AHAA: Hispanic ad spend at $4.3 billion in 2010


The Association of Hispanic Advertising Agencies released its 2010 Report on Hispanic Advertising Spending, which finds spend rose 14% to $4.3 billion in 2010–reversing a two-year slowdown, increasing the aggregate Hispanic ad spend by over 2009 levels. In fact, Hispanic media spend by the Top 500 advertisers stood only $163 million below its peak in 2007 showing a strong recovery.

AHAA says for “Best-In-Class” companies, defined as U.S. companies with a Hispanic allocation of marketing dollars of more than 14.2%, the percent of ad spend allocated to Hispanic markets can determine a company’s overall revenue growth rate. Consistent ad allocations greater than 14.2% explain about half of the best-in-class companies’ revenue growth rate.

The AHAA study found with a confidence level of 99% that a Best-In-Class company allocating one quarter of its ad spend to Hispanic media over five years, would generate annual revenue growth of 6.7%.

The best advice underscores Roberto Orci, AHAA president and CEO of Acento Advertising, is to keep spend consistent, to keep products and services top of mind in recall and recognition: “This research underscores that companies can’t just pop in-and-out of the Hispanic market as a fad and see benefits – real bottom-line benefits come from consistent integrated approaches. Companies must get on the train or risk being left behind and becoming irrelevant.”

Among the best-in-class group:
AFC Enterprises (Popeyes Chicken, Church’s Chicken, Cinnabon)
Collective Brands (Payless Shoesource)
Domino’s Pizza
Echostar Communications
JC Penney
SAB Miller
State Farm

After “Best-In-Class” marketers, the report noted different tiers of advertisers and categories:

Leaders:  companies which allocate between 6.4 and 14.2%;
Followers: allocate between 3.6 and 6.4%;
Laggards: Hispanic allocations of 1.0 to 3.6%; and
Denial: allocation of less than 1%.

Best in Class:
Three out of five — Subscription TV, Auto Insurance and Financial Services/Tax Preparation — catapulted a total spend of $400 million. The Beer category maintained its Best-In-Class standing and edged 1.2 share points in allocation to 15%. Direct Consumer Marketing was the only Best-In-Class category that decreased spend, reducing it by 33% over its pre-recession level of $118 million in 2006.

The Automotive categories in (manufacturers and retailers) have shown an aggregate decrease of approximately $259 million since 2006. In contrast, all other 50 categories in aggregate have shown an upturn of $280 million or 8% in the same period. Among Hispanic allocation Leaders, the Telecom category grew the most, nearly $170 million or 51% since 2006. The Restaurants-QSR category also showed a significant increase of 30% or $70 million in incremental investment to arrive at $301 million in 2010. The Home Improvement & Builders category rebounded from the recession dip increasing 6% over its 2006 base of $91 million. Among 2010 Leader categories, only Government & Lottery and Retail Mass Merchandisers-Department Stores experienced decreases in overall spending.

Four categories among Followers increased their dollar spend since 2006, led by Packaged Goods especially Food manufacturers within it, which boosted their investments in Hispanic consumers by 44% compared to only 16% up among Non-Hispanic traditional media. Both the Automotive Manufacturer and Media & Entertainment categories experienced decreases in excess of $150 million each.

The Pharmaceutical and Automotive Dealers-Assn categories experienced decreases in excess of $50 million each. The Financial Services category has increased its focus on the Hispanic segment with both the subcategories of Investment Firms and Banks-Mortgages showing healthy recovery.

Among the 13 Denial categories, all but three–Diet-Supplement-Vitamins, Insurance-Life, and Luxury Brand–experienced decreases in Hispanic allocation. The Private Investment category took the biggest loss among Denial with an approximate decline of $86 million.

More findings:
* The Hispanic advertising industry has remained constant at five to six percent of total advertising budgets, from 2006 to 2010. 

* At $707 million, Packaged Goods advertisers, including Colgate, General Mills and Mars, are targeting Hispanic consumers, increasing $140 million in ad spend over 2009 and increasing their share of allocation to Hispanics by 1.6 points to 6%.  

* The converging Telecom & Subscription TV categories, including Metro PCS, Verizon and AT&T,  follow closely with $502 million or 9% and $349 million or 13% Hispanic ad spend and allocation respectively, investing $850 million combined in 2010 and adding $415 million to Hispanic media over 2009.  

* Hispanic ad spend in the Auto Insurance category increased by $97 million over 2009 to 12.5% allocation while Non-Hispanic spend decreased by $73 million over the same period.

* With a remarkable jump in Hispanic allocation from 0.5% to 9.8%, Fitness-Sports companies, including Bally’s (Harbinger Capital), became a reemerging category in the Latino community.

* From 2006 to 2010, the expenditures by Financial Services- Tax Preparation & Other category has grown by 9.6% to a 24% allocation of overall spend to Hispanic in 2010.

* During the same period, Beer advertisers, including Grupo Modelo, SAB Miller, and Anheuser InBev, have remained loyal to the Hispanic community as they allocated 15% or about $150 million to the Hispanic segment.

* The Financial Services categories have tripled their focus on Hispanic media since 2009 reaching $215 million in 2010. Similarly, all Insurance categories have experienced increases.

RBR-TVBR observation: A lot of these findings parallel general market ad spend as well. The general market experienced similar cuts and reallocations during similar time periods. But no doubt, consistently reaching out by branding and messaging the Hispanic market here in the US is a smart thing to do. The same can be said for other rapidly-growing multicultural groups such as Korean and Vietnamese. Both are experiencing a boom in media outlets right now as well, thanks to DTV multicast and cable channels. In larger markets, more than ever, the AM dial is becoming home to Korean, Chinese and Vietnamese programming.