Ten years ago, Jaime lived outside Managua, Nicaragua, worked in a shoe factory and took college classes. The then-35-year-old did not own a car and shared a house, a TV and a stereo with his parents, along with his brother and sister- in-law. Both Jaime and his brother helped his parents pay the rent, and the rest of Jaime’s paycheck went toward saving for a move to the United States.

Now Jaime lives in Daly City, Calif. He works as a bookkeeper in San Francisco and rents a house with his girlfriend, Aura, and her 12-year-old son, Juan. Together they share a car, own a TV, a computer, a stereo and cell phones.

They got on the Internet five years ago and Jaime spends about two hours a day online, surfing the Web and doing email. Aura has difficulty reading and does not use the computer at all, but her son spends about an hour a day playing computer games.

Jaime reads news about Nicaragua at the La Prensa website and reads U.S. national and local news in Spanish at the Univision and StarMedia sites. He also regularly reads the Latino Channel on AOL, especially for entertainment and sports news.

The La Prensa site also helps keep him up to date with his favorite baseball team, El Boer, as well as delivering news about his other hobbies – following the Brazilian soccer team and seeing what’s happening in the boxing arena. To follow news about his new local sports teams – the San Francisco Giants and the 49ers, he watches TV. He also uses the Spanish version of Western Union’s website, geared for U.S.- based Hispanics, to check exchange rates, but he goes to the physical location to send money back home.

For his past two trips to Nicaragua, Jaime bought plane tickets at Expedia.com, a site he visits often to check prices. As time passes, he says he feels more comfortable with the security of purchasing online, but he has only bought plane tickets from the Web so far because he likes the experience of shopping in a brick-and-mortar store so he can check the quality of products and walk around.

Because of the financial opportunities in the United States, many of Jaime’s relatives also now live here. Jaime feels that he is living the American dream. He does not know that he is quickly becoming a marketer’s dream. As a 45-year-old bilingual male with a combined household income of more than $50,000 – 8 percent of it disposable – Jaime and his household are part of a U.S. demographic with a purchasing power that dwarfs all other minority groups.

By 2007, the Selig Center for Economic Growth projects that disposable income in the Hispanic market will approach $1 trillion, which represents 9.4 percent of all disposable income in the United States.

Hispanics in America

Understanding the untapped opportunity of Hispanics online requires knowing more about the U.S. Hispanic population. And these days, there is no shortage of research, reports and studies examining this group.

In 2002 the U.S. Census Bureau announced that Hispanics are the largest minority in the United States with 13.4 percent of the population – or 38.8 million people. By 2020, Latinos are projected to be 21 percent of the population, and a third of them will be under age 18, which is another highly desirable segment for marketers.

But it’s not just the size of this group, it’s how much money they are making and where they are spending it. Hispanics are increasingly the major driving force behind revenue growth in consumer product and service markets, a $690 billion market that has attracted the attention of online marketers and retailers.

And while the median income for American households increased just 6 percent between 1996 and 2001, the median income of Hispanic households rose by 20 percent, from $27,977 to $33,565, during the same period. As of 2002, 31 percent of U.S. Hispanic households had an income of $50,000 or more, according to Scarborough Research and Arbitron.

So, as the Hispanic population is making more money, larger numbers of Hispanics are also getting online. Market researcher Centris found that the number of Hispanic online households in 2003 was 5.5 million.

A study by AOL/Roper reported that Hispanics go online 13.8 hours per week at work and 9.5 hours at home, compared with 8.4 hours at home for the general online population.

Hispanics Internet users tend to be younger than the overall population. Research from comScore Media Metrix shows that 60 percent of Hispanics online were 34 years old or younger, compared to 50 percent of the total Internet user population.

As Hispanics get greater Internet access, they are also starting to shop online more. According to Scarborough Research and Arbitron, 33 percent of online Hispanic adults made at least one purchase in 2002. Although that is significantly lower than the 56 percent of all Internet users who bought something online in 2002, as estimated by eMarketer, it is still increasing year-over-year. Still, according to Scarborough Research and Arbitron, only 13 percent of Hispanics purchased something online 10 or more times.

When U.S. Hispanic adults get involved in e-commerce it’s typically travel and banking, according to the AOL/Roper U.S. Hispanic Cyberstudy. Also, Hispanics tend to consume more types of entertainment, including purchasing tickets, than Internet users overall.

The study also found that Hispanics engage in online communications and other forms of communications at a high rate. A study by the UCLA Center for Communication Policy reports that substantially more Hispanic users than non-Hispanics consider the Internet an extremely important source of information – 44 percent versus 32 percent.

An Untapped Market

Considering the growing purchasing power of Hispanics, the higher-than-average amount of time they spend online and the categories that they spend in, there is a surprising lack of affiliate programs aimed at Hispanics.

Geoffrey Gonzalez, president of Ahorre Marketing, a Hispanic marketing services company, agrees. “I think it is a tremendous opportunity,” he says, but adds that the programs are “pretty much nonexistent.”

In September 2000, affiliate consultant Shawn Collins wrote about the potential of the affiliate marketing industry for Hispanics in Latin America in an article on ClickZ.com, “Brave New Affiliate World.”

Collins admits that the market has not taken off as he projected. “I thought it was about to explode five years ago, but it never happened,” Collins says. “The Hispanic market is a very under-served area for sure.”

Linda Woods, president and CEO of Partner Centric, agrees. “We have been waiting for this to happen; I think a lot of money is being left on the table,” she says.

There are many theories as to why the online marketing community has yet to seize this seemingly huge opportunity. Some believe the merchants need to lead the effort, while others claim it is the affiliate networks that need to act first to facilitate the opportunity. Still others say that the affiliates need to create demand in order for programs to take off.

Language Barrier

However, most agreed it is a language issue and that the expense and commitment associated with developing a Spanish language infrastructure is deterring the merchants and the networks from moving first.

Spanish language is very important to 67 percent of Hispanic Web users, according to the AOL/Roper U.S. Hispanic Cyberstudy, which reports that 40 percent of all Hispanics consider themselves bilingual, 40 percent consider themselves Spanish-dominant and 20 percent are English-dominant. For those who are bilingual, their preference for English or Spanish depends on if they are native- or foreign-born.

Some experts say there cannot be affiliate programs aimed at Hispanics until there are complete Spanish-language versions of major merchant websites. Many company website

s, such as Target.com, offer a bit of Spanish, but pages of merchandise, site navigation and the shopping cart are in English.

“Some companies have a landing page in Spanish, and then the rest of the site is only in English,” Collins says. “What kind of ridiculous user experience is that?”

Most major e-commerce sites, such as Sears.com and Wal-Mart.com, do not even have Spanish landing pages. AOL offers channels such as news, entertainment and sports channels in Spanish, but their e-commerce channel, called Shopping, is in English only.

“A merchant company can create a great conversion engine, but when Hispanics get to the shopping cart, all of the instructions are in English and the customer support is in English,” says Matias Perel, CEO of Miami-based interactive agency Latin3. “If an affiliate brings the 20 percent [of the Spanish-dominant Hispanics] to the site, it’s going to be hard for the affiliate to see a positive return on investment.”

Brian Littleton, president of affiliate network ShareASale.com, agrees. “The merchants have to be the first people to step on board. If they determine that it is a market that is available and should be targeted, then that is the basic first step in selling. Obviously the network platform and the affiliates need to be there, but that is down the road. E-commerce came before affiliate marketing.”

Some industry watchers wonder if merchants are worried that focusing on one group will have other growing ethnic groups feeling left out. “Perhaps merchants think it is a slippery slope where if they create a site for Spanish-speaking Hispanics, they will need to create a site for many other ethnic groups and languages,” says Kathryn Finney of TheBudgetFashionista.com.

What About the Networks?

Another theory suggests it’s possible that merchants are waiting for demand from the affiliate networks and publishers before they go through the expense and commitment of building Spanish-language capabilities.

“It’s something of a chicken-and-egg thing,” Collins says. “Why go through the trouble and expense to convert everything if there is not a network to bring you down there? They need Commission Junction, LinkShare, etc., to invest there. Affiliates haven’t gone there because there are no programs to promote.”

In addition, the traditional networks, such as Commission Junction and LinkShare, are not set up to accommodate Spanish-dominant affiliates.

For example, at Commission Junction, when a publisher searches on “Hispanics” for programs to promote, the search yields several programs including Amigos.com, Date.com, FriendFinder.com, SpanishToys.com and Yahoo Personals. But like many of the shopping carts at big online retailers, the interface is in English only; Spanish-dominant affiliates cannot sign up if they can’t navigate the English-only site.

Many merchants describe their affiliate program, or “programa de afiliados,” in Spanish but switch to English once the user reaches the enrollment pages.

Ahorre.com’s Gonzalez points out, “You can’t walk a user through in Spanish until page 9 and then switch to English when it gets to page 10. It’s misleading. It’s very similar to mortgages. You can promote, market, talk, speak and write everything in Spanish for mortgages, but the bottom line is that the contract is in English, and that hasn’t been changed by our laws.”

For example, the bookseller Ofertón de Libros has two complete versions of its site and two complete descriptions of its affiliate program, as well as contracts for both. However, the affiliate contract on the Spanish site is non-binding, but links to the English contract, meaning that the user needs to sign the contract in English to join.

A Spanish-language interface at the networks’ sites would facilitate the enrollment of Spanish-speaking affiliates into Spanish-language affiliate programs. But if the affiliates can’t sign up, the networks can’t know that the demand is there.

“The affiliates who can’t speak English would not know how to join,” says Linda Buquet of 5 Star Affiliate Programs. “My guess is that the networks won’t do it until they know the affiliates are there.”

To date, none of the major affiliate networks (Commission Junction, LinkShare, Performics or ShareASale.com) offer outreach in Spanish. ShareASale’s Littleton says, “These things are definitely in the plans for companies like ourselves and, I am sure, other networks as well.”

Affiliate Demand

Each group seems to be looking at the other to get the ball rolling. From the networks’ view there is also concern about whether there will be demand from affiliates to make a program successful, according to Partner Centric’s Woods.

“I think a lot has to happen before affiliates get into it,” she says.

Littleton agrees. “It is hard to put a lot of resources and work behind a product when the majority of affiliates are not ready and the majority of merchants are not ready,” he says. “All of the pieces are needed for a successful push into any market, whether it is Hispanic or European or Asian.”

Latin3’s Perel says, “The last thing you want to do is build an affiliate program directed to Hispanics and then find that you fail on the transaction part.”

A Need for Content

An affiliate program cannot work if there is not enough relevant content. So, the key to a successful affiliate program is to recruit affiliates with contextually relevant sites that have a proven track record for driving traffic, according to Buquet.

“Until they know the relevant content is there, the networks won’t do it,” she says. Page views are up 30 percent in the U.S. Hispanic market, but they’re up only 6 percent in the U.S. general market, according to comScore Media Metrix. Some point to this as proof that Hispanics are spending more time on the same sites because there is a lack of good Spanish content on the Web.

According to the AOL/Roper study, more than half of all offline Hispanics (56 percent) cite lack of Spanish content as a reason for not going online at home. About half (49 percent) also say it is because there aren’t enough sites and activities online that would interest Hispanics.

It’s in the Works

Regardless of whom you speak to – merchant, network or affiliate – there is a sense that the development will happen with time. But there is trepidation expressed as well as optimism by all parties.

“Everyone knows that Hispanics are a vast audience, but I don’t think that anyone is doing it well yet,” says John Ardis, vice president of business strategy at ValueClick. “Everyone is still scratching their head. There is no shining example to point to. There is a paralysis about when to step forward. It is not just a translation job; whole concepts have to be translated to do it right. It can affect the offline merchandise – if we build it online, do we have to have duplicative merchandise in our offline world?”

Joseph Anthony of Vital Marketing says, “In time, with the proper commitment and appropriate research, these brands will find a lot for them to target. They just can’t sit back and keep doing what they are doing.”

Mark Lopez, publisher of AOL’s Latino, agrees. “As the market develops and companies see the potential of this market and see the Internet as a really mass medium to reach these audiences, I think there’s going to be more investment in the back end to make sure the whole interactive product is in the same language.”

Targeting Hispanics

The research and the online experts say the opportunity to reach the Hispanic market is huge and the development is in the works. Meanwhile, affiliates are scratching their heads about how to tap into this market.

Language is the first concern for any potential affiliate. Other advice from experts in the field includes translating concepts, not just words; being culturally sensitive to the target au

dience (realize that Mexicans are different than Cubans); targeting the appropriate products with appropriate price points; and testing and retesting the market.

Some experts claim that companies may be wrongly assuming that if customers have an Internet connection and a credit card, they can understand English well enough to make a transaction. A Feedback Research study found that 79 percent of Spanish-speaking Hispanics who have used the Internet for five years or less are already highly engaged in online activities.

There is evidence that it is important to reach out in Spanish even if the user is bilingual. comScore Media Metrix found that 49 percent of the 12.6 million U.S. Hispanic Internet users prefer sites that are either in Spanish or bilingual. “While English content can and does reach large numbers of Hispanics, marketers must also provide relevant Spanish-language content to fully reach U.S. online Hispanics,” the report stated.

There are programs that do target the 20 percent Spanish-dominant U.S. Hispanic market. For example, 21st Century Insurance supplies its affiliates with creative in Spanish for car insurance deals. Partner Centric’s Dan Fink, who manages 21st Century, says the “Spanish creatives represent about 15 percent of our creative content and do bring in a good amount of quotes as well.”

Pedro Sostre of Sostre & Associates is a design consultant and an affiliate who owns several sites that provide creatives to affiliates in Spanish. Sostre’s FreeBookClubs.com promotes two Spanish-language book clubs – Mosaico and Circulo.

“The Spanish-language clubs are on par with some of the other niche clubs,” says Sostre, who also notes that his book club targeted to the African-American market does extremely well, as does the Large Print book club (aimed at the older market).

In addition, Sostre helps run the affiliate program for ServerPronto.com, which also provides its creative in Spanish. Most of the affiliates that use those creatives are targeting a South American audience. Because the company serves clients internationally, ServerPronto’s Spanish-language website and marketing are not specifically geared for U.S. Hispanics.

Be Bilingual

While there are many sites, including Mexgrocer.com and Amigos.com, that also offer some Spanish-language pages, some claim the experience does not need to be entirely in Spanish – it is sufficient to reach out with a bilingual message that leads the user to a Spanish-language page at an English-language site.

Many companies are targeting Hispanics with bilingual messages. Ahorre.com advertises its Household MasterCard credit card in English and Spanish on the same page. Target.com has banners on its Spanish landing page that mixes languages to say “Nuestra Gente – Hispanic Heritage. Discover the Cultura and Tradicion.”

Reebok used this “Spanglish” this year in its much-hyped BarrioRBK campaign, which was produced specifically for the U.S. Hispanic youth market. The site is marked with Spanish and English tag lines as well as Spanglish tags directing visitors to “Volver a Home” or “Return to the Home Page.”

Latin3’s Perel, who designed the site, explains, “We created this website in Spanglish because we realized that young Latinos are bilingual or, because they came here very early, they are English dominant. Because we want to connect with them, we give it a Spanish flavor, so the key here was to have copy writers who have a clear understanding of when to use English and when to use Spanish.”

But there are other reasons not to reach out solely in Spanish. Research firm Cultural Access Group found that Hispanic youths prefer English-language television and radio programming over Spanish-language fare by a margin of nearly two to one, and overwhelmingly prefer English-language Internet sites.

“I think a lot of younger Hispanics are more comfortable in English,” says Sostre. “I am in my 20s, and if I see a site that is completely in Spanish, I think it is targeted at my mom or my grandmother.”

He warns that you might risk insulting a potential user if you communicate with them only in Spanish. “A lot of Hispanics find it offensive if you assume that they don’t speak English.”

A Question of Culture

Affiliates may find that language is less important than culture. Lopez, the AOL Latino publisher, says “the Hispanic audience definitely has cultural dimensions that are really different than the general market.”

For example, Reebok’s BarrioRBK site features a Reggaeton dance game, a music area that includes the top 10 Latino artists, and information about famed Mexican soccer team Chivas.

Because Hispanics online skew younger, Ahorre’s Gonzalez claims affiliates might also do well to target them with lower-priced items. “The growth in Hispanics online is in the youth market, and the youth market is into music – they are into iPods and they are into CDs. Try to sell reasonable price points; if you target up to $99 you should do well.”

Not everyone agrees that low-price items are the way to go. According to Lopez, Hispanic demographics tend to be younger than the general market, but he adds that their buying power is increasing year to year. “Hispanics are becoming more sophisticated just like the general market.”

Nacho Hernandez, president of iHispanic Marketing Group, says, “U.S. Hispanics spent $5.6 billion in 2003 purchasing on the Web.” In fact, Sharper Image, which is known for its high-end electronic goods, has a Spanish-language version of its website targeted at Hispanics in the U.S. and has a “programa de afiliado.”

But some argue that the current research and demographics don’t tell the whole story. Many claim the Hispanic market is not that distinct and will become less distinct over time – much like the offline world where Hispanics become acclimated to American lifestyles and habits.

“In recent years, there has been a shift in online advertising – less of a focus on demographics and more of a focus on psychographics or behavior,” wrote Barry Parr in his MediaSavvy blog. “Demographics are usually the wrong way to target online advertising. You may believe that the most likely user for your products is a woman between the ages of 25 to 44, but what you’re really looking for is anyone who might want to use your product. ” On the Web, you can target users by context and behavior. That’s a lot more powerful than demographics. “”

Vital Marketing’s Anthony concurs. “I think that marketers may be overanalyzing the Hispanic market in terms of feeling that Hispanics are only going to go to sites that are relevant to Hispanic cultural content or contain some type of concentrated cultural information,” he says.

The debate continues about how to target this growing Hispanic group, but for now many agree that for affiliates to succeed, they need to recognize that the Hispanic segment is one with unique requirements – including differences in language, culture and spending habits. Reaching out with cultural references that appeal to Hispanics, and experimenting with Spanish, bilingual and Spanglish messages, are some of the ways to get started. Programs will have better conversion rates if they can demonstrate that they have considered the wants and needs of Hispanic shoppers.

The best way for affiliates to determine the appropriate way to drive traffic is through experimentation. “Top affiliates must be committed and continually test, measure results, make adjustments and retest the market,” Hernandez says.

ALEXANDRA WHARTON is an editor at Montgomery Research, Inc., Revenue’s parent company. During her four years at MRI, she has edited publications about CRM, supply chain, human performance and healthcare technology. Previously she worked at Internet consulting firm march FIRST (formerly USWeb/CKS).