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The creative session starts out sedately enough: three casually dressed writers, none older than 40, sit around an office, brainstorming a new advertising campaign for an over-the-counter stomach remedy. But when Cesar Martinez, Pablo Ragazzi and creative director Federico Traeger slip from straight-faced English into animated Spanish, the energy level rises. Soon, everyone is gesturing exuberantly and talking about indigestion with a passion, and humor, born of intimacy.

Intestinal discomfort is a familiar subject in these quarters. To the Latin-born ad guys, a bellyache is not so much a calamity as an inconvenient occurrence in Hispanic life, intimately linked to the pleasures of food, conviviality, family. “Even more than language, this culture is basically a stomach culture,” Martinez explains. “Anglos, you know, they’re always wanting to eat healthy food. We don’t care. You go to a family dinner, there’s all this spicy food, you know for sure you’re going to get sick, but you eat it anyway. You can’t help it.”

Discussing scenarios for a Spanish-language television commercial, Traeger imagines a gorgeous banquet of favorite foods. “You have a camera shot panning across all these beautiful dishes . . . chicharrones , platanos fritos , frijoles . . . I’m getting hungry now,” he says.

Make it a family dinner party,” Ragazzi suggests.

“All the uncles eating,” Traeger adds.

“Yeah, a whole row of uncles,” Ragazzi says, “and then use sound effects to portray el malestar --something that feels bad--without being too scientific about it.”

Warming to the subject, Traeger suddenly jumps up and throws open the big old double-hung window behind his desk. “I’ve got to have some real air in here,” he announces. As a hot, heavy South Texas breeze sends the air-conditioning system into overdrive, the writers continue to toss ideas back and forth for hours, speaking mostly in Spanish. Their goal is a new advertising strategy designed to attract as many Hispanic consumers as possible without straying too far from the product’s image in the general market.

It’s a profitable balancing act performed daily at Sosa, Bromley, Aguilar, Noble and Associates of San Antonio, currently the leader of the pack in Spanish-language advertising in the United States. By virtue of its merger with Noble & Asociados of Irvine in January, Sosa is the first Hispanic-owned agency to top $100 million in annual billings, an accomplishment no less impressive in that it took place in San Antonio, of all places. A more predictable venue would have been Southern California, where the largest and wealthiest market of Spanish-speaking consumers resides. Or Miami, home of two Spanish-language cable TV networks as well as MTV Latino. Or New York, where big-name Madison Avenue firms have been buying up Hispanic advertising agencies to cover their marketing position in the rapidly growing New America, the one whose inhabitants hablan espanol .

“I got to tell you, this isn’t exactly Madison Avenue down here. But that’s all right, we love it. This is Hispanic Madison Avenue,” enthuses president Adolfo (Al) Aguilar Jr., a San Antonio native with the build of a football coach and a garrulous manner. “This agency now manages 10% of total Spanish language media dollars in the entire country. (Its clients include Burger King, Procter & Gamble, Anheuser-Busch and Coca-Cola.) I view being in San Antonio as a bit of an underdog status, and I always want to continue being that, because that’s going to make me hungrier. And I relish being able to beat up the Los Angeles and New York shops every single day.”

How sweet it is. For despite the tourist bustle and Alamodome glitz, San Antonio--whose population of one million makes it the second-largest U.S. city with a Hispanic majority--is bound by blood and geography to South Texas, a sandbar long ago cut off from the swift currents of mainstream America.

Here the conflict between Anglos and Hispanics, the victors and the vanquished, was especially bitter and prolonged. Families with Spanish surnames lost their land and sometimes their lives. Until the mid-1960s, children of Mexican descent were punished for speaking Spanish in the public schools. Now many of their children, whose families have lived in Texas for generations, barely understand Spanish anymore. Pochos , they’re called in Mexico--kids who have forgotten where they’re really from. The wildly popular Tejano singer, Selena Quintanilla, who was slain earlier this year, was a product of this environment. (Tejano, from the Spanish word for Texas, signifies a distinctive style of Tex-Mex country music.) When Selena first started singing professionally, she had to learn Spanish songs phonetically.

The ironies of language and culture are not lost on the owners of the Sosa agency, who posed in front of the Alamo for the industry magazine, Adweek. Founded by Lionel Sosa, a Mexican-American, the agency occupies offices overlooking the old Spanish mission where a small band of Texas patriots were slain in a famous 1836 battle that helped make Mexican a pejorative in this part of the world. (Among the grievances that sparked the Texans’ defiance of what they called “the combined despotism of the sword and the priesthood”: They were tired of doing business in Spanish.)

Despite this long and acrimonious history, the sort of ethnic consciousness prevalent in other areas of the Southwest is strangely absent here. “In terms of civic differences between California and Texas--I will be bitterly contested on this by the way--I think, politically, the Hispanic community here is a little more developed. A little more self-confident,” says Ernest Bromley, chairman and CEO of the agency. (More than twice as many Hispanics hold public office in Texas than in California.) Visitors are often struck by the way the two cultures in South Texas have melded into one.

“All you need to do is tune in the radio there, and it’s the most fascinating thing,” says Tony Cruz, with cruz/kravetz: IDEAS, a Hispanic marketing firm in Los Angeles. “The disc jockeys, the music they play, the people who call in--they’re going back and forth in English and Spanish all day long. It’s certainly not the way I was taught to speak Spanish.”

Little things make a difference. The Sosa agency uses “associates” in its name instead of asociados , the preferred wording in California. Founder Lionel Sosa, who is considered one of the godfathers of Hispanic advertising, is called Lie-nul , pronounced the Anglo way instead of the Spanish Lee-oh-nell . And although Spanish is the native tongue of most agency employees, the predominant language spoken at the office is English--with a Texas accent. “We are in America,” notes publicity director Cristina Aguilar-Friar dryly.

Indeed. The past is over, and there’s money to be made in the future. Total advertising expenditures in the Spanish-language media market--just under $1 billion--are increasing by 15% annually. (In 1994, advertisers dropped $214 million in the Los Angeles market alone, according to Hispanic Business magazine--twice that of the next leading market, Miami.) As immigration from south of the border continues to feed the appetite for Spanish-language media, the fortunes of agencies like Sosa are rising.

So is the price of expertise. Gone are the days when Hispanic advertising was a matter of buying some cheap radio spots or doing a straight Spanish translation of an English language ad. Successful marketers now fine-tune their messages to resonate with a foerign culture that has its own take ont the Anmerican Dream.

Immigration isn’t all that’s boosting Spanish media consumption. In this city and others in the Southwest, a reawakening of cultural pride has third- and fourth-generation Hispanics tuning into Spanish language media. “In 1976 there were 66 Spanish-language radio stations in the United States, and now there are 480,” Aguilar says. “The No. 1-rated radio station in Los Angeles (KLAX) is a Spanish station. The No. 1-rated station in San Antonio (KXTN) is a Spanish station. I guarantee if you went and interviewed 100 Hispanics down on the street and asked them, is it important for you to pass on Spanish language to your children, you’ll get 99 answers yes.”

Dressed casually in a bright chartreuse polo shirt and khaki pants, Aguilar keeps checking his watch. It’s almost time for him to glad-hand the visiting suits from New York, executives with D’Arcy Masius Benton & Bowles, a top multinational ad agency that four years ago bought a 49% interest in the Sosa operation. The DMB&B; delegation is in town for a sort of company pep rally, dubbed a “Sparkarama,” designed to generate excitement about drumming up new business.

There’ll be platters of Mexican food, mariachi bands, the requisite riverboat ride down the once-beautiful San Antonio River, now a torpid canal lined with restaurants and hotels. In the morning, early risers may hear the soft call of Inca doves roosting in the trees downtown, a beguiling sound in the middle of the city. The New Yorkers will wilt in the spring heat--it’s 92 degrees outside, with humidity to match--but they’ll have a great time. Most people do in San Antonio, bemused by its oddly familiar foreignness, like a place they’ve seen in an old movie.

As Aguilar gets up to leave, he flicks a business card to his interviewer, notices that Aguilar’s given name is actually Adolfo instead of Al, which everyone in his office calls him. He instructs: “Use my formal name. My mama prefers it.”

The nearly 27 million Hispanics in the United States trace their origins to Mexico, Puerto Rico, Cuba, and Spain and every country in Central and South America as well. Hispanic Business calculates their spending power, after taxes, at nearly $190 billion, including $42 billion in the Los Angeles area--the fattest Hispanic pocketbook in the nation. They represent every economic class, every walk of life and educational level, from the unschooled to graduates of the most elite universities. But unlike immigrants who journeyed here from, say, Eastern Europe at the turn of the century, they share a common language. This has led to the creation of what amounts to a parallel universe in this country, one in which business is conducted and people are entertained and informed--all in Spanish.

What about America’s melting pot? What about the sacred tenet that ethnic differences that hinder its citizens from assimilating--especially their dependence on a foreign language--must be cast off in order to partake of the fruits of America’s bounty? Even the League of United Latin American Citizens, one of the oldest Hispanic organizations in the United States, used to require its new members to say the oath of allegiance in English. If the premise of language assimilation is discarded, what next--the Tower of Babel?

Get over it, say observers of this parallel universe. The market has spoken, and it couldn’t care less about melting-pot metaphors. “This is more or less the first time in recent history that a major population group in this country is not assimilating as they did traditionally. They can live their lives entirely in Spanish here and prosper. I’m not judging that; it’s just a fact. And there’s a whole industry designed to capitalize on that,” says Gary Berman, president of Market Segment Research & Consulting, an ethnic marketing research firm in Miami.

“Right now, marketers have one issue--they want to sell their stuff,” says Roger Sennott, general manager of Market Development Inc. of San Diego, which specializes in Latino market research. “They don’t care about the cultural issues.”

Assimilation of Hispanics is complicated not only by the rapid growth in population, which is expected to eclipse that of African Americans by the year 2010 (an increase of 32 million over a 50-year period) but by settlement patterns. Instead of scattering, Latinos tend to cluster in certain metropolitan areas. Seventy percent of the total U.S. Hispanic population is located in just four states--California, Texas, New York and Florida. “They’re not merely a niche in the market. They’re not people who simply are in a different language group. It’s closer to being a separate country,” Sennott says.

Foreign-born immigrants, who are the most dependent on Spanish, comprise 40% of the annual growth rate. This influx causes “a constant refueling of the culture--linguistically, culturally, musically, everything,” Berman says. “We don’t see that stopping at all. In fact, I think it’s going to accelerate.”

How do agencies like Sosa sell to this country-within-a-country? The same way agencies in the general market do--by coming up with good ideas and doing their homework. To an even greater extent than general marketing, Hispanic advertising is research-driven. Sosa has six full-time researchers on a staff that is known for its attention to data, gathering information from surveys, focus groups and consumer testing when it develops a campaign. “They put tremendous emphasis on account planning and research, to an extent that’s unusual,” Sennott says. “They give you an in-depth understanding of the consumer.”

The nuances of language are crucial to that understanding. A technique called language segmentation, pioneered by Hispanic Market Connections of Los Altos, uses census data to categorize Hispanics according to which language they use at home, at work and in the marketplace. The Sosa agency’s version of segmentation assigns consumers to one of three “acculturation influence groups’ or AIGs. The first group, AIG 1, is composed of people who depend primarily on Spanish to communicate. Those in AIG 2 go back and forth--perhaps speaking English at work and Spanish at home; reading an English-language newspaper, listening to Spanish radio and watching CNN, Univision and Telemundo. Hispanics in AIG 3 rely primarily on English and are the most comfortable with Anglo culture.

There are wide variations among individual markets, which influences media placement. The marketing approach in say, Hispanic Los Angeles, where 75% of adults are in AIG 1 and 2, is different from that in San Antonio or Albuquerque, highly acculturated markets where the same percentage of Hispanics are either truly bilingual or prefer the English-language media.

When asked whether language segmentation is simply a measure of assimilation, Aguilar acts as though he’d heard a bad word. “We use the term acculturation versus assimilation ALWAYS. Assimilation to me means something turning from black to white. And acculturation means more of a dynamic process taking place. Even the AIG 3 cannot escape being a Latino. You go to Grandma’s today and I guarantee you that AIG 3 is going to say, ‘ Hola, abuelita .’ They may know only those two words, but they’re going to say them.”

Although 97% of Sosa’s ads are in Spanish, advertisers are waking up to the sizable market represented by AIG 3s, who, as a group, have the highest incomes of all Hispanics. They are the “forgotten souls,” Aguilar says. “It’s a big issue these days, that these people who are consuming English media are not represented in it. Why can’t the star of the next Bud Light commercial be a Hispanic who speaks English? It’s going to work wonders for the Hispanic population, but it’s also going to work effectively for the general population. Perhaps mainstream America will begin to accept and recognize that Latinos are a part of the fabric of this country. They’re not just over there on the Island of Hispanic or whatever. We’re everywhere.”

Sales pitches that work in the general market are often fatally flawed when it comes to Hispanics. For instance, English-language TV spots for Western Union, one of Sosa’s clients, have a lighthearted take on the problem of sending money somewhere fast. A college kid is away from home and needs emergency cash; the parents wire the money; problem quickly solved. But research showed that such an approach leaves Hispanic consumers cold, because they have a radically different mind-set about money transfers.

“Think about it,” Aguilar explains. “People work real hard to send back $200, $300, $400 to Latin America. They don’t do it just when an emergency arises; they do it on a monthly basis, because they’re helping to support family down there. Speed may be your global strategy for the general population, but trust--I’m going to take my hard-earned money, I’m going to slip it under this little window of this cage and it’s going to reach my family--trust is of the essence.”

“We tested the idea of using humor. Boy, that went over like a lead balloon,” says Bromley, who heads the research division.

The ads wound up with a straightforward scenario in which a man enters a Western Union office, puts money in an envelope and gives it to a clerk, who smiles reassuringly. The action cuts to a kitchen in a Latin American home where a motherly woman opens the money letter. The cash is shown, appreciated and tucked away.

Hispanic advertising is also a field dotted with cultural booby traps. Latin American consumers, by and large, have not been exposed to the barrage of advertising symbols, code words and cues that surround U.S. children from birth. Take “torture tests,” an American advertising cliche.: A gang of kids slides into a mud puddle on TV, and the experienced viewer knows it’s a torture test, a joke, to show how a particular detergent will get filthy clothes clean. However, a Hispanic mother might take the ad too literally. “She might say, ‘Oh, those mothers aren’t taking very good care of their children, to let them get dirty like that,’ ” Sennott says.

Even Hispanics who are perfectly bilingual, Sennott adds, “may have no clue about the subtleties of advertising copy in English. We have people here who went to college in the United States, MBA students; they can converse incredibly and articulately in English, and you show them a print ad and they don’t get it. Those ads are very culturally based. I’m thinking of one that shows a bottle of liquor inside a little felt bag, and it says, ‘How to dress for the weekend.’ Well, what does ‘dress for the weekend’ mean? You have to understand these sorts of things.”

Thus “aspirational” advertising, which plays on traditional immigrant desires for a better life, must be calibrated to a different sensibility. “A commercial for a luxury-car maker might show someone loading his golf clubs into the car and driving to a plantation-style house and talk about the status of the car. That may not be relevant to Hispanics, who may not be members of the club and may not play as much golf and may not live in those houses,” Berman says. “But using the same aspirations, the same American dream, you might show someone playing soccer with their friends, being with family, driving home to a city house and continuing the soccer game in the yard.”

“Never assume anything. That’s the first mistake you can make,” warns Sosa creative director Federico Traeger. He cites the agency’s award-winning Sprite commercial, aired during the World Cup games, which was an example of aspirational advertising. Shot in fast-breaking MTV style, it portrayed a succession of Latino youths talking about their dreams for the future. “I want to finish school,” said one of them. “I don’t want to be a statistic,” said another. “I want to make a difference.”

Their statements came directly from focus groups involving Hispanic teen-agers, the content of which surprised the “creatives.” They would have expected the kids to have more, well, superficial teen-age goals, along the line of “I want to be in a band.” Traeger laughs. “See, we were already stereotyping.”

Though the flashy MTV approach worked well for Sprite, it fell flat for another client, Burger King. The reason, once again, had to do with cultural perceptions. Research showed that Hispanics viewed Burger Kings not simply as fast-food joints but also as nice places to take the family for a special meal. They were offended by the jumpy, camera-in-your-face way that Burger King commercials were shot for the general market. “They felt it was very bad manners, intrusive,” Traeger says. Sosa took a different, quieter tack with Spanish-language spots for the restaurant chain. “We did a series of eight little soap operas, novelas . They were very successful.”

Then there are times the creative instinct makes it all look easy. For a series of ads for Sprint, the long-distance carrier, Traeger improvised for video a voice-over demo of a young professional, like himself, talking on the phone to his brother back home. (Hispanics are a lucrative market for long-distance carriers, which is why AT&T;, MCI and Sprint are among the top 20 spenders in Spanish-language advertising.) Sprint loved the demo. When the actor who was going to appear in the spots became unavailable, the company went looking for a new face. After auditioning hundreds of actors, it picked an unknown amateur: Traeger. The telegenic 34-year old is now the spokesman for Sprint.

“I didn’t have to think about what to say (in the ads). That was just a gut thing. And I’m a big-time consumer of their services,” says Traeger, whose family is still in Mexico. He contributed his first acting fees to a center for at-risk youth.

The Sprint campaign also broke new ground by deviating from the company’s advertising message in the general market--a bold step advertisers are generally reluctant to take. When Sosa acquired the account in 1993, Candace Bergen was hawking Sprint in English-language TV ads that stressed value--getting the most service for the money. But Sosa’s “Acercete’ (get closer) campaign puts far more emphasis on communicating with loved ones. “We’re selling closeness, we’re not selling long distance,” Bromley says. “With Sprint, la distancia no existe .”

“What they’ve done is create a unique positioning for the company,” Alcazar says. “When all was said and done, the campaign had customers picking up the phone and calling us.” Hispanic sales soared, and have gone up an average of 75% annually ever since. (Sprint is ranked third in general revenues behind industry titan AT&T; and MCI.) In 1994 Sprint doubled its Spanish media budget to $6.4 million, according to Hispanic Business; industry sources place current spending near the $11 million mark. “Basically there is no cap to what we’ll spend on TV as long as it keeps producing,” Alcazar says.

Family remains the dominant and perhaps overworked theme in Spanish-language advertising. “Sometimes we push it too much on this ‘mom takes care of the whole family’ thing,” says ad writer Cesar Martinez. Indeed, Se Habla Espanol, a communications industry newsletter published by Hispanic Business, labels as a cliche “any Spanish-language ad that insists on using an entire Hispanic family to sell almost any product.” Other potential hazards:

-- Direct attacks on the competition. “The Hispanic market doesn’t like to see you trash another product. That’ll make them go for the underdog instead,” Traeger says.

-- Aspirational ads that are too unrealistic. This sort of fabulous advertising plays well in Latin America, Traeger says. “But what U.S. Hispanics want to see is their real identity. They say, ‘Portray me as I am.’ They work hard. They’ve got no time for fantasy.”

In this young industry, there’s still considerable disagreement about which ads push the right ethnic buttons and which are lousy with politically incorrect stereotypes. Tony Cruz of cruz/kravetz: IDEAS nominated Domino’s Pizza’s “El Presidente” ad for the annual El Gran Estinki de Oro award, a tongue-in-cheek competition concocted by “about four or five creative directors with too much time on our hands,” Cruz says. They slammed the Domino’s spot for its music (throbbing heavy-metal, dubbed with Spanish lyrics) and its story line, in which a banana-republic dictator speaks to an unruly crowd clamoring for pizza.

Not everyone shared their professional disdain; the slickly-produced commercial won a CLIO (the ad industry’s Emmy) this year, and Domino’s is “very happy with it,” Cruz admits. “That just proves how wrong we can be. In retrospect, maybe it’s not fair to single out Domino’s for the Stinky. At least they spent the money and made the effort. A lot of companies don’t.”

In 1994, the top 20 Hispanic advertisers, a list headed by Procter & Gamble, AT&T;, McDonald’s and Anheuser-Busch, spent a total of $190 million on Spanish-language media--a drop in the proverbial bucket compared to the total advertising budget of just one of those companies, such as McDonald’s (4410 million). Given the relentless growth of the Hispanic population in the United States--which the Census Bureau projects will reach 49 million within the next 25 years--and the new buying power it represents, an obvious question forms: Why aren’t more companies advertising in this potentially lucrative market?

The answer has two parts, say those in the business. Cranking up a whole new advertising campaign in corporate America takes millions of dollars that most companies can’t spare. “To do an effective advertising effort, you’ve got to commit a certain amount to it, or you might as well do nothing. To create a 30-second commercial--you’ve got to get an agency, you’ve got to have somebody in your organization who’s going to spearhead the effort and, of course, you’ve got to have a brand that can justify the investment. . . . Basically (only) the bigger players are involved. The other ones who are trying to survive--the third- and fourth- and fifth-ranked brands--they really can’t thin out their efforts to go after Hispanics,” Sennott says.

The other discouraging factor is the difficulty in measuring return on investment in the Hispanic market. A long-distance carrier knows when it’s signing up a new Spanish-speaking customer. But how does the detergent manufacturer know who’s buying its product at the supermarket? And in the absence of reliable ratings for Spanish-language viewers, how do advertisers know how many consumers are watching their commercials?

That’s beginning to change. Nielsen now has a Hispanic Television Index, Arbitron has improved its methods for gathering data from Spanish radio audiences, and researchers are looking at ways to accurately track purchase and consumption of goods and services--marketers call this “volumetrics”--by Hispanic buyers. “We’re going to be working with a very major research company in filling that gap,” says Market Segment Research’s Berman. “I can’t go into details at this point, but it’ll tell you how much is being bought at stores where Hispanics shop.”

Berman says Hispanic advertising will continue to grow as the quality of Spanish media improves, and as marketers become better informed about the buying power and habits of the Hispanic consumer. They’ll be attracted to the most powerful lure of all: the opportunity to make a buck. “Over the last 10 years we’ve been doing this work, we’ve noticed a distinctive shift away from the minority mind-set to the bottom line. That means profits.”

As far as Adolfo Aguilar is concerned, that process is taking too long. And too many companies are still just toying with the Hispanic market. “The dabblers need to get serious. A dabbler is someone who says, we want to do Hispanic marketing, here’s $200,000, now go and reinvent the world for me. It must not cost that much--after all it’s in Spanish, so shouldn’t it be cheaper ? They expect to pay me tiny money, but my air fare didn’t cost me less to fly up to go visit them than it did the general market guy. My cost of business is the same as everyone else’s. We don’t have to start out gangbusters; we can take baby steps and grow. Many of our larger clients started that way. Home Depot just got into it a year ago, but we’ve already doubled our budget in that one year.”

Aguilar adds: “We’re not anywhere near where we need to be--I’m talking about the industry as a whole--doing the kind of things that need to be done to effectively reach the Hispanic market. I can watch Spanish television and flip between Spanish and English, and I don’t see Apple computers and IBM on Spanish television. They should be.

“If the U.S. Hispanic market were a Latin country, it would be the fifth largest in terms of sheer population. It would be the richest Latin country in terms of total purchasing power. There are 50 or so major advertisers out there in the Hispanic marketplace that are truly committed to it, that are doing a great job with it. But that 50 needs to become 100, and that 100 needs to become 200. That’s all I’m saying.”

It’s an almost evangelical attitude that pervades this agency from top to bottom. “In this business, it’s not so much to get rich--it’s just to show America that we’re here, that there’s power in this market, power in our numbers, that we’re part of this country,” says 36-year-old Cristina Aguilar Friar (no relation to Adolfo), who’s in charge of media relations for Sosa. South Texas-born and reared, she’s proud of how far she and other Hispanics have come since the old days. “I wasn’t raised to get a college education. I was raised to take care of the house and have kids. I’ve changed, and the next generation is changing. I see Hispanic kids growing up, getting into positions of power, decision-making, leadership. It’s not like it was even 20 years ago.”

Though it’s technically not part of her job, Friar sends out a steady stream of faxes and e-mail to companies such as Adweek, which she thinks need to be paying more attention to Hispanics. Recently she sent a message off to Bill Gates at Microsoft.

Love your software products, she told Gates. Use them all the time. And by the way, have you ever thought about advertising to Hispanic consumers?