Hispanics are Hot, Others are ... Not?

  When it comes to the payments industry, Hispanics are hot. The population is growing, and there is a diverse choice of media to reach the community. Issuers are hungry to form bonds with this powerful group of U.S. consumers.
  But other ethnic groups are at risk of becoming also-rans in the card-marketing contest.
  Many of the industry's name-brand advertisers downplay campaigns targeting specific ethnic groups, claiming they do not have the resources. But marketing experts note that means the industry is missing out on opportunities in the U.S. black and Asian markets
  Evidence suggests there is room for card growth among several ethnic groups. A recent study found that Caucasians make up 83% of all payment card-carrying consumers in the U.S., blacks, 6%; Asians, 5%; and Hispanics, 4%. The Edgar, Dunn & Co. PaymentDynamics 2004 Preferred Card Study drew data from an online survey of 6,525 consumers, with questions on payment card ownership, behavior and attitudes.
  Hispanics made up about 12.5% of the population in 2000, according to the U.S. Census. Blacks came in at about 12.1%, while Asians totaled nearly 3.6% of the population, the Census data show.
  No ethnic group has been courted more for everything from votes to money than the U.S. Hispanic population. Card marketers see big obstacles but bigger opportunities in that market.
  The major hurdle is the lack of banking experience, as 56% of U.S. Hispanics do not have accounts, let alone credit and debit cards. Limited English skills, lack of financial literacy, concerns about citizenship requirements and bad experiences with banks in their home countries all are part of the Hispanic marketing landscape.
  Marketers also must be careful about making assumptions with U.S Hispanics. The community falls into a variety of smaller categories, including English- or Spanish-language dominance, country or region of origin and length of time in the United States, as well as the endless list of classic marketing factors that cross ethnic boundaries such as earnings, age and religion.
  Fortunately for marketers seeking to reach a wide swath of Hispanics, the Spanish-language television stations in any major U.S. city include not just Abuela's traditional soap operas, but the tattooed and pierced young rockers of MTV En Espa?ol.
  MasterCard International was the first credit card company to launch a specific Spanish-language television ad campaign based on its "Priceless" ads. MasterCard also sponsors internships, organizations and events such as the Hispanic Heritage Awards.
  In 2004, MasterCard began to sponsor "Tu Dinero," a financial education talk show hosted on Radio Univision by bilingual financial guru Julie Stav. Now MasterCard sponsors her show on the Univision television network. Issuers are frequent guests of the show.
  Amy Fuller, MasterCard group head of Americas brand development, says MasterCard's Hispanic-specific marketing is only in Spanish through Spanish-speaking media, which has become increasingly expensive. "It's a tough segment because the media inflation in reaching them has driven pricing up," she says.
  To make sure those increasingly pricey ads are effective, MasterCard conducts a lot of its own primary research of the Hispanic market, research that covers a lot more than card-payment preferences. "One of the things that we do is to invite them to talk about things that matter to them," Fuller says. "We say bring in a picture of an event that is the most important event in the past year."
  Some of the assumptions about marketing to Hispanics hold true, Fuller says. "The importance of the extended family and children, the importance of preserving values of their home countries, that hasn't changed," she says.
  Nor has the popularity of soccer among American Hispanics. "This may seem like a no-brainer, but we are a sponsor of the World Cup," Fuller adds. "It's extremely relevant to this audience."
  Suzanne Lyons, executive vice president and chief marketing officer of Visa USA, similarly recognizes the variety of subsegments within the Hispanic demographic. "The Hispanic market is a number of different markets," she says. "People who just arrived from Mexico are very different from people who are from Puerto Rico."
  Visa, however, does not segment its Hispanic advertising, but it provides foundational materials to its members, says Lyons. Those issuers then have the option to fine-tune the message. Much of the material highlights credit education, security and plastic over paper as a payment method.
  One spot airing on Spanish-language television networks in the U.S. shows two young men competing for the attention of the same woman outside a movie theater. Each scrambles to be the first to get tickets so he can invite her on an impromptu date. A strong wind blows one man's cash out of his hands before he can buy the tickets, but the other uses his Visa check card, which gets him the tickets and the girl.
  Banking relationships in the United States in the past 40 years started with a savings account, followed by a checking account and on to a credit card. But for many issuers and community banks, remittance services and prepaid card products are the first step in getting Hispanic customers in the door.
  Minneapolis-based U.S. Bancorp, with its 2,370 branches in the Midwest and West, is trying to build relationships with these offerings. "If an individual signs up for our secured credit card product, we will offer them a free checking account," says Alice Perez, the bank's Hispanic market manager. U.S. Bancorp gets out into the community, staffing bilingual booths at street fairs and co-sponsoring local events attended by Hispanics.
  In 2001, U.S. Bancorp became one of the first financial institutions to accept the Mexican Consulate's Matricula Consular identification cards for use in opening accounts, sending remittances and other services. Since then, the bank has worked with nonprofit organizations to cosponsor eight visits to the Minneapolis area by the Chicago Mexican Consulate's mobile unit. At a June church event, the consulate staff helped Mexican citizens apply for Matricula cards. Meanwhile, the bank extolled a secured Visa card along with remittance services that allow users to move money between debit cards held in the United States and sister cards in Mexico.
  Such efforts make a big difference, Lyons says. "The Hispanic community is looking for a company dedicated to this marketplace," she says. "You can't just go in and translate a brochure and think you've got a program."
  Efforts Vary
  American Express Co.'s Open Network program for small businesses has an advisory council that includes representatives from diverse groups, according to a spokesperson. AmEx also buys ads in ethnic-specific U.S. magazines, though all the advertising is in English.
  The actual spend on these efforts is a guarded secret of issuers, the associations, AmEx and Discover Financial Services, issuer of the Discover card. The major industry brand names are especially coy about efforts to court blacks and Asians.
  Saul Gitlin, executive vice president at Kang & Lee Advertising, says that many firms still are gauging the success of their Hispanic campaigns before branching out. "The industry is trying to understand the Hispanic market," he says. "They are going after the volume (of customers) there."
  Visa, for example, uses the same message to blacks as it does with other consumers, says Lyons. "Our products (range) across the economic spectrum and consumer life cycles," she says. "We've not felt a need or heard from our members" to conduct campaigns specific to blacks.
  Discover takes a similar approach, marketing to all audiences at once, according to a spokesperson. "There is no specific target," the spokesperson says. "(We seek) everyday people for everyday (card) use."
  MasterCard says it does not create ads specifically targeted at blacks, but it does make a point of broadcasting ads on networks such as Black Entertainment Television and in publications such as Essence, Vibe, and Black Enterprise.
  Lumping black consumers in with other consumers does not cut it, contends Ken Smikle, president of Target Market Media, a Chicago-based marketing consultant that focuses on black consumers. Consumers react to messages based on their group experiences, so card issuers should follow the example of such consumer-product companies as McDonald's and Ford that have been consistent marketers to blacks for over 20 years, he says.
  Smikle recommends that issuers start by working with black-owned ad agencies to tailor marketing campaigns to the black consumer. "You have to get a guide that knows the terrain, someone that's been there," Smikle says. The market is huge, with 38.7 million blacks controlling $656 billion in earned income in 2003, according to Target Market Media.
  A campaign should integrate national, regional and local advertising and use a mix of media and community events, Smikle says. He says card organizations should buy ads in major black-oriented magazines, and on BET television and influential radio stations. They should then seal the deal by building a presence at events with resonance such as the annual Bud Billikin parade in Chicago and the Bayou Classic football game among black colleges. These local events get national pick up through cable and broadcast television.
  Target Market Media has found that cause-related and philanthropic events have a special appeal to black consumers, a conclusion confirmed by the PaymentDynamics study. It found that blacks prefer affinity cards at twice the percentage rate of the general cardholding population, says Ronald G. Mazursky, an Edgar, Dunn director. These affinity cards often are tied to a college or philanthropy, he says.
  Card Preference
  The most preferred card among all cardholders is the debit card, with 38% saying it is the first card out-of-wallet. Nearly 60% of black cardholders said that debit was their preferred card, according to PaymentDynamics.
  Mazursky says that the Asian segment is the opposite of blacks when it comes to card preferences. A standard credit card is the most preferred card for Asians, cited by 32% of those surveyed, followed by 24% that prefer cobranded credit cards.
  Despite these numbers, Visa, MasterCard, AmEx and other household brands do little advertising in Asian media, Gitlin says. That is despite the fact that Asians in the U.S. generally have higher education and comparable income levels to Caucasians. Those findings caught the attention of insurer MetLife and brokerage house Charles Schwab, two firms that have been buying in-language ads in media serving the Korean, Indian, Japanese and Chinese markets in the U.S. for about 10 years, says Gitlin.
  There is also payments opportunity in the small-business market, where 900,0000 Asian-owned small businesses generated $302 billion in revenues in 1997, the most recent year such statistics are available, Gitlin says. "There is a huge business-to-business (card) market that is almost completely untapped," he says.
  Like Hispanics, in-language materials are necessary to reach Asian consumers, as 70% of the market is foreign born, according to IW Group Inc., a Los Angeles-based advertising agency that caters to the Asian market. (Visa provides in-language educational material in Mandarin Chinese.)
  Clearly, ethnic marketing presents challenges. Separate, in-language materials should be prepared for the Hispanic and Asian markets. Some black consumers are reluctant to work with banks because of a history of loan discrimination. And it is no secret that many black and Hispanic consumers need financial education, as many continue to patronize expensive neighborhood check cashers and payday loan outlets.
  These are challenges that many consumer-product firms already have overcome. Yet when it comes to ethnic marketing, major card-industry firms have barely begun.
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