Hispanic audiences, and $1.5T in buying power, trend toward OTT

By Samantha Bookman

As the online video market heats up, increasing attention is being paid to one of its fastest-growing consumer segments: the Hispanic viewing audience. Increasingly, Hispanic OTT viewers are young, technologically savvy, and have increasing buying power. But are online video providers and advertisers reaching this potential powerhouse demographic?

For Hispanic viewers, finding compelling content online is still a challenge. Univision and Telemundo, as the largest cable channels in the U.S. targeting this demographic, provide a centralized and well-branded presence. But online--despite the emergence of online players like multichannel network MiTu--Hispanic viewing options are still fragmented.

Hispanic time viewing digital video

According to Nielsen, Hispanics watch more online video on average than the full American population.

The lack of options in online video for Hispanics is especially noteworthy when one looks at the size of the Hispanic market in the United States. There are more than 52 million Hispanics residing in the U.S., with a combined potential buying power of $1.5 trillion, according to studies by Nielsen and PricewaterhouseCoopers. An Advertising Age report says that the average age of U.S. Hispanics is 28--about 10 years younger than the average age of the overall U.S. population. More than 60 percent of Hispanic households in the U.S. have Internet-enabled smartphones, and more than 52.2 percent of Hispanics watch video on their smartphones.

The PwC study also noted that 43 percent of Hispanics are streaming mobile video, compared to just 25 percent of non-Hispanic viewers. And Hispanics watch 90 minutes more digital video on devices than Americans on average.

Further, "The average Latino spends more than eight hours viewing online videos each month, which is more than 1.5 hours longer than the U.S. average in Q3 2013," Nielsen noted in its February 2014 Digital Consumer report.

Limited online viewing choices

Despite the numbers, Hispanic viewers have limited options for online video keyed especially to their demographic, and content is scattered. Hulu, for example, offers a few Hispanic-only series and movies via its Hulu Latino section. Yahoo Screen offers a Spanish-language version of its video site.

MiTu has become a breakout MCN, with more than 55 million subscribers on a network of 1,300 partner channels. It raised $10 million in a funding round from investors including the Chernin Group, and just announced a $15 million Series B funding round led by Upfront Ventures and including AMC Networks. It partnered in August with Mexico-based Televisa to develop and distribute programming across multiple platforms, and it syndicates some of its content through AOL's online properties. It also partnered with Maker Studios in September to provide "branded content opportunities" for advertisers looking to reach the Hispanic market.

DirecTV in December launched Yaveo, a $7.99 monthly SVOD service aiming to draw in both U.S. and Latin American subscribers.

Cable network Univision has been busy the past few years making its programming available to its multiscreen-savvy audience. It has had a TV Everywhere offering since mid-2012. The company in 2013 debuted Flama, a youth-themed, predominantly English-language online video outlet featuring original shorts and viral video clips. Notably, Univision live-streamed the 2014 World Cup matches to anyone who wanted to watch them, no authentication required--at least up until the semifinals. That boosted its concurrent live streams by 262 percent over the 2010 World Cup, and the company noted that the first seven days of the event resulted in the most visits ever to its digital properties.

For Univision at least, those are great numbers for live streaming. But Hispanic-only programming isn't necessarily increasing yet, partly because advertisers are only just increasing their spending and focusing in on their audience targeting online.

Looking for ads in all the right places

In 2013, Procter & Gamble was the biggest advertiser to Hispanic viewers, spending $335 million overall, which was 36 percent more than it spent advertising to the same demographic a year earlier. AT&T, the second-highest spender on advertising to this group, spent just $124.7 million, AdAge found in its study.

AdAge Hispanic media spending 2013

P&G amped its spending in Hispanic media 36 percent in 2013. (Source: AdAge Hispanic Fact Pack, July 2014)

L'Oreal, Mcdonald's Corp., T-Mobile US, Dish Network and Walmart all placed in the top 10 as well. Walmart in fact increased its spend by 61.1 percent year over year to $92.12 million, and St. Jude Children's Research Hospital increased its spending in the Hispanic market 201 percent, to $107.57 million.

But when it came to Internet advertising, AT&T, which spent far less, topped the companies that gained the most impressions. P&G landed in second place--suggesting that the companies' targeting is different.

Hispanic display ads 2013

In website display advertising, AT&T gained the highest amount of impressions. (Source: AdAge Hispanic Fact Pack, July 2014)

Why do advertisers and online providers miss as big a target as the Hispanic audience? A big factor is not so much a language barrier as a cultural barrier.

Reaching the right crowd

A 2013 blog post at Content Marketing Institute still holds true as we zoom into 2015. Knowledge of the culture, the ability to engage the Hispanic audience, and the willingness to invest in this audience segment are key, Zubair Talib wrote in a post titled "3 Reasons Your Brand Content Won't Connect With Hispanic Consumers."

Univision's Flama is one of the company's digital properties.

Univision's Flama is a great example of an aspect of the U.S. Hispanic culture that many potential advertisers miss: It's Hispanic content, presented primarily in English. "So what exactly does 'English-language Hispanic-targeted content' mean? In a nutshell, it means content with specific cultural relevance to U.S. Hispanics," Talib said.

But, he warned, "The most important thing to remember when creating targeted content is that U.S. Hispanics are a diverse and heterogeneous demographic. There is no 'one-size-fits-all' Hispanic content strategy."

Zeroing in on just one aspect of Hispanic culture is a key part of the strategy for digital media provider Latin Everywhere. The company, which has a YouTube channel, recently launched a beta test of Pongalo, a website and mobile app designed to aggregate and stream the content it currently owns or licenses.

Pongalo website

Mobile-friendly streaming service Pongalo will feature a simplified interface designed with smaller devices in mind. (Source: pongalo.com)

"We know our audience really well, we've been programming for them for a long time," Jorge Granier, co-founder of Latin Everywhere, told FierceOnlineVideo. "They're a mobile-first audience."

Having control over that mobile experience is part of the reason why the company decided to acquire Inmoo, a provider known for streaming indie movies, to gain its streaming infrastructure rather than go to a third-party provider. The move will help Latin Everywhere customize Pongalo for its audience's unique needs. That customization will be found in "very small things" when it comes to the site and app's look and feel. "You don't have to make sweeping changes," he said.

For one thing, simplicity is key to the app. "Not because they're not savvy but … a lot of Hispanics do not have a landline connection, just mobile. It's important that we not replicate a website experience," Granier said.

Even the app's color schemes and palette need to fit the tastes of the audience, he explained.

Pongalo will feature mainly telenovelas--Spanish-language soap operas, which have a big following--in its first months of operation. "It's a content vertical we know very well," Granier said, noting that the ability to binge-watch is a must-have for the company's audience. "(Fans) will watch all 150 episodes (of a series), not just 5 episodes."

Latin Everywhere's Pongalo is targeting mainly fans of telenovelas at the moment, but the company has plans to expand into other verticals, and hopes that as a content aggregator with complete series, it will attract a much larger audience to its SVOD service.

The approaching Hispanic OTT boom

Advertising to Hispanic viewers online hasn't blossomed--probably because a large-scale Hispanic OTT provider hasn't yet appeared. But things may not stay this way for long.

Dish's Sling TV will feature Univision content.

Univision, for example, will increase its viewer reach with a newly announced deal to make 10 of its cable channels available on Dish Network's new OTT service, Sling TV, later this month. It appears to be both a smart strategy to increase its online audience, and a small insurance policy against the possibility of the approval of Comcast and Time Warner Cable's planned merger--which would make Comcast the dominant pay-TV provider in 19 out of 20 of the nation's largest Hispanic markets.

"Hispennials," or Hispanic millennials, are the "It" consumer this year, MediaPost predicted in a November article. "To win with Millennials, marketers must win with Hispanics--and winning with Hispanics means digital," MediaPost's Lee Vann wrote.

Mobile only video Hispanic audience

Hispanic millennials made up 40 percent of the mobile-only video audience in 2014. (Source: MediaMetrix)

Thanks to the predominance of mobile devices among Hispanic consumers, online video is rapidly becoming a "must-have" among the demographic, the article notes.

Online video's leading popularity among Hispanic viewers makes for a very attractive opportunity. Online video players need to devote a much bigger share of their time and money to this diverse group--meaning 2015 could indeed be a boom year for the Hispanic market segment.

Hispanic audiences, and $1.5T in buying power, trend toward OTT