Spanish lesson: Carl Kravetz says advertisers must identify likely buyers, then target them in the appropriate language.

STANDING 6'4" and bearing a Ukrainian-Jewish surname, Carl Kravetz doesn 'tilt the stereotype of the Hispanic consumer. Nevertheless, he has become a spokesman for the market as the new chairman of the national Association of Hispanic Advertising Agencies. He is also chairman and chief executive of cruz/kravetz: Ideas, an advertising and marketing strategy agency he co-founded in 1991. Kravetz moved with his family to Mexico City, before his first birthday and staved there until returning to the states for college. He worked for several large adverting agencies in Mexico before moving to Los Angeles in 1991 to open cruz/kravetz. Original partner Tony Cruz died several years ago at 44. The agency now has 30 employees and billings of $35 million. Clients include Denny's, El Polio Loco, and WellPoint Inc. Kravetz has devised a future strategy for the entire U.S. Hispanic market. He believes it should not just be defined only by its language but by more sophisticated metrics that take into account its growing complexity.

Question: What is the state of the Hispanic advertising business today?

Answer: It's now a $5 billion business--still only about 2 percent to 2.5 percent of total advertising spending in the U.S. today. But when we started AHAA 10 years ago, $1 billion looked like an almost impossible target. Our agencies exist thanks to the fact that the general market agencies didn't get it. It created an opportunity for a lot of small independent agencies. Most of those are now owned by large advertising holding companies. Only a handful of us remain independent and are significant in terms of billings.

Q: How about the language issue? Until now, the Spanish language has defined Hispanic marketing.

A: Right. The business was originally started to reach out to consumers who were not being targeted, primarily because they only spoke Spanish. But close to 50 years later, we see that the major growth in the Hispanic marketplace is children of immigrants who were born in the U.S. or educated in the U.S., and very well may have a preference for English, even though they may retain some Spanish. So if we only do Spanish, we're marginalizing ourselves. We're defining ourselves as agencies that speak to immigrants. Whereas the reality of the Hispanic consumer today is that they come in many shades and languages and interests and levels of education. The market has become as complex as the general market.

Q: Where does that put agencies like yours?

A: English vs. Spanish is not really the issue. The issue is to identify the Hispanic who is most likely to buy the product our client has to sell, and then target that consumer in the appropriate language or languages. The Hispanic agencies of the present and the future have to become more skilled in doing creative work in English, Spanish and a blend of the two.

Q: How do you see the market evolving over, say, the next 10 years?

A: It's clear that the bulk of growth in the marketplace now is coming from what demographers call "net natural increase." That's the excess of births over deaths. So we're talking about U.S.-born Latinos, much more so than immigration. What we see are two very different groups of Latinos in this country: A slightly older immigrant population, and a very fast-growing U.S.-born and U.S.-educated population. It's a divergence and bifurcation of the marketplace.

Q: And in Los Angeles?

A: The typical Hispanic household in Los Angeles will have both Spanish-dominants and English-dominants living in it. So it has become a far more interesting business. We used to do everything thinking of the Spanish-dominant immigrant consumer. Now we have to think more holistically about how to reach families as a whole, not just individuals.

Q: What are the implications for marketers?

A: The growth is just phenomenal. If you look at Census Bureau projections, by the middle of the century Hispanics will make up 25 percent of the total population. Now you might say, "Yes, but most of those will speak English," which is absolutely true. But there are significant differences when you start to look at culture, values, beliefs and behaviors. Simply the fact that the numbers are so massive means that advertisers throughout the country will have to focus on those beliefs and behaviors in order to successfully grow their companies. Here in Southern California, we are living the future. We are already where the U.S. will be 50 years from now. Hispanics in Los Angeles are no longer a minority population; they have emerged and are the general market population.

Q: What would be your advice for small and middle-sized advertiser--maybe regional advertisers?

A: They really need to look at the population holistically. figure out which segments speak Spanish and which speak English, and recognize that it's no longer an emerging population. They're going to have to look at segmenting markets and segmenting messages. Yes, it's more expensive, because it means you have to do two things instead of one. But on the other hand, they're leaving money on the table presently by not selling to one of the two groups. So it should more than pay for itself if they dedicate the necessary resources to the job.

Q: How about the media? Are most of your billings still in Spanish-language television?

A: Yes, mostly in Spanish-language television and radio. But that's because the change is only beginning to take place. We're just a few years into substantive English-language Hispanic media.

Q: What are your recomendations for media in English?

A: I've been doing a little bit of English for 20 years, but it was narrowly focused print media. Then we started to see radio stations in South Texas, in the Tejano or TexMex format, with DJs that spoke both (languages). They accepted advertising in English or Spanish. The latest thing is English-language television targeting Hispanics. Here in L.A., we have LATV. SiTV is quite well distributed on cable. MTV has just re-launched its Spanish channel as MTV3, and it's language neutral. It will do good programming, whatever the language. We are on SiTV and buying Hispanic print vehicles. We will do more of that as the media develops.

Q: Historically, Spanish-language media has cost less than English-language media, and as a result, advertisers had a better rate of return on their investment. Is that trend holding?

A: The trend isn't holding. As the Univision (television) stations have moved into first place in many markets, the price differential is shrinking dramatically. Starting this year, Univision, Telemundo and TV Azteca--the three major Hispanic networks--are going to be measured under the same rating system as general market networks. The fact that we've moved to that sends a message that Univision and Telemundo are no longer looking at each other as the competition, but are seriously looking at ABC, NBC, CBS and Fox as the competition. They definitely want the same dollars for the same number of eyeballs. Eventually it will be at parity. And that's fair--a consumer's dollar is worth the same no matter where the consumer is coming from.

Q: And the other piece--the return on investment?

A: It's still true today. But it won't always be true. Eventually, the Hispanic consumer will become just as cynical, hard to reach and hard-boiled as the general market consumer.

Q: And the media to reach him or her will cost the same?

A: The same. Today, Hispanic consumers are still relatively untouched. They receive a much smaller number of sales messages in any given day. They receive them from a narrower band of competitors in any given category. In fact, there are still categories in which a company could still be the first mover. There are categories that are stunning for their lack of attention to Hispanics.

Q: But the beverage companies, the car companies--that level of marketer has jumped on board. From where do you see new advertisers coming into the market?

A: A number of places: Technology. The computer companies have not jumped on board in any significant way. The gaming companies have not really jumped in. Fashion companies are not really targeting this market. Oddly enough, the toy companies have not targeted this market. Their assumption is that children speak English. But children don't have money, their morns do, and they speak Spanish.

Q: And the pharma companies?

A: Pharma is way behind. When I turn on the television in English during prime time, 60 percent of the ads are either automotive or pharmaceutical. When I turn on the TV in Spanish, automotive is at the level it should be, but pharma is just about invisible.

Q: Financial services?

A: Quite strong when you talk about basic banking services. Most of the national banks now are at least talking about checking and savings. When you move into investment services it's still not really happening.

Q: Television is considered expensive for small or mid-sized companies. Are there cable or radio options?

A: Radio is an incredibly strong medium for Hispanics. In fact, Hispanic radio really saved the whole AM band. Most Hispanic radio formats still target the immigrant. Among the youth we're starting to see crossover. Print is vibrant in this marketplace. We have La Opinion and Hoy, plus a lot of weeklies and special-interest publications. Cable is still not that strong. With Spanish language you only have a couple of options: Galavision, SiTV. Not a lot of ad-supported cable TV. But if you are looking at the young English-dominant demographic, there are options on local television buys. Fox has traditionally done very well. But on cable we are starting to see ESPN in Spanish and Fox Sports en Espanol. Cable is interesting when you are targeting men.

Q: How about direct marketing?

A: Direct is very powerful and response levels tend be higher than the general market for the simple reason that Hispanic consumers are not overwhelmed by the quantity of direct. They still only receive 1 percent or 2 percent as much direct as the general market consumer.

Q: Traditionally, messages in the Hispanic market were family-oriented, often simple. How would you advise people on that?

A: Beware of oversimplifying. We did it for many years, and smart advertisers today dig deeper. They find the most appropriate segment, and then they address that segment with the most appropriate message.

Q: How does that differ from today?

A: The old way of looking at the Latino market, focusing on children and family, was very similar to American advertising in the 1950s. Advertisers looked for lowest common denominator advertising. Until recently, that was the case in Hispanic advertising. They were trying to simplify the consumer into one model. The lowest common denominator seemed to be family, as proved true of the general market in the 1950s. As we segment the market, we find segments for which kids and family are strong, particularly the immigrant group. But if you look at other generations and other segments, those same messages may not be as important. Youth tends to define itself more as youth than as family. Men in some categories are very family-driven. In other categories, their interests in activities like sports or work drive them.

Q: How about your own family?

A: I'm married to someone I call a stealth celebrity. People in the general market have no idea who she is, but the Latino market knows her very well. I'm married to Aliza Lifshitz, known as "Doctora Aliza." She not only practices full-time at Cedars-Sinai in internal medicine, but she is the TV, radio and print doctor for the Hispanic community. She's on both radio and TV with Univision, and she writes a column for La Opinion.

Q: Those are two different careers.

A: Yes, she's a nice Jewish girl from Mexico City who has practiced medicine here in Los Angeles for more than 20 years. I look up to my wife as someone who has managed to combine what she does for a living and social welfare.

Q: What do you two do together?

A: I collect both primitive art and Latin American graphics and photography. I'm an avid traveler--the more exotic the location, the better. The last significant trip my wife and I took was to Papua-New Guinea, to combine our travel and primitive art-collecting hobbies.

Carl Kravetz

Title: Chairman

Company: cruz/kravetz: Ideas

Born; 1953, Boston

Education: B.S. & M.S. in Public Communications, Boston College; M.B.A., UCLA 

Career Turning Point: Decided to leave Mexico City advertising industry to focus on the U.S. Hispanic market

Most Admired People: Charles Darwin, Albert Einstein, Jeff Bezos and Steve Jobs 

Hobbies: Collects primitive art

Personal: Married to Dr. Aliza Lifshitz, practicing physician at Cedars-Sinai, health columnist for La Opinion, commentator on Univision

JOEL RUSSELL

Staff Reporter