IMGCAP(1)]
From the September 2008 Issue
Soft drink makers, presidential candidates and payment-services vendors alike are intensifying their efforts to woo Hispanic consumers in the United States. It is simply a matter of capitalistic math, as statistics gathered by the U.S. Census Bureau get the attention of anyone that has something to sell.
Census takers counted a mere 14.6 million Hispanics in the U.S. in 1990. In the official 2000 census, 35.3 million individuals identified themselves as Hispanic. Between 2000 and 2006, the U.S Hispanic population grew by another 24.3%, more than three times the 6.1% growth rate for that period of the U.S. population as a whole, according to estimates by the census bureau, which projects it will find some 47.8 million Hispanics living in the U.S. when it conducts the next official national tally in 2010.
Though one of the fastest-growing population segments, Hispanics also hold a lower percentage of credit and debit cards than does the general U.S. population, a fact not ignored by card networks and issuers eager to find their ways into more wallets. The challenge is finding the best methods to attract Hispanic consumers to U.S. banking and financial services, including cards.
Financial institutions and card brands still are experimenting with various products and marketing campaigns targeted to a variety of Hispanic subcategories: age, region of ancestry, level of assimilation, language preference, income, gender and immigration status, to name just a few. But the payments industry as a whole is getting better at crafting relevant marketing messages for a wider variety of Hispanic consumers in the U.S., sources tell Cards&Payments.
"Latinos in this country are very diverse," says Rebeca Vargas, senior vice president of marketing and communications at JPMorgan Chase & Co. "We at Chase are committed to serving all Latinos."
Room For Expansion
Some 60% of U.S. Hispanics have credit cards, while nearly 74% of the general U.S. population has them, suggest the results of two surveys the National Foundation for Credit Counseling released in June and July. And the findings from a range of studies of unbanked and underbanked consumers in the U.S. estimate that some 30% to 35% of Hispanics do not have bank accounts, which leaves plenty of room for debit card expansion.
Indeed, Visa Inc. last year spent $26.3 million on ads in Spanish-language media, according to Nielsen Monitor-Plus, a division of The Nielsen Co. (
Visa declined to agree to an interview for this article. Instead, Kevin Burke, Visa's head of consumer marketing, sent a statement saying the card brand's specific marketing strategy is confidential and proprietary. "The U.S. Hispanic segment is an important, valued and growing segment for Visa," he said.
Chase, which shelled out $7.8 million last year, ranked second in Nielsen's rankings of Spanish-language ad spending. The issuer this summer rolled out a set of television and radio ads with the new tag line "Chase. Juntos se puede" ("Chase. Together we can").
The Spanish-media campaign coincides with the "Chase what matters" English-language campaign the issuer launched earlier this year. And it is Chase's first rollout of ads that target the U.S. Spanish-speaking market since the bank's 2006 campaign with the tag line "Confia en ti. Confia en Chase." ("Trust yourself. Trust Chase.").
The "Together we can" message echoes the chant "Si se puede" ("Yes we can"), long a message of empowerment in the Hispanic community that Sen. Barack Obama adopted for his presidential campaign. "We're leveraging a sentence that is very well known in the Latino community," Vargas says. The new tagline has "a stronger message of partnership, saying 'Whatever matters to you matters to us, and we are here to serve,'" she adds.
One of the two TV ads shows a man facing a string of grumpy convenience-store clerks who demand exact change or who do not accept small-ticket payments with large-denomination bills. The ad shows the man opening a Chase checking account and informs viewers that Chase checking is fee-free when customers use their debit cards at least five times per month.
The ad "is more targeted to the unbanked and underbanked because it is promoting free checking," Vargas says.
The second ad, "Carta," shows a young man reading a statement that informs him he has overdrawn his checking account. He recalls a spree of spending on his new girlfriend to the tune of "Me Pasé de la Cuenta" ("I Spent More Than I Should Have"). The commercial ends with the reformed man on another date but using his mobile phone to check his Chase checking account, which informs him he has a balance of $750.
The ad promotes the benefit of mobile-banking services "to all market segments, both unbanked and well-banked," Vargas says.
Chase's three new radio ads also focus on free checking with debit card use, the benefits of mobile banking and how Chase can help Hispanics manage their finances.
MasterCard Worldwide, at $6.8 million, was third-biggest spender on Spanish-language credit card-services ads last year, according to Nielsen.
MasterCard's new
So the "Priceless" tag line, "Estar a la moda: No tiene precio" ("Being in fashion: Priceless"), is a joke U.S. Hispanics beyond Mexican-Americans can understand, along with a growing number of non-Hispanics familiar with the increasingly popular comic drama of Mexican wrestling, says Marcus Jiménez, vice president of Hispanic marketing and business development at Street Source Marketing Communications in Denver.
"It's always been a form of entertainment for Hispanics," Jiménez says. "Even my uncle was a wrestler, and I'm Puerto Rican."
Jiménez says the sport spectacle is enjoying a resurgence among younger Hispanics raised on similar World Wrestling Federation-style schlock. So MasterCard is smart to tap that popularity for a Priceless story line because it shows an understanding of a phenomenon particularly relevant to Hispanics in the U.S., he adds.
MasterCard is running the Luchador ad on Spanish-language television stations in 11 U.S. markets with large Hispanic populations, including Chicago, Dallas, Los Angeles and Miami.
"It's our most integrated program to date," says Chris Jogis, MasterCard president of U.S. brand development. He notes that MasterCard's revamped Spanish-language Web site, mastercardenespanol.com, provides information on MasterCard products and services, including information on using cards to pay instead of cash and tips on building credit histories and managing finances. It also features video from Spanish-language channel Univision.
And it is yet another campaign that repeats the message of debit card use over cash. "For 75% of Hispanic consumers, their preferred payment is cash," Jogis says. "So we have to educate those consumers as to how to use debit cards to monitor their spending."
Jogis says MasterCard's marketing effort does not segment U.S. Hispanics as much by age as it does by first-generation immigrants and native-born or long-term, acculturated residents of the U.S.
Such distinctions are smart, as is developing ads specifically for U.S. Hispanics instead of running the same commercials as those run in Spanish-speaking markets outside the U.S., Jiménez says. "There's a duality many immigrants on U.S. soil live with," he says. "Life here doesn't always equate with life back home."
Wells Fargo & Co. long has been aware of the divergent needs of recent immigrants and Hispanics with deep U.S. roots. The company began marketing its services–initially stage-coach and ocean-vessel delivery–to Spanish speakers in what is now the southwestern United States in the 1850s (
But Wells Fargo has improved its ethnically targeted marketing in recent years and the way it delivers financial services to customers of several ethnicities and language preferences, says Brenda Yost, the bank's senior vice president of card services.
"We've become more aware of how acculturated people are," Yost says. "There's differences between people who have just arrived from other countries as opposed to those who are second and third generation."
Financial-services providers also should keep in mind that, while some 65% of the Hispanics in the U.S. have Mexican ancestry, consumers from other Spanish-speaking countries like to see nods to their cultural traditions, too, says Juan Pablo Valdes, senior marketing director for Western Union's U.S.-to-Mexico and Latin American remittance corridors.
"We don't look at Hispanics as a homogeneous group, as many companies tend to do," Valdes says.
Lost In Translation
For example, Western Union runs promotions and ads around Mother's Day, having learned that it is the most-important holiday for sending funds home to madres in Mexico. But the company also runs ads tailored specifically for Nicaraguans on local radio stations that serve the Nicaraguan diaspora, Valdes adds.
The positive reaction to the use of humor in MasterCard's and Chase's new ads is significant because the U.S. media landscape is littered with advertisers' failed attempts to achieve cultural-insider status–and, therefore, sales–from attempted hipness and humor directed at Spanish-speaking consumers.
Such attempts include Coors Brewing Co.'s translation of its "Turn it Loose" English tag line into Spanish that means "Get Loose Bowels," and Volkswagon's pitching of its zippy cars by the Warner Brothers cartoon character Speedy Gonzalez, a Mexican caricature many Hispanics long have found offensive.
Such ethnic or language faux pas are rare, however, says Luis Salces, president of LMS Communications Inc., a Chicago-based market-research and public-relations firm. More common are straight-laced commercials created by marketers who do not fully understand their audiences. "Some companies are too conservative because they don't want to offend, so their commercials are very bland," Salces says.
In marketing to recent immigrants, payment-services vendors and financial institutions also have occasionally aroused the ire of American consumers who consider some types of outreach as condoning illegal immigration or eroding the status of English as the "official" language of the U.S.
In February 2007, a Wall Street Journal article about a small Bank of America Corp. pilot to offer secured credit cards to individuals in the Los Angeles area with thin credit files and, in some cases, no U.S. Social Security numbers triggered such a flap.
"Report: Bank of America's New Credit Card Targets Illegal Immigrants," read a headline on Fox News' Web site, and the Minutemen Civil Defense Corps called for BofA customers to close their accounts and boycott the bank.
BofA representatives declined to comment for this article other than to say the bank is conducting research of the Hispanic market.
But in February 2007, the bank issued a statement by CEO and Chairman Kenneth Lewis noting that the program was not about illegal immigrants. "It is designed to help Bank of America customers build a credit history," Lewis said. "While many people legally in our country do not possess Social Security numbers, 84% of the participants in our pilot do. The remaining 16% meet the requirements of government-issued ID."
Immigration-Reform Impact
Of course, BofA is far from the only institution to have offered banking services to consumers who do not have Social Security numbers. Chase, Wells Fargo and U.S. Bancorp (which also declined to offer an interview for this article) have offered financial products, along with financial-education events, to immigrants with Mexican matricula ID cards, passports and other forms of identification issued by countries outside the U.S.
Such tension over successive waves of immigration from various parts of the world always has been a heartburn-inducing ingredient of the American stew. So working in the U.S. and sending funds abroad can be a stressful experience, even for immigrant workers who have the proper visas and work permits to do so.
In 2006, Western Union, the world's largest international remittance company, reported that its revenue had been hurt by a renewed debate in the U.S. over immigration reform. It seemed Mexican workers in the U.S. were nervous about sending funds back home, company executives told investors.
"The uncertainty around immigration has caused apprehension among immigrants in general," says Western Union's Valdes. "So we tend to have an approach that tries to communicate the message that we value them and the hard work they do."
In 2007 and earlier this year, Western Union ran a couple of ad campaigns celebrating Hispanic customers in particular "and their hard work to send money home," Valdes says.
The immigration debate has died down a bit since then, but immigrants now face new financial concerns as the U.S. economy slows. In August 2007, as the U.S. credit crisis was ramping up, the percentage of Mexican immigrants sending funds from the U.S. to Mexico dropped to 64% from 71% the previous year, according to a report by the Inter-American Development Bank.
Even in good economic times, most consumers new to the American banking system have needed some extra reassurance and education in their native languages, according to Wells' Yost. "A lot of what we do in-language is education, to help them understand what the product is and how to use it," she says.
Web sites in several languages, including Mandarin, Cantonese and Spanish; bilingual branch staff; and participation in neighborhood street fairs and other ethnically targeted events all are important parts of Wells Fargo's marketing to customers who need or prefer to bank in languages other than English, Yost says.
Education Media
So are educational materials, such as Vias, the magazine-style guide Visa produced that Wells Fargo sent to Hispanic customers a couple summers ago. The guide "talks about debit and credit cards and how you use them, how to establish and use credit and student loans, how to save for college–all kinds of things we felt were helpful," Yost says.
LMS's Salces agrees that many recent immigrants who have little experience with any financial products or who have had bad experiences with financial institutions in their native countries prefer and need more education about American banking and payment products.
In branches of neighborhoods with high percentages of Spanish-speakers, bilingual staff members are essential for educating potential and new customers. But sending bilingual outreach staff to events such as street fairs, carnivals and financial-education seminars is important for other reasons, Salces says.
"The segment that is foreign-born has a stronger preference for face-to-face communication than does the native-born population because of the nature of the societies where those populations grew up," Salces says. In Latin America, "there's more selling face-to-face rather than by impersonal means."
That said, marketers should not assume that all Hispanics in the U.S. prefer the personal touch or to conduct business in Spanish. Factors including age, country of birth and time in the U.S. are only a few factors that drive preferences for face-to-face or electronic communication with financial-services providers, Salces says.
Four years ago, Salces was conducting a focus group of Hispanics for a major U.S. bank and card issuer. When the discussion turned to the importance of a welcoming atmosphere in bank branches, a man in his early 20s whose dominant language was English, not Spanish, dropped out of the conversation. "The man later said 'I didn't participate in that part of the conversation because I've never visited a bank. I do everything on the computer,'" Salces says.
Indeed, among Hispanics surveyed for the spring 2008 edition of Nielsen's Mediamark Research & Intelligence survey of the American Consumer, 25% paid bills online compared with 32% of non-Hispanic survey respondents that did. Nearly 19% of Hispanics made a personal purchase online, compared with 32% of non-Hispanics who did.
As younger Hispanic consumers graduate into their first use of banking services, those numbers are likely to grow. And so will the courtship of a wide variety of Hispanic demographic groups by financial services providers eager to serve this growing market. CP
