “They see the ability to be creative, to reach an audience that is maybe a little higher in household income.”
Maney said for last year’s upfront, FSE had 35% growth in sales volume. It expects a similar rate of growth this year. “The genie is out of the bottle in Spanish-language cable television,” he said. “Three years ago there were 10 Spanish-language cable networks, and now there are 25. Cable has gone from a 7 to a 14 share. Next year it may hit 16 or 17. In five years it may reach 23.”
BIGGER, BUT STILL SMALL
There is significant growth in Spanish-language cable, though from a much smaller base than broadcast, where the biggest bucks remain.
But Michael Schwimmer, CEO of English-language network Sí TV, dismissed the increased flow of advertisers into Spanish-language cable as “lemmings running into the sea.”
“The Spanish-language cable market is small and will remain small,” he said.
“Add up [DirecTV] Para Todos, Dish Latino and all of the cable customers, it is a very small pool and it will grow but won’t grow at the rate of the young Latino [audience] ... Spanish-language cable is a niche business and English-language cable for mainstream cable is a mainstream business and fundamentally different as it relates to advertising,” said Schwimmer, who helped launched Dish Latino in his former role as an EchoStar executive.
“I’ve seen and heard of more advertisers looking to segment the market into more than just Hispanic, whether broken out by language or acculturation; and that does have media implications,” said Ken Deutsch, media director for Grupo Gallegos.
“Hispanic marketing is rapidly becoming more sophisticated,” said Ole’s Escobedo, who believes it is myopic to focus so much attention on the upfront. Yet the upfront is where the bulk of the action remains.
“Both Nielsen services validate that there is a tremendous number of people watching Spanish-language television every day,” said Sanchez of The Bravo Group. Despite the different dynamics peculiar to this upfront, she said “marketers continue to recognize they need to be in the upfront and firm up their key properties.”