Habla Gateway? Cows learning Spanish

Gateway Inc. is launching the personal computer industry's biggest-ever ethnic-marketing effort, a broad initiative involving Spanish-language PCs, software, Internet services and an advertising campaign.

The effort will kick off in Miami and Phoenix and quickly expand to each of the top 10 U.S. cities with substantial Hispanic populations. The company says it expects to reach the bulk of the nation's 32.4 million Hispanics through its efforts.

The San Diego company is launching its campaign as a new study finds Hispanics second among U.S. ethnic groups, behind Asian Americans, in the percentage with access to the Internet. The Latin pitch also comes as new Spanish-language Internet portals are competing with Yahoo! Inc. (Nasdaq:YHOO) and America Online Inc. (NYSE:AOL).

'As we looked at this market and all the products and services we offer, it became a very significant market for us,' -- R. Todd Bradley, Gateway senior vice president

"As we looked at this market and all the products and services we offer, it became a very significant market for us," says R. Todd Bradley, Gateway (NYSE:GTW) senior vice president. He estimates that PC purchases by Hispanics next year will be between 1.5 million and 2 million machines -- equivalent to the college-student market.

"Hispanics are very open to new technology and embrace technology," says Ekaterina Walsh, an analyst at Forrester Research Inc. in Cambridge, Mass., who surveyed 100,000 U.S. households. Forrester predicts that 43 percent of Hispanic households will have access to the Internet next year, up from 36 percent currently.

The bulk of PC purchases by Hispanics are equally split among four companies: Compaq Computer Corp. (NYSE:CPQ), Gateway, IBM Corp. (NYSE:IBM) and Apple Computer Inc. (Nasdaq:AAPL), says Walsh.

Investment growing
Gateway's Bradley hopes to break out of the pack with a campaign targeting Hispanic households and small businesses. The company is budgeting a relatively modest $2.5 million for television and radio advertising campaigns between now and December. But if the company achieves its goal of becoming the clear leader in the segment, its spending on Hispanic marketing could rise to $25 million next year, the company says.

The new TV ads, developed by Vidal, Reynardes & Moya, the Hispanic marketing arm of Interpublic Group of Cos.'s McCann-Erickson, will begin in November on the Univision and Telemundo television networks. The campaign also includes local radio spots and product ads in Spanish-language newspapers.

The ads retain Gateway's folksiness while adding a strong dose of family aspiration: One connects Gateway to a family's goal of encouraging a child who aims to become a pilot. In another, a Latina uses a Gateway portable PC as the narrator says, "Wherever your dreams take you, we're there."

The ads emphasize the company's Spanish-speaking sales and technical help and each finish with the theme "Tomarlo Personal," which means taking it personal. "The appeal in this market is no different from our mainstream market. Hispanics want to educate their kids, want quality products that are well supported and available in their language," says Bradley.

As part of its push, Gateway will sponsor the Tapas portion of Miami's Hispanic Heritage celebration and hold small-scale fiestas at its Gateway Country stores. The firm also plans to be involved in computer programs at predominently Hispanic elementary schools in Phoenix and San Gabriel, Calif.

Tackling the language barrier
The company plans to have bilingual staffers available on the phone and Internet as well as at stores in San Diego, Los Angeles, San Francisco, Chicago, Houston, San Antonio, Dallas and New York. By next year, some 500 bilingual employees should be available, up from about 100 currently.

A leasing program brings PC and Internet access to as low as $30 a month. Initially, the PC bundles will include Spanish-language versions of Microsoft Office or Microsoft Works plus five family-oriented pieces of software from The Learning Co. Next year, Gateway is expected to add Spanish-language pages to its Gateway.net Web portal site and links to Spanish-language portals.

The Hispanic campaign is a first not only for Gateway -- which doesn't yet sell in Latin America -- but also for the PC industry. Dick Thomas, senior vice president at Miami's Strategy Research Corp., a division of Market Facts Inc., says direct-sales companies such as Gateway are ideally suited to a Hispanic initiative.

"Hispanics are one of the segments of the population that can be easily identified by surnames for direct marketing," says Thomas. With an estimated 8.9 million U.S. Hispanic households, direct marketing is the least costly way today to reach the group.

Gateway isn't the only high-tech company to recognize the potential of a dedicated marketing campaign. Spanish-language portals, such as quepasa.com of San Antonio and Yupi.com of Miami, have recently been joined by Argentina's Elsitio.com and Starmedia.com, owned by New York's StarMedia Network Inc.

"What's happened in the Hispanic marketing industry in the past year is just remarkable," says Dolores Kunda, president of Lapiz, the Hispanic marketing division of Leo Burnett USA.