Missed OpportunitiesVast Corporate Underspending in the U.S. Hispanic Market
FAST MARKET INTRODUCTIONFACTS This study is the first-ever look at America’s leading corporate advertisers’ spend- ing trends to target Hispanic consumers. It has long been assumed that corpora- tions were underinvesting marketing dollars relative to the size and strength of the• There are 40 million U.S. Hispanic market. This report confirms that the majority of America’s top Hispanics in the U.S. advertisers still lag in their U.S. Hispanic market spending relative to their overall marketing expenditures. Armed with the overwhelming 2000 U.S. Census data providing an official val-• 61% of the Hispanic popula- idation of the strength and size of the Hispanic market, more corporations are tion was born in the U.S. investing marketing dollars into the Hispanic market than ever before. Other cor- porations, who have been in the market for some time, have also increased their• Hispanics have a combined investment. Top performers in this study included Colgate-Palmolive Co., Sears Roebuck & Co., MCI Worldcom and Hyundai Motor Group. This is good news buying power of $630 billion and we all applaud the efforts of these companies. However, the majority of top advertisers have still not met the minimum investment threshold to truly be effective• The median age of Hispanics in the U.S. Hispanic market. is 26 compared to age 35 for This research is conducted and released by the Association of Hispanic Advertising Agencies (AHAA). The data was gathered and analyzed by Santiago the rest of the U.S population & Valdés Solutions, strategic market consultants, with input from the Hispanic Association for Corporate Responsibility. Since its founding in 1996, the members• Hispanic population increased of the Association of Hispanic Advertising Agencies have been leading the adver- by 58% in the past 10 years tising industry and working with corporations to develop innovative strategies that sell products, build brands and foster a relationship between Hispanic consumers and corporate America. Our goal in studying corporate spending patterns is to• Hispanic buying power is better help corporations understand the bottom-line benefits of reaching Hispanic increasing at a rate of 118% consumers.• Median Hispanic income is METHODOLOGY more than $40,000 The Association of Hispanic Advertising Agencies with the help of Santiago & Valdés Solutions studied measured advertising spending for the top 50 U.S. advertisers using data collected by CMR and published in Advertising Age over a three year period. This sample represents nearly all of the top U.S. advertisers, who collectively spend more than one-quarter of U.S. advertising annually. Top Hispanic advertising spenders were identified through a list published by Hispanic Business Magazine, verified by AHAA and other third party sources. Using Strategic Research Corporation (SRC) 2002 data tracking Hispanic adults’ language-preference and media consumption, Santiago & Valdés deter- mined that for optimum effectiveness in reaching the Hispanic market, advertisers should devote at least eight percent of their advertising dollars to Hispanic adver- tising and marketing. Results in this report were obtained by comparing the per- centage of measured media spending on Hispanic Spanish and bi-lingual adver- tising and comparing this to the eight percent optimum spending ratio.
KEY FINDINGS Relative to the 8% threshold needed to be effective in reaching the Hispanic market, the majority of top advertisers still lag in their investment on total ad spending. While Hispanics represent about 13 percent of the U.S. population, in aggregate America’s leading advertisers are allocating an average of 2.4 percent of their measured media advertising resources targeting Hispanics in the past three years. 3.5 3.0 With heightened awareness on the 2.5 value of the U.S. Hispanic market, 2.0 since 1999 leading advertisers 1.5 have almost doubled their alloca- 1.0 tion of advertising resources to 0.5 Hispanics from 1.8 percent of 0.0 total advertising dollars in 1999 to 3.2 percent in 2001.LEADERS LAGGARDSFood & Beverage Products Pharmaceuticals Relative to their overall advertis-Food Services U.S. Government ing resources, on average, theseGeneral Merchandise Auto Industries leaders have invested the most inTelecomunications Travel/Entertainment marketing to Hispanics whilePersonal Care Software these laggards have invested the least.Insurance Computer Makers Securities/Financial Services Specialty Retail
CONCLUSIONS ➣ The low scores in our sample demonstrate that companies are not placing proper value on the opportunities the Hispanic market offers. Something still stands in the way of understanding the market’s poten- tial and how to effectively pursue it. ➣ Shareholders should be concerned with corporate America’s inertia in seeking out Hispanic consumers. ➣ The companies with the best understanding of the Hispanic market’s contribution to profitable revenue growth will be in the best position to thrive over the long-term. ➣ Without proper investment and positioning of brands, Hispanic con- sumers do not have the knowledge to differentiate between brands and are only left with price as the differentiator. Thus, without strongSPECIAL THANKS TO: branding among Hispanics, brands run the risk of being commodi-• Santiago & Valdés Solutions ties.• Hispanic Association for Corporate Responsibility A CALL TO ACTION• Members of AHAA G-10 ➣ CEOs must take the lead in reversing underinvesting in the Hispanic Committee market. ➣ Corporations should take a look at the growth and potential ROI of all available target segments. ➣ To create strategies that result in profitable revenue growth in the Hispanic market, managers need to look beyond general market advertising agencies and turn to Hispanic market experts. ➣ Corporations should evaluate how they use their Hispanic advertising agencies to ensure that they are maximizing this strategic relationship and using these agencies for creative and strategic consultation and execution. ➣ Corporations should take a holistic approach to Hispanic marketing by evaluating things like retail locations, call-centers, hiring etc.Association of Hispanic Advertisng ➣ Independent organizations must continue to track corporate invest-Agencies ments in the Hispanic market and additional research is needed.8201 Greensboro Drive,Suite 300McLean, VA 22102703-610-9014703-610-9005 faxwww.ahaa.org