a CNBC article.
This article was featured by CNBC in their US online business edition. It’s the result of a collaboration with the Young Presidents’ Organization — Chief Executive Network.
Special thanks to Robert Grossman for facilitating my work with CNBC editors. The original CNBC article can be found here.
A bigger, better consumer market than millennials
Ed Fernandez, start-up investor and advisor, former BlackBerry executive, and a member of the CNBC-YPO Chief Executive Network. (3 Hours Ago via CNBC.com)
With a 163 percent increase in population between 2010 and 2050, the U.S. Hispanic community will account for one-third of the country, according to U.S. Census data. The U.S. Hispanic population had purchasing power of $1 trillion in 2010 and is approaching $1.5 trillion this year — a 50 percent increase in just five years, according to a report from the Selig Center for Economic Growth.
The numbers are staggering, and the last two Census reports and election cycles have raised awareness of this community and its growth, but this consumer segment still remains underserved by businesses and brands. Such a vital market force, driven by new generations of millennials and multicultural immigrants, resembles, to a certain extent, the baby boom phenomenon. It has significant implications for the U.S economy, and it represents a growth opportunity for companies of every size.
Hispanics represent arguably the biggest consumer market opportunity in the U.S., and more importantly, they are early technology adopters and heavy technology users. They lead in adoption of new devices, they are mobile-first, smartphone power users, and they over-index in video consumption, according to a recent Google consumer survey.
Nielsen, meanwhile, has some illuminating numbers about the Hispanic population’s use of technology:
- Hispanics are adopting smartphones at a higher rate than any other demographic group: Nearly 3 in 4 Latinos own smartphones (72 percent), close to 10 percent higher than the U.S. average.
- Forty-nine percent of Hispanics said they plan to replace or upgrade their smartphone within the next six months; Hispanics are twice as likely to upgrade their tablets (15 percent).
- Data usage is 16 percent higher among Hispanics, compared with the national average.
- One in five social media users via mobile apps are Hispanic.
- Twelve percent of mobile shoppers are Hispanic.
“With one-third of the U.S. population projected to be Hispanic by 2050, businesses may well start considering the hire of talented ‘billenials’ to influence marketing, and in the case of corporations, think about expanding the board and/or executive team to embrace cultural diversity at a deeper level.” – Ed Fernandez, start-up investor and advisor, and a member of the CNBC-YPO Chief Executive Network
This resonates with my own experience. Back in 2011, when I was overseeing Southwest territories in Europe for BlackBerry, Spain was ahead of the U.S in smartphone penetration. Data and experience indicates there is a close link between Hispanic audiences, their cultural and social behavior, the dynamics in emerging markets and adoption of technologies.
When it comes to wireless, this phenomenon can be further explained by the fact that many emerging markets have fixed infrastructures still under development; therefore, mobile becomes first (and, in some cases, the only way) to access the Internet. These markets, free from legacy barriers, are a perfect test bed for future services (mobile payments, for instance).
In essence, U.S. Hispanics, as well as Hispanics in other emerging markets, are early adopters of new services and technologies.
The U.S. business opportunity
Given the strong technology adoption within this community and its cultural and social behavior with technology, U.S. businesses can seize growth of this market segment by focusing on its distinctive characteristics.
A refreshed marketing campaign that is mobile-oriented and culturally engaging will bear results. This is particularly true for the 21-million-member community of Hispanic millenials, which, according to ThinkNow’s polling, believe mobile ads provide useful information about new products and services (more than 77 percent agreed with this statement).
A recent example: Univision and T-Mobile are partnering to launch mobile services addressing the Hispanic audience.
For many U.S. small- and midsize businesses, targeting Hispanics hasn’t yet evolved beyond a straight language translation effort for existing products and services. This is perfectly understandable, as the bulk of their business remains on other audiences, but it also highlights the opportunity to grow in this consumer segments if addressed properly.
Language is, undoubtedly, a barrier to consider, but with new generations of Hispanics born in the U.S., it shouldn’t be a hurdle in years to come. “Billenials,” or bilingual millennials, as the term suggests, speak both English and Spanish as native languages, so translations no longer will be required for future generations.
The best of both mundos
It is not an either/or scenario. It’s about “and” — in the digital world, U.S. billenials search terms using both languages, even at the same time, as the Google’s report showed. They strive for the best of both worlds, naturally. Relevant content and campaign messages in a bilingual format are more effective. DISH Network, ESPN and Hyundai are among the big brands starting to mainstream their ads in Spanish, or in a combination of Spanish and English terms.
However, not all languages are born equal. Hispanics seem to be tapping into Spanish-language media for right-brain entertainment — telenovelas are still a big draw — while they tap into English-language sources for left-brain stuff, including news, according to a study from Pew Research.
Spanish proves to be more emotionally engaging and is associated more with entertainment or life values. Other, more rational elements — pricing, for instance — are conveyed more effectively in English, the preferred work-related language. Decisions, including those about purchasing, are driven by emotions but based on rationale.
With one-third of the U.S. population projected to be Hispanic by 2050, businesses may well start considering the hire of talented billenials to influence marketing, and in the case of corporations, think about expanding the board and/or executive team to embrace cultural diversity at a deeper level.
Lastly, technology start-ups and early-stage companies can benefit from this audience to secure initial market traction and early revenues. This is a critical factor for valuation and investor consideration in initial funding rounds and, later on, entering the growth phase.
In a way, U.S. Hispanic and Hispanic audiences in emerging markets represent a greenfield opportunity for new start-ups. Some venture capital firms suggest the nextUber-like valuation is going to be built by emerging markets’ entrepreneurs.
—By Ed Fernandez, start-up investor and advisor, former BlackBerry executive, and a member of the CNBC-YPO Chief Executive Network
Ed can be reached (and criticized publicly) at @efernandez
CNBC and YPO (Young Presidents’ Organization) have formed an exclusive editorial partnership consisting of regional Chief Executive Networks in the Americas, EMEA and Asia-Pacific. These Chief Executive Networks are made up of a sample of YPO’s unrivaled global network of 20,000 top executives from 120 countries who are on the front lines of the economy.
Zeitgeist · ed fernandez 