By Mike Shields

While a typical American household often exhibits various rungs on the tech-savvy ladder under one roof—Mom likes Yahoo, daughter lives on Facebook and Grandpa pecks away at a genealogy site—perhaps nowhere is the digital generation-gap more clear than in the U.S. Hispanic community.

Just 56 percent of the nearly 43 million U.S. Hispanics use the Internet at all, versus 71 percent of non-Hispanic whites, according to a report released last week by Pew Hispanic Center. A closer look at the audience reveals a growing gap between Hispanic immigrants and their American-bred offspring when it comes to Web usage. Among U.S.-born Latinos, 76 percent are online, compared to 43 percent for those born outside the U.S. The generational split becomes more clear the longer Latinos live in the U.S. and the more fluent they are in English. Eighty percent of second-generation Latinos are Web users; just a third of Latinos who speak only Spanish go online.

In fact, some surveys show that broadband penetration for younger Latinos is higher than for the general population and these users are gravitating to social networking, online video and particularly to mobile media in droves. Recently, a new crop of Web start-ups has taken aim at this young, disposable-income-laden and brand-impressionable group, while established Hispanic-aimed Web players are looking to adjust to the rapidly changing user base.

In concert, more online advertisers are dedicating specific budgets to Latinos, though some in the industry contend that spending is not shifting as fast as the general Web market.

Generally speaking, the Hispanic online media space is typically dominated by TV extensions—such as Univision.com—and by the Spanish-language versions of the Web's top portals MSN, AOL and the recently formed hybrid Yahoo Telemundo. Just below those leaders are a second tier of Spanish-language sites like Terra.com and Starmedia.com that cropped up in the late 1990s, primarily to serve first-generation U.S. Hispanics.

But lately, broadband-video hubs such as Voy TV and Barrio305.com have emerged, looking to become the TúTube of the Hispanic world, while longstanding community sites such as QuePasa.com and MiGente.com have been revitalized as social networking explodes.

One major difference sets the newer sites apart from their predecessors—they are primarily published in English, which underscores a major shift in the U.S. Hispanic market.

"Even using the term 'The Hispanic Market,' that's a bit nonsensical," says Fernando Espuelas, chairman and CEO of Voy TV, and founder of Starmedia. "Between natural-born Hispanics and immigrants there is a huge difference." For example, while Espuelas says that Starmedia.com was originally founded to serve as a portal for Hispanic immigrants and Latin American users who were just discovering the Web, Voy TV is meant to serve the emerging generation of wired Latinos. "They are the heaviest users of next-generation media. We've focused very much on that consumer's needs."

That's also what the founders of Barrio305 have in mind. The two-year old site, while modest in size, is growing rapidly, reaching roughly 10,000 users a day with a mix of music videos and user profiles. The site's core target is "third-generation, English-dominant Latinos," says founder Antonio Otalvaro, who adds "There are very different sites that serve very different purposes for this audience."

The established players say they are recognizing the changing media habits of younger Latinos. "When you look at what we did a year ago, we transformed [Yahoo Telemundo] into a Web 2.0 company," says Jose Rivera-Font, general manager, Yahoo Telemundo. That has meant premiering Telemundo telenovelas online and then allowing users to comment and even mash up the show's content.

Yet with all the audience growth and innovative content offerings, the question is: Are advertisers capitalizing? Rivera-Font estimates that online advertising currently represents $150 million out of the $4 billion spent in Hispanic media overall—implying that there's room to grow if more clients want in.

"There are two schools of thought on this," says Kyung Kim, group director, OMD Digital. "One client will say that they didn't need a Hispanic effort because their general-market coverage was going to be so vast that they were going to reach Hispanics anyway. Another client says we're going to go after Hispanic and we need to go after them in their language."

Marla Skiko, vp, director of digital investment at SMG Multicultural, says much of her job is spent working to educate brands approaching this space where, she says, the biggest obstacle is simply a lack of dedicated experts. "Marketers don't necessarily have a Hispanic brand manager, let alone a Hispanic digital expert," she says.

Meanwhile Rob Stearns, CEO of QuePasa.com, says that online media spending aimed at Hispanics is still limited because budgets remain so siloed. "It's lagging, but picking up velocity." he says.

QuePasa is one of a group of long-standing Hispanic sites forced to reinvent. Since Stearns morphed the property into a social-networking hub roughly a year ago, traffic has jumped from less than 200,000 registered used to roughly 1 million. "We had a vibrant audience, but it needed to be reoxygenated," he explains.

But others contend that sites like QuePasa suffer when it comes to advertising because they are published in English, since Hispanic-specializing agencies demonstrate a preference for tried and true Spanish-language properties. "Advertising in the market has been driven by Hispanic agencies, who tell clients that you had to have content in Spanish," says Peter Bassett, senior vp at Community Connect, operator of the Latino social networking site MiGente, which publishes in English.

SMG's Skiko acknowledged that most of her online budgets tend to be concentrated on legacy sites like Starmedia.com and Univision.com and that when targeting young Hispanics, she often finds more success with general-market sites such as MySpace.

That points to a challenge for newbies like Voy TV. "This is the conundrum," says Espuelas. "Marketers say, 'If Hispanics are consuming media in English, why use Hispanic sites?' Yes, the demo is absolutely mainstream, but also appreciates being spoken to as Latino."

As for what's next, OMD's Kim predicts that nearly all of the top Web players will have Spanish versions, including MySpace. And regardless of whether clients are active now, he's certain Hispanic online media is on everyone's to-do list. "One thing I know is that this year my budgets will be bigger," he says.