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2014

Franklin Rios, the 41-year-old president of Luminar Insights, was on his way to LAX airport in Los Angeles, California, in August 2013. He was scheduled to catch an evening flight to Atlanta, Georgia, where he would meet with executives from The Home Depot, Inc.

Home Depot had been a regular advertiser with Luminar’s parent company, Entravision Communication Corporation, a Spanish-language media and information services company based in Santa Monica, California, focused on the U.S. Latino population. In the upcoming meeting, Rios planned to discuss Home Depot’s interest in acquiring Luminar’s data-based insights about Latino consumer patterns. Selling insights about the U.S. Latino population to companies like Home Depot was critical to Luminar’s business model, but it was also an important long-term strategic goal for Entravision.

With more than 100 television and radio properties and $223 million in 2012 revenues, Entravision had been serving media and advertising to the U.S. Latino consumer for 17 years. Faced with challenging shifts in the media industry, however, Entravision’s executive team recognized the need to transform the company from a broadcasting group with an advertising revenue model to an integrated information and technology company that would add revenues from sales of analytics and technology services focused on the U.S. Latino markets.

The key idea behind this strategy, crafted in 2012, was to create a separate business unit in which a core capability was using data to analyze consumer behavior among U.S. Latinos and describe how that behavior differs from one region to another, even from one city to another. Television advertisers wanted such detailed consumer analyses of Latino communities, but actually having such information was as yet unheard of among television advertisers. Providing it promised to give Entravision an edge with advertisers who wanted to reach a growing Latino market that had, collectively, more than a trillion dollars in purchasing power.

But Rios had already discovered that many businesses wanted Luminar’s insights about the U.S. Latino market independent of their interest in buying media spot advertising with Entravision. The new business unit had already won such clients as the California Milk Board (the “Got Milk” folks), Nestlé, Publishers Clearing House and General Mills, each of which was paying Luminar to sell them insights about different Latino groups.

As Rios entered the LAX terminal, he says he considered Luminar’s key strategic challenges:

Luminar is going to help us figure out whether Entravision can become more than a Spanish-language broadcast company.

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About the Author:

Renee Boucher Ferguson is a contributing editor for the Data & Analytics Big Ideas Initiative at MIT Sloan Management Review.


Photo Credits

Map tiles by Stamen Design, under CC BY 3.0. Data by OpenStreetMap, under CC BY SA.

References

i. Entravision Communications Corp., 2012 Annual Report, “Entravision is the largest affiliate group of both the top-ranked Univision television network and Univision’s UniMas network, which reach 96% of the Spanish speaking broadcast audience.” http://www.annualreports.com/Company/3086

ii. "Television Broadcasting Industry: Market Research Reports, Statistics and Analysis," ReportLinker. http://www.reportlinker.com/ci02097/Television-Broadcasting.html

iii. “What a Publicis-Omnicom Merger Means for Media Companies,” Jeanine Poggi, Alexandra Bruell, AdAge, July 29, 2013. http://adage.com/article/agency-news/a-publicis-omnicom-merger-means-media-companies/243360/

iv. “America’s Corporations Can No Longer Ignore Hispanic Marketing Like Mitt Romney Did,” Forbes, November 12, 2012. http://www.forbes.com/sites/glennllopis/2012/11/12/americas-corporations-can-no-longer-ignore-hispanic-marketing-like-mitt-romney-did/

v. In its report “State of the Hispanic Consumer Market: The Hispanic Market Imperative, Quarter 2, 2012,” Nielsen named the 2010 and 2011 top ten Spanish-language advertisers by revenue as Procter & Gamble ($226M), Bancorp (193M), Dish Network (160M), McDonald's (131M), AT&T (130M), Verizon (126M), Toyota (100M), General Mills (95M), Kraft Foods (92M) and General Motors (91M). http://es.nielsen.com/site/documents/State_of_Hispanic_Consumer_Report_4-16-FINAL.pdf

vi. Pew Research has identified the 14 largest U.S. Hispanic populations, in order of size, as: Mexicans, Puerto Ricans, Salvadorans, Cubans, Dominicans, Guatemalans, Colombians, Spaniards, Hondurans, Ecuadorians, Peruvians, Nicaraguans, Venezuelans, and Argentineans. http://www.pewhispanic.org/

vii. According to MarketingCharts (September 24, 2013), “An analysis of Nielsen data and publicly released Kantar Media figures indicates that while Spanish-language TV accounted for only 5.9% of total expenditures in 2011, this overall segment has generally grown more rapidly than TV media overall for several quarters now. During 2011, Spanish-language TV spending grew by 8.3% year-over-year, compared to 2.4% growth for TV media overall. In 2012, that trend continued with Spanish-language TV revenues jumping by 15% compared to the overall figure of 8%." http://www.marketingcharts.com/wp/television/data-dive-us-tv-ad-spend-and-influence-22524/

viii. “State of the Hispanic Consumer: The Hispanic Market Imperative,” Nielsen, Quarter 2, 2012. http://es.nielsen.com/site/documents/State_of_Hispanic_Consumer_Report_4-16-FINAL.pdf

ix. The AHAA: Voice of Hispanic Marketing: Hispanic Fast Facts. http://ahaa.org/default.asp?contentID=161

x. According to the U.S. Census, the projected Hispanic population of the United States on July 1, 2050 will be 132.8 million, up from 52 million currently. According to this projection, Hispanics will constitute 30% of the nation's population by 2050. Source: Population Projections http://www.census.gov/newsroom/releases/archives/population/cb08-123.html

xi. http://mitsmr.com/entravision-video

xii. W. Chan Kim and Renee Mauborgne, “Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant” {Harvard Business Review Press Books, 2005)