Los Angeles and its environs is an Hispanic hotbed. Of the 9.1 million people who live in Los Angeles County, 46.5 percent of the residents identified themselves as Hispanic during the 2000 Census.
Hispanic households also hold considerable sway when one considers that L.A.'s media reach includes Orange County (27.8 percent Hispanic homes), Riverside County (32.4 percent) and Ventura County (30.2 percent).
Population aside, this group carries heavy economic clout. A DRI/McGraw Hill research study projected that Hispanic households in Southern California will represent spending of between $123- to $132.5 billion in two years.
Yet with all those people wielding mucho dinero to spend, cable operators weren't really talking specifically to the segment—until recently.
Marketing executives for the major companies in the area, including Comcast Corp., Charter Communications Inc. and Time Warner Cable, concede that until two years ago, they weren't truly targeting Spanish-speakers. When they did solicit business from Spanish-speaking households, they made many mistakes. They merely translated English direct mail into Spanish, inviting misinterpretation and confusion.
Operators set price points that were too high for packages that held no compelling content for the many recent immigrants representing significant ethnic segments. They also did not analyze the population in order to provide enticements for each subgroup (29.55 percent of the overall market is of Mexican descent, while other Hispanic groups represent 17 percent).
Today, MSO marketers are playing catch-up. And perhaps the major Hispanic marketing trend that is currently emerging in Los Angeles is dropping buy-through requirements that have been a barrier to the most cost-sensitive members of the community. Most companies now offer a basic-only plus digital tier, branded with the company name and at a price low enough to attract Spanish-speaking homes.
"For the last eight years we've been focused on the overall market," said Bill Erickson, vice president of sales and marketing for Comcast in Southern California. "Today, we have billing agents and materials in Spanish and separate marketing efforts between the general market and Hispanic households. We tailor the product offerings differently."
Seducing the Hispanic marketplace is vital to Comcast, which is taking over the AT&T Broadband operations in the city. An estimated 57 percent of its non-customers are Hispanic. Overall, Comcast says that attracting Hispanic households to cable ranks among its top five initiatives this year.
The company began hiring Spanish-speaking customer contact personnel, and they are paid extra for their bilingual skills.
Targeted marketing materials now are "transcreated, not translated," Erickson said, explaining that the operator determines the message it wants to relate, trying to distill the message into no more than three bullet points for a mailer. Bright colors are selected for the design. Then, the message is turned over to a specialty ad agency, Castess & Asociados, which creates the mailer and determines the target list. Bilingual versions exist for everything from "we missed you" door tags to on-hold communication.
But most importantly the campaigns promote the company's most compelling offering: Broadband en Español. Launched in 2001, the $19.99 package includes broadcast basic, plus a 10-channel digital tier of content, including Galavision and Telemundo, Toon Disney, Discovery en Español, CNN en Español, Fox Sports en Español and CineLatino.
Although there was a "good response at first," Erickson said the tier may be revamped, based on feedback the company has received from its bilingual CSRs. Assimilated Hispanic consumers indicate they want more English-language satellite programming, while more recent immigrants request channels from their homelands of Mexico or Central America, he said.
Acquisition efforts have been supported by more image-related event participation around the city. Most recently, the operator helped sponsor the city of Los Angeles's Latinos in Hollywood benefit for the charity Centro de los Niños. The event featured screenings of fare such as Frida
and was attended by star Salma Hayak.
As AT&T Broadband, the company also attended annual events, such as Fiesta Broadway in downtown Los Angeles. Hispanics throughout the region are drawn to the event and the company staffs such celebrations with two demonstration trucks designed to sell cable, Internet services and telephony.
As a result of the efforts, penetration in the Hispanic marketplace has increased 29 percent, Erickson said, but there is still a long way to go.
Adelphia Communications Southern California systems also pass heavily Latino neighborhoods in Los Angeles and Ventura counties. It launched its low-cost digital Hispanic tier in October 2001. Executives declined to update their marketing efforts, citing the current bankruptcy proceedings. But that company's tier was marketed for $24.95 when it launched, encompassing an eight-channel digital tier. Its introduction spawned a 22-fold increase in digital upgrades among Hispanic basic-cable subscribers for the fourth quarter of that year.
Time Warner Cable, too, began proffering a low-cost digital Spanish option just over a year ago, Time Warner en Español. The digital tier includes 15 channels and can be added to the basic-only tier for just $3.95. But the company has made an effort to make as many of its English options Spanish-language friendly, too.
Research found that only 2 percent of consumers use the second audio program (SAP) feed to convert English programming into Spanish, said John Trierweiler, vice president marketing and sales for the Time Warner Los Angeles division. Most viewers don't know how to the use the service and therefore can't switch over to their preferred language before the icon disappears from the screen at the start of each available program, he said. To aid viewers, Time Warner mapped SAP programming to a separate channel, so Spanish-speakers could enjoy their programs without having to make any software changes, he explained.
Time Warner systems have 50 Spanish language or SAP channels, with the company's primary offer remaining its 250-channel full-digital offering, priced at $45.90 (basic, expanded basic and digital tiers). "We've done really well with that. We've cleared in the 15,000 [sub] range," he said.
The operator has added customer-care personnel to provide service in the Spanish language, and installed Spanish-language voice-recognition hardware for self-service options.
Yet, "clearly, in talking to the community, we haven't done our best to communicate the value of video and data to the families," he said.
While still trying to build its video-subscription customer base, the Los Angeles operation is also faced with the problem of selling newly launched products such as high-definition television and subscription video-on-demand to Spanish-speaking customers.
"Explaining all the products, all the attributes, will be a challenge," Trierweiler said. He predicted that SVOD would perform well in the Hispanic community because the group has historically been enthusiastic supporters of pay-per-view.
Charter is the latest major operator in Los Angeles to embrace the low-cost targeted-tier philosophy, launching its Seleccion Latina tier in the fourth quarter of 2002 to the Hispanic-rich communities it serves in the San Gabriel Valley suburbs. The $23.95 package includes broadcast basic and an eight-channel digital tier ($19.95 basic plus $4 tier). Other low-cost add-ons include $20 cable-modem service and $10 for HBO Latino, said Brian Gruber, vice president of marketing.
"The legacy monopoly buy-through position [was in place] for years. The key is to find what people really want in a way that still delivers positive cash flow," Gruber said. He said that affluent Hispanics fled cable for direct-broadcast satellite, but economically challenged Spanish-speaking homes rejected both technologies and settled for broadcast TV.
Charter's offering now includes CNN en Español, CineLatino, TV Chile, Canal Sur, Puma TV, and Latin TV and Vida Vision. Spanish language versions of MTV and VH1 are about to be added, Gruber said, adding the operator is shooting for a tier of between 12 and 20 channels.
"This segment is so profoundly under-penetrated that the solution is a great product, at a great price," he said.
Thus far, he labeled the response "modest." Indeed, despite three rounds of direct mail the community is not busting down Charter's doors. "We've got to find a cost-effective way to build product," Gruber said, noting that the operator has hired a Latino ad agency and is investigating new and innovative community partnerships.
One possibility is to take a page out of the DBS playbook and partner with local merchants, he said, soliciting help from local mom-and-pop outfits.
"They have credibility in their communities, authenticity," he said, noting that a commission program is in the very early planning stages because patrons already rely on those shops for such telecommunications products as phone cards. A similar program may be deployed in Armenian neighborhoods Charter serves in Glendale, too.
Even where operators aren't targeting Hispanics for acquisition, they've learned they have to be aware of possible communications problems that could impact them in the future. For instance, overbuilder Altrio Communications Inc., under construction in Pasadena, Arcadia and Monrovia, learned it was alarming Spanish-speaking residents there. Altrio is not yet targeting Spanish-speakers for subscriptions, so door hangers, notifying residents of cable construction in the neighborhood, were published in English. When alarmed Spanish-speaking homeowners confronted strange workmen in their yard, they found the construction crews spoke only English.
"We realized then they have different issues, different ways of viewing the world," said Hope Neiman, senior marketing officer for Altrio. A second printing of the door hangers bear a Spanish-language section, including calming language explaining the presence of the intruders.
Although operators targeting Hispanics for acquisition may feel they have begun to make strides against price-point problems, the greatest challenge to cable penetration remains direct-broadcast satellite providers. DirecTV Inc. and EchoStar Corp.'s Dish Network have been wooing homesick expatriates longer with a variety of channels in their own language.
Dish Network offers three packages targeted to Latinos, priced from $21.99 for 20 channels to $41.99 for an 80-channel Spanish/English package. It just added new Spanish-language soccer net Gol TV and Telemundo West.
DirecTV Para Todos has been available for three years, and its packages are big, and getting bigger.
"Cable has woken up and added this as a focus but in my opinion, they still fall short," said DirecTV Para Todos vice president Yolanda Macias, who has since left the company.
"Los Angeles is definitely our biggest Hispanic market and our largest in sales performance," she added.
For $37.99 per month, Hispanics can subscribe to Opcion extra especial, with 125 channels, including 29 local Spanish broadcasters and satellite channels. Opcion ultra especial is $39.99 for 170 channels, but adds only one Spanish-language channel.
With its foot solidly in the community, DirecTV is now refining its offer, Macias said. A market-segmentation study, examining how the segment interacts with TV, was "eye opening," she said. The company had been targeting Hispanics as a family-oriented audience group, but the study showed actual viewing is taking place on individual sets. Kids go to their rooms to watch cartoons, while Mom watches telenovelas in the den and Dad retreats to the living room for sports.
"That changed our positioning, our whole communications strategy," she said.
The Census report also pointed DirecTV toward the ethnic subgroups they should be targeting. "Most of the subscribers who take the packages are foreign-born," she said.
Tooting net's horn
When content from Azteca America, the No. 2 Mexican broadcast station, was launched by an affiliate California broadcaster, "we didn't just add it as a must-carry, we shouted it," Macias said. The DBS service touted its digital picture and sound and blasted the message that viewers could "see it better" on DirecTV.
"Our dealers promoted it, too," she added.
DirecTV has also partnered with an attractive spokesman, boxer Oscar De La Hoya.
"He appeals to females and males and he's used everywhere, even on the on-hold messages," Macias noted.
As a result, the Spanish-speaking marketplace is adopting DBS at a rate higher than English speakers, she said.
"Ultimately, it's about the programming. Cable's still not addressed this market with a breadth of programming at an affordable price," she concluded