Luminar Insights

Introduction

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. We have to evolve if we are going to survive in the long term. We know there are lots of companies that want better information about the Latino market, and we think our analytics service offers a distinct and valuable set of insights, but a big open question is whether we will be able to maintain this advantage if and when our competitors create their own analytics to understand this market.

Franklin Rios

Originally from Nicaragua, Rios left home in 1982, when the revolution and the subsequent conflict between the Sandinistas and Contras forced many to emigrate. He lived in Cairo, Rome and Mexico City before finally settling in Los Angeles. He began working at Galavision, a Spanish-language cable network owned by Univision Communications, where he was employed as a traffic assistant.

While at Galavision, Rios met Walter Ulloa, who was managing some of the network’s California properties, just before Ulloa struck out on his own to cofound Entravision. Through the years, the two stayed in touch as Rios watched Entravision grow its national presence, go public and enter new markets, including Rios’ new home, Denver (which had a miniscule Latino population at the time).

In the back of his mind, Rios always thought that he would like to work with Ulloa again — he was highly respected in the field, with tremendous market foresight — and to be a part of Entravision.

By 2003, Rios had cofounded a Spanish-language advertising agency, Rios Group. The company specialized in TV and Internet creative and media buying advertising, SEO [search engine optimization], SEM [search engine marketing] and establishing CRM [customer relationship management] database marketing and processes for its clients. Three years later, in 2006, Rios went to work for Vertis Communications where, as the vice president of interactive sales and marketing, he developed interactive and direct-response campaigns by integrating clients’ loyalty database and consumer behaviors.

In his subsequent role as president and chief revenue officer of Enterprise Solutions at Infogroup (a big data company before the term was coined), Rios led a turnaround that included integrating seven business units into one sales and operations Center of Excellence.

Collectively, Rios’ professional experiences forged a path to understanding the power of utilizing big data to extract very targeted market insights — and forged a path, finally, to Entravision.

Entravision

Founded in 1996, Entravision is a diversified Spanish-language media company. It owns and operates 53 TV stations across the United States.¹ It also operates 48 Spanish-language radio stations, making it one of the largest groups of Spanish-language radio stations in the United States. The company has multimedia assets in 11 U.S. regional markets, over 100 local web properties and also connects with the U.S. Latino community through social media, mobile phones, newsletters and email promotional sites.

In 2008, Entravision launched a digital business division to bring its content to digital audiences through websites, video and online streaming. The move would help it counter the rapid fragmentation of the broadcast industry that has seen audiences move from network to cable to satellite to Internet access of media content. Luminar would be the next big step in that transformation.

Broadcast: An Industry in Flux

Advertising has been driving broadcasting revenues since the industry got its start in radio in the 1920s. According to Nielsen, global television advertising revenue in 2012 totaled $557 billion, accounting for 63% of advertising spend for the year.

In recent years, that business model has begun to shift due to several factors. First, television advertisers have more ways to reach customers. Fifty years ago, television advertisers had their choice of three commercial broadcast networks, which together held 90% of the television audience. The top ten broadcast networks today reach less than 40% of the overall television audience.²

Second, new digital technologies make it possible to skip advertising, which makes it difficult for broadcast companies to set accurate advertising rates. Third, most television advertising is purchased through advertising conglomerates like Interpublic, Publicis and WPP, a group that is consolidating and acquiring digital businesses. These acquisitions are giving television advertisers more leverage with setting advertising rates with networks and better insights about their target audiences, putting traditional broadcast companies like Entravision at a competitive disadvantage.³

Advertising to U.S. Latinos

There is a broad market view that advertisers could improve the effectiveness of their media spots that target U.S. Latinos, if only they could learn more about the consumer habits of this fast-growing, diverse community.

Despite its massive size, expected growth and consumer buying power, advertising dollars directed at the Latino market have often been lumped in with what advertisers refer to as “total market strategies” that combine non-Hispanics and Hispanics into a single pool. Many argue that this strategy misses the Latino consumer’s “cultural values, preferences and passion points” that can influence buying preferences.⁴

The reason many advertisers miss the mark: A fundamental lack of insights into Latino consumer behavior. While general market advertising has utilized data and analytics for some time (through, for example, online targeted ads), Latino insights are derived through surveys conducted two to four times a year, by two dominant players: Nielsen for TV and Arbitron for radio (Nielsen acquired Arbitron in September 2013).

Nielsen and Arbitron essentially do samples of marketplaces and come up with audience estimates. For the Latino market, that means a small percentage of the population, about 50,000 Latinos, fill out surveys, or “diaries,” to help determine things like household income, family size, ages, occupations and buying preferences.

Entravision and competitors like Telemundo Communications Group, Inc. and Grupo Televisa S.A.B. use this survey data to sell advertising to marketers interested in reaching the Latino population: automakers like Toyota, fast food retailers like McDonald's, service providers like AT&T, and consumer packaged goods companies like Procter & Gamble.⁵

On a national level, surveys provide a useful directional approach. However, when advertisers seek regionally specific data — Latino buying habits in Los Angeles versus Dallas or within one of the many different communities of Hispanic origin⁶ throughout the U.S. — the survey information falls flat. There are simply not enough signals within the survey samples to describe or explain regional variations.

As a result, advertisers have difficulty answering questions about this target market, including:

Does your product have a certain business cycle? Are your customers rural or are they urban? Are they Spanish-dominant, bilingual, or is English the best way to reach them? What’s the share of wallet within a determined radius of a location?

“There’s not an agency out there or a client that doesn’t struggle with some of these questions,” says Entravision executive vice president of national sales Eddie Melendez. Consequently, broadcasters to Latino markets do not get a representative share of the total marketing wallet, even though the U.S. Latino market is a valuable, fast-growing market.⁷

Providing better, data-driven insights into how this growing population behaves is one of several factors that led to the creation of Luminar.

The Impetus for Luminar

A synchronicity of events led to the creation of Luminar as the big data insights unit of Entravision.

In 2011, Walter Ulloa read an article in The Economist that talked about the tectonic impact that big data was having on the advertising industry. It wasn’t an idea that shocked him, by any means. But it did make him ponder the implications of big data with regard to the future of the broadcast industry. In Ulloa’s words:

I don’t know where the TV and radio model is going. This model — having affiliates distribute the programming of networks in markets across the country — may not hold up going forward. I say this even though we’ve built a pretty successful business on it, and I’ve worked within this model for over 30 years now. It’s already seen such heavy fragmentation as a result of different technologies. I don’t know when it will stop. So I’ve been thinking a lot about what does the next stage of our development look like? Is it going to look like the first? I don’t think so.

While Entravision collected massive amounts of data on its audience base, like many organizations it wasn’t putting that data to much use. The question was, how?

Meanwhile, Rios had been mulling the potential impact of big data on the Latino consumer market. As he was winding up the turnaround at Infogroup, he read a book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, (Harvard Business Review Press, 2005)¹² that had a tremendous impact on his thinking. In Rios’ words:

I saw an opportunity: how can we take new technology, like big data technology, and apply that technology in a manner that can make everyone out there irrelevant? When you shift the conversation from sample data to empirical data, which is what Luminar is doing, then the competition becomes irrelevant. We have today transactional data in every single category that advertisers and marketers care about, on over 15 million Latino adults.

Rios contacted Ulloa with the message that there was an area of big data that related to media in general, but to the Latino consumer specifically, that had not been tapped. The two agreed to meet in Los Angeles.

Rios presented his idea: combine external, transactional data with Entravision’s internal data to create very specific insights about Latino consumer behavior, and sell those insights to Entravision’s media buyers.

Ulloa felt Rios’ idea had merit. He felt, in fact, that it had the potential to differentiate Entravision from the rest of its media peers. It dovetailed with far-ranging conversations he had been having with his chief strategy officer, Esteban Lopez Blanco, about the impacts and potential for big data. In Lopez Blanco’s words:

Walter and I were having that conversation, but it was just a conversation. We were not thinking about initiating anything. Neither the concept nor the strategy was materialized. It was soup. And then Franklin came, and Franklin had a vision that nobody was looking at multicultural data, particularly data for Hispanics, the way that Google, Facebook, Apple and Amazon look at data. He brought an entrepreneurial enthusiasm that I had never seen before.

Ulloa hired Rios as a consultant with the mandate to develop a feasibility study, with Lopez Blanco as the sponsor of the project. Ulloa had two objectives in mind: One, find a way to use big data to grab more media dollars, and two, find a way to use big data technology to make Entravision more data-centric. He would approach the board once the feasibility study was complete.

Code Name: Latin Math

In early 2012, Rios and Lopez Blanco began hashing out the feasibility study for Luminar, then code-named Latin Math. They looked at what services they could provide to customers to drive revenue. They looked at the data that would be accessible, and the potential technology needed to drive insights. They looked at where they could realign Entravision around data.

The result: a 5-year plan with growth and revenue targets for years one, two and three. There would be an initial 6-month ramp-up time, in which Rios and Lopez Blanco would focus on multiple tracks: technology, business model development, revenue generation and, in Rios’ words, “whatever else we needed.”

Rios and Lopez Blanco then began securing management support from the rest of the company to launch the big data initiative.

Getting Buy In

Rios and Lopez Blanco presented their plan to Entravision’s board of directors and its executive team, including chief financial officer Christopher Young and chief operating officer Jeff Liberman. The reactions of the team were hesitant optimism, at best. In the words of Lopez Blanco:

We presented our ideas about big data, and many in the room were just scratching their heads with an expression that said, “these guys are nuts.” But being nuts is good. That means you’re pushing the envelope on some perspective. We went, we shocked, we explained.

Entravision’s board consists of six members, including Ulloa and his cofounder Philip Wilkinson. The youngest member of the board is 55, the oldest 83. While savvy, accomplished businessmen (there are no women on Entravision’s board) the implementation of big data — a bona fide buzzword — as a strategic asset, a revenue generator, was not on their radar. “Some of the board were skeptical. But others were supportive,” said Ulloa. “They thought that we were going in the right direction, but that not everything you try is going to work.”

Liberman was one of the executives scratching his head:

I was there when Franklin first came in and started talking to us about big data. I was like a deer in the headlights, because they were talking about stuff that I never really looked at before. I first sat in that room with Franklin and said, “What do you mean? What does ‘big data’ even mean?” I was thinking as a broadcaster, saying, “how am I going to use this?”

Then I said, “wait a second, I have to take off my broadcaster’s hat and start looking at this as just a flow of information, and look at things in different ways, through analytics.” It just really clicked at that point.

Finance

With a board quorum in place, Rios worked with Entravision’s CFO Christopher Young to set up a separate profit-and-loss statement for Luminar. This was no small consideration for Young. In his words:

My heightened focus was on year one, and then doing a pro forma analysis of what that meant to us as a company. Figuring that out, without getting a lot of heat from the outside investor world, without the revenue, that was a struggle for me. Because all I saw were expenses and no revenue for the first year.

We often have spirited debates internally over capital expenditures in excess of $100,000. That’s part of my job, to ensure an efficient use of capital. So to have a big-ticket outlay well beyond this level without corresponding revenue in year one for an operation that no one else has tried, certainly no broadcaster has ever tried? And in a venue that not only has nobody tried, but the argument in house still hasn’t been fully satisfied? That’s a tough one for any CFO.

As part of his due diligence, Young, along with Rios, got on the phone with a very large retailer that has its own in-house analytics unit, and explored the concept of building an analytics niche within the U.S. Latino marketplace. In Young’s words:

They put it very succinctly: there was nobody else out there doing it. They loved the concept because they’re trying to figure out how to approach Latinos by using data analytics themselves. That was the first stepping-stone for me.

Sales

As executive vice president of national sales, roughly two-thirds of Entravision’s revenue comes through Eddie Melendez’s department: national spot TV, radio and digital. But winning over Melendez, executive vice president of national sales, would be no easy task.

Melendez was included in a second round of meetings with executives to talk about big data and Luminar. He felt squeamish about representing an analytics service if it were a part of Entravision. Others did as well. To present it as an Entravision offering — to Entravision customers, partners and competitors, as well as outside prospects — would endanger credibility. In the words of Melendez:

Luminar needed to be — and it is — completely separate. We’re quick to tell clients that we don’t know what kind of results they are going to get from Luminar. We can anticipate based upon what we’ve seen, but we don’t know. It’s a completely separate part of the company because it doesn’t make sense for us to say, “Let me introduce you to Franklin. He’s going to tell you how great my assets are.”

The Technology Launch

While Luminar had a budget, it wasn’t huge. And while Rios had the “go” on Luminar, he still needed to figure out the how, in terms of developing a technology infrastructure and filling it with content.

To get there, he and Lopez Blanco headed to a Strata conference, where a presentation titled “Big Data on a Shoestring” caught their attention.

The two met with the presenters and another consulting firm and laid out the business rules of what they were hoping to accomplish. They asked for recommendations for the best way to achieve their goals, from a technology perspective. A company, akin to a general contractor, was brought on board to help determine requirements and select vendors.

In the end, Rios chose to implement a big data technology platform, hosted by Amazon, as well as integrated business intelligence and visualization tools. Additional vendors were hired to conduct data processing, cleansing and standardization, and records matching from multiple sources, as well as to load analytics models.

The Data

After a frank assessment of what data would be necessary — and available — to achieve Luminar’s ends, four main legacy systems were targeted. Two of the systems — an accounting suite and a call system that manages planning for major capital expenditures — are owned by Entravision. Two others are licensed from partners: a traffic system that schedules the billing and advertising time that runs on TV, radio and digital and the Nielsen and Arbitron systems that do the ratings for Entravision’s media properties.

Extracting information from the partner owned systems proved to be the more difficult challenge. In the words of COO Liberman:

We’ve had to deal with some bumps in the road. For example, our traffic system partner was telling us that they own the data, not us, and we were arguing with them about who owns the data and how we can get to it. And when we told them that we want to get this data, they said they have no way of doing it. Then they came back saying, “For $650,000, we’ll open the door to you. We’ll build the connections, not you.” So we’re working with somebody else. We’ve actually moved two or three of our systems to companies that understand the need of big data, and they’re willing to open the door to us.

The Aha Moment

With the Luminar platform up and running — and with Ulloa’s backing — the Luminar team began showing the analytics findings to Entravision customers. Along the way, something interesting happened: clients started asking Luminar to perform analyses beyond standard media buys. In Rios’ words:

We started showing the results to clients, in connection to increasing their media budgets with the Entravision properties. Clients then began asking us, “Hey, can you do a predictive model for me on these other markets, for these other categories?” And the requests had nothing to do with media; they were purely to do with driving better efficiency, or purely for them to know what the market penetration was in a particular DMA [designated market area], and what a 2% or 3% lift could mean to them, and how the competition was stacking against them for the Latino consumer.

That’s when Rios and Lopez Blanco had the aha moment: Luminar could offer its own analytics insights, services and technology, beyond those for Entravision customers.

To better define its strategy, Lopez Blanco suggested an advisory board. He and Rios tapped their professional network and, after the non-disclosures were signed, gathered the group in a room to tell them what they had in mind. Included were the head of analytics from Home Depot, the head of Latin insights from Google, representatives from two of the industry’s major advertisers and Entravision’s C-suite.

Rios asked the advisory board how they would like Luminar insights presented to them. The outcome: a products roadmap, which includes a Web-based tool to enable companies to identify key Latino behaviors with regard to a product, category or trading area; a Customer Decision Engine that inputs customer data into Luminar’s analytical models, and generates insights; data refinement services; and data cleansing and integration services.

An important component of Luminar’s analytics services is the ability to “mash-up” disparate data sources, including ingesting client data. Ingesting customer data provides the foundation on which Luminar conducts its analytical solutions and delivers insight via the Customer Decision Engine. Many of the deliverables anticipated with Luminar’s quantitative analysis are based on having an enriched data set.

The first step in enriching a customer's data set is to isolate those Latinos in the customer file. This matching process is derived from the blending of customer data set with Luminar’s 15 million adult Latino data store. It’s important to note that there are only 28 million adult Latinos in the U.S., and Luminar’s data set of 15 million represents nearly 53% of all U.S. Latinos. The Luminar data covers over 70% of all U.S. Latino adult transactions. This would allow the Luminar team to achieve a high match percentage to work with.

A New Analytics Service

Rios was determined to set Luminar apart from other analytics providers:

We didn’t want to reinvent the wheel. Some off-the-shelf models already exist for predicting consuming behavior. About 60% of the models we use are of this type. The remaining 40% is what gives the secret sauce of what we do, because these models use a distinct cultural lens.

Luminar’s data scientists are themselves Latinos. Not acculturated, second- or third-generation U.S. Latinos, but culturally fluent Latinos based in Mexico (there are nine data scientists in Mexico City) and Argentina (where there are 13 business intelligence analysts). During its digital launch, Entravision had hired skilled technicians in both countries. Rios tapped that network to find data scientists to model Luminar’s data “in culture.”

This group creates, tests and refines proprietary algorithms that analyze licensed data from six unique sources. These vendors draw on transactional data from online and offline businesses. Luminar can associate nearly 2,000 data points with an individual, enabling fine-grained analysis of Latino buying patterns. For example, Luminar can determine regional differences in buying patterns for a given Latino holiday using only transactional shopping cart data.

In a twist, its Luminar Audience Platform, for online audience buying, enables Luminar to take offline transactions — from a brick-and-mortar store — “cookie-tize” each transaction and connect to an IP address. In turn, online ads can be targeted to offline behavior.

With Luminar’s senior management support, Rios’ team focused on its twin mission: Use the team’s insights: Use the team's insights to enhance Entravision operations, and to acquire external customers.

Internal Realignment

Stakeholders

For the other half of its mission with Luminar, Rios focused on three internal departments: Finance, Operations and Sales. To facilitate the change management process, two or three members from Luminar’s team were assigned to each department and a project manager, or quarterback, from the department was assigned to the project. The goal: align each function around data, and enable departments to talk with one another. In Rios’ words:

I had the idea to tie our management software to our traffic system, to our finance system, in order to have more effective management. Because selling television time or radio time is like selling an airline seat. When the flight takes off, the empty seat next to you cannot be sold. You want to make sure you’re maximizing your inventory as you sell more empty seats.

Finance

Luminar defined two core initiatives within Finance that would generate the greatest efficiencies from big data: integrated finance and forecasting (through Tableau). A year into the project, CFO Young figured his team was perhaps in the second inning of a nine-inning game. Even in early stages, the insights from Luminar had been transformative. In Young’s words:

We’ve got a guy in our accounting group who had some database management skills. We put him together with Franklin, and boom! Within three or four months we’re getting real-time data on our revenue performance, day by day. If we had to wait for our traffic system, which is our billing system, it would have been once a week. To be able to slice and dice data — revenue data, expense data — on a day-to-day basis is phenomenal. You look back and wonder how you ever managed your business before these guys came into the room.

Next steps include integrating accounting reports into Salesforce.com, which would in turn be integrated with sales management processes. Once the two departments could see the same data, they could converse.

While senior management had been watching the progress, the field generals and those in Entravision’s markets have yet to access Luminar’s big data capabilities. That is the next phase of the rollout plan. Young is expecting some pushback:

I can tell you exactly who is going to push back: The guys and gals who have been doing the same thing for 20 years and they’ve got their system, and they don’t like to change with the times. Well, that’s going to change, so you either adapt or you don’t. And if you don’t, you’re in trouble, because we need everyone to be working in sync with this.

Operations

Within Operations, four focus areas were defined: research, equipment, and the integration of the Luminar Audience Platform (LAP) and an event management database. LAP is an advertising platform in support of Entravision’s online digital media sales channel. LAP brings a real-time bidding solution to Entravision’s online advertising that enables advertisers to focus on targeting audiences, rather than simply targeting consumers based on inventory. By “onboarding” Luminar’s 15 million Latinos offline data into an online asset, Luminar can deliver precise behavioral targeting to audiences based on the same transactional characteristics of consumers delivered offline.

The team first focused on being able to tie together revenue with expenses and view the combined results through an analytics lens. The result: massive efficiencies. In the words of Liberman:

Looking at a client across all of our platforms was not an easy process. Extracting data from the legacy systems, it was market by market. And it’s hard to cross markets. I would send an email out to my team, asking, for example, what McDonald's spent in January. Then I had to wait on people to read their email, research that number in the marketplace and get back to me. And when you’re trying to turn around proposals or businesses or ideas, you don’t have the luxury of time anymore.

Now, being able to set up some parameters with a click — which stations, which market, which regions, which revenue streams — and being able to run a report from anywhere in 20 seconds to a minute, it’s just eye-opening. It’s changed us completely. We were reliant on pushing paper, looking at one spreadsheet trying to match it up to another report. Analytics has brought everything together.

More importantly, analytics has required a mindset shift in operations. In the words of Liberman:

Any time you’re trying to change someone’s behavior, there’s always obstacles in getting there. When we started, it was, “Franklin is crazy. We can’t get this done. You can’t look at data this way.” So it took a [mindset] change. It’s really educating, training, talking, explaining, so people understand what’s actually going on, and showing people that it’s going to make their daily tasks easier.

We have people that are doing jobs and all of a sudden, when you say, “we’re going to change that process,” they start thinking, “do I still have a job?” or “I don’t have a job.” Our response was very simple: We need you and your knowledge to analyze data rather than to produce data.

The group has also done a lot of work to reorganize its research division, creating more of a business intelligence approach to the unit, through analytics. Research employees are now focused on providing strategic insight to the sales division, versus gathering traditional information. The shift has created, in the words of Ulloa, an entrepreneurial spirit within the unit. It’s also saved Entravision upwards of half a million dollars, in year one. Luminar’s analytics turned up better insights than the traditional research material Entravision had been licensing for years. In early 2013, it cancelled a long-standing relationship with its research vendor.

Sales

While the Luminar project would focus on three separate areas of alignment within Sales — inventory management, yield management and forecasting — Luminar’s influence has been felt the most on the front lines.

When Luminar launched, Melendez and his team included one slide describing Luminar in its presentation deck. And half the time that slide wasn’t presented. After Rios helped Melendez obtain a meeting with United Healthcare, Sales now includes three to four Luminar slides in his team’s sales deck. But that, too, was an evolutionary process. Melendez had to feel his way through explaining what it was that Luminar would provide to clients and prospective customers, so that he and his team could present Luminar confidently. On a sales trip to New York, he realized what he had to do to bring the Luminar message home for clients and prospects — and cement his own understanding of Luminar:

We were struggling to give customers real-life examples of the questions marketers have that Luminar can answer. On the subway that night I called Franklin, and I said, “Okay. Give me the top ten questions that people want to know when they’re going through a project.” I actually created a slide that says, “These are the types of questions you have; Luminar can answer those questions now.”

Being able to identify and solve those questions brings it all home. Luminar has helped us get deeper into the agencies we’re already with and it’s helping substantiate advertisers in categories that we didn’t have before.

Lessons Learned

In their initial business plan, Rios and Lopez Blanco assumed it would take one or two months to close sales, but it took eight. And when deals weren’t closing they were left questioning whether they had the right product, the right packaging or the right marketing. In Lopez Blanco’s words:

The first bump in the road was thinking that we were enlightened; that we would just show up in a room and we’d enlighten everyone else. The connection would be there and they would say, “Let’s do business.” But this enlightenment that I’m talking about, it actually was a process. We needed to explain two things: the tidal wave of Latinos and the tidal wave of big data. And then we needed to explain the intersection between them and what that means. You would think that’s an easy thing to do, but it was very difficult.

There was another misstep: they underestimated how difficult it would be to build customer trust, in order to analyze their data. Again in Lopez Blanco’s words:

That was a challenge, having companies saying, “Why am I going to give you all my data?” “Because we’re going to help you,” we said. Their response: “Yeah, sure, yeah, yeah.” So we went more modest. We said, “Okay, fine, don’t pay us. Let’s start.” So we got people to trust us. Then they opened the data. They gave us information. We were able to have two, three, four case studies. And they got to the ‘aha moment.’

Once these customers saw the value Luminar brought, Lopez Blanco said it was easy to have an economic conversation.

What's Next?

From a revenue standpoint, Luminar is targeting to deliver positive earnings (EBITDA) in 2014. In the meantime, there will be continued capital investment. And as Luminar’s engagements get larger, there will be an expanded capital requirement. Is there a ceiling? “If [Rios] brings home the big contracts, we’ll fund them,” said Young.

But perhaps Melendez said it best with regard to Luminar’s prospects:

I want to get deeper in the agency. Us coming in and doing the same old thing we did in 1996 is not going to get us anywhere. We’re not different. We’re not progressive. The digital side got us moving. But big data and Luminar, this is the next thing. You constantly have to evolve and separate yourself in this industry. I think Luminar is giving us that right now. So, you’ve got to ride it. You got to ride that horse.