Ad Agencies Focus Pitch on Latinos : Marketing: Companies that specialize in reaching fast-growing segment of U.S. population have seen rapid growth in business.

The message is simple when Victor Ornelas tells a prospective client about the need for Latino advertising.

Look ahead to Texas in the year 2010.

“Do you want to be in business that year? Are you willing to only market to half of your consumer base? Because if you’re not marketing and building a foundation now within the Hispanic community, you won’t be in business.”

“It’s a strategic imperative,” he said. “So now is the time to start to build a foundation.”

It’s a message Ornelas has sold with great success in the six years since he founded Ornelas & Associates, a Latino advertising and marketing agency based here. The agency has grown to 35 employees, 12 blue-chip clients and $20 million in billings last year and an estimated $25 million this year.

“Everyone in this agency is bilingual and bicultural,” Ornelas said. “We feel we can walk in both worlds very, very capably. . . . We’re positioned as the agency of the future.”

Ornelas, 46, who was named National Hispanic Business Entrepreneur of the Year by Hispanic Business magazine, sees plenty of room for growth. Although Latinos make up about 10% of the U.S. population, Ornelas estimates less than 1% of all advertising dollars are spent on the fast-growing segment.

Diane Crispell, executive editor of American Demographics magazine, says targeting Latinos makes sense because they tend to retain much of their culture.

“There’s enough difference definitely in terms of culture and ethnic identification to merit targeting them. They also happen to still be very highly geographically concentrated in this country, which means that it’s a manageable process--it’s actually physically able to target them geographically,” Crispell said.

“They’re a viable market because they identify themselves as a type of market, they see themselves as a market, and they’re easy to reach,” she said.

According to Hispanic Business magazine, about $721 million was spent on advertising to the Latino market in 1993, a 14% increase from the year before.

The magazine’s managing editor, Hector Cantu, said Ornelas & Associates is part of a five-year boom among Latino advertising agencies.

“As more and more corporations maneuver to penetrate the Hispanic market, businesses like Mr. Ornelas’ are taking off and seeing fast and rapid growth,” Cantu said.

“I think he represents . . . the marketing efforts being directed at this growing market, and he’s in the pack of Hispanic advertising agencies that have popped up to cater to this market. He’s shown tremendous innovation, a lot of ideas and insight into how to reach the market. I think it’s paid off in the bottom line,” Cantu said.

Not everyone agrees with Ornelas. William Mitchell, marketing professor at the University of Texas at San Antonio, thinks there may be a certain amount of faddishness in the rapid growth of Latino advertising.

“My own experience is that the agency that has good broad experience across the U.S. market offers clients, I think, a better option than one that specializes only in Hispanics,” he said.

The soft-spoken Ornelas, a second generation Mexican-American, was raised in northern California.

“I grew up at a time, particularly in California, where when you’re second generation, you’re kind of unsure really which world you’re in. Are you in the Hispanic world, or are you in the general market world? Because you’re part of both, you have a foot in both.

“As I was growing up, though, I had a great sense of identity and pride in my culture and my language, and that was definitely inculcated by my father,” he said.

Ornelas studied Latin American history at the University of the Pacific and was active in Vietnam War protests and in the Chicano student movement.

Before starting his own agency in 1988, Ornelas worked for Levi Strauss & Co., Anheuser-Busch and the Seven-Up Co.

He has two partners at Ornelas & Associates: Tony Dieste, director of client services; and his wife, Marjorie, director of human resources. Married 21 years, the couple have four children ages 10 to 19 and work well together, Ornelas said.

“She’s kind of the ultimate utility player,” he said.

The agency’s clients include the Pepsi-Cola Co., Anheuser-Busch, GTE, Wrangler, Bank One, the Southland Corp., Georgia-Pacific, the McIlhenny Co., Imperial Sugar and the American Heart Assn.

In formulating marketing plans, Ornelas & Associates relies on studies that have delineated four basic Latino attitudes, from least to most acculturated, to help identify and target the audiences advertisers want. About 80% of its work is Spanish-language.

Perhaps the agency’s most high-profile creation was the “Pepsi Man” character, played by comedian Paul Rodriguez. Other campaigns, for Bank One and GTE, have appealed to the traditionally strong Latino family values to sell the message, Ornelas said.

With other clients, the challenge becomes adapting its general market positioning, such as Wrangler’s “Real Cowboys Wear Wrangler.”

“How do you communicate that to the Hispanic consumer without saying, ‘Real Rednecks Wear Wrangler?’ Because real cowboys are quite often real rednecks,” Ornelas said.

The key, he found, was to tell the story of the vaquero, the original cowboy.

“The roots of the cowboy are in the vaquero and they’re in the Hispanic community. And so there’s a tradition there, and let’s celebrate that tradition-- viva la tradicion, “ Ornelas said. “The whole way to position Wrangler was that yesterday’s vaqueros and today’s cowboys wear Wrangler, and that goes back generations.”