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Hispanic Ad Spending and Reallocation Could Mean Accelerated Growth for Firms, Brands: Study

First Posted: Nov 20, 2015 11:34 AM EST
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The Hispanic market is traditionally underserved, but that may change soon. Several firms with the financial services, insurance and retail sectors have discovered that reallocating funds and increasing ad dollar spending on Hispanic media could mean a greater return on their investment.

The national trade organization Association of Hispanic Advertising Agencies (AHAA) published the latest addition to its insight series on Nov. 8, "Financial-Insurance Services & Auto Hispanic Media Allocation Trends 2010-14 & Impact on Total Market Revenue Growth Study." According to findings in the report, which were also sourced via Nielsen, insurers and financial service companies that effectively target the Hispanic market with publicity campaigns see a higher rate of growth in sales revenue and increased return on investment.

The study examined companies within the insurance industry and financial services that increased their marketing budget for Spanish-speaking consumers by 5 percent. Those companies benefited from an increase in revenue and grew the total market. Among top 500 advertisers, spending increased by 5 percent from 2010 to 2014 ($79 billion to $81.1 billion), and Hispanic ad spending increased 61 percent ($4.4. billion to $7.1 billion) during the same period. Financial-insurance ad spending among top advertisers increased 20 percent, and Hispanic media ad spending jumped 39 percent from $253 million to $352 million. Financial services firms and insurers increased marketing budget spending for Hispanic media by $100 million in the last four years; spending for the Anglophone market was only increased by $50 million.

"This information is convincing, the data reveals that the Hispanic market can be a decisive factor in business success" Carlos Santiago, president of the AHHA research committee and CEO of Santiago Solutions Group, said in a press release. "Insurance companies and financial services want to win not only some market share among their competitors, they also want to provide growth and stability for their investors, which is why investing in Hispanic marketing is a clear strategy to reach both objectives."

State Farm, which devotes 22 percent of its advertising budget to Spanish media, leads the way when it comes to spending for businesses, outlaying $106 million in total expenses. Wells Fargo, National and Allstate are among the other companies that invest in marketing that's directed pointedly at the Hispanic market. Increased spending on Spanish-language advertisements contributes to growth in the automotive sector and several other sectors. Only five percent of advertisement spending needs to be reallocated the Hispanic market, if companies want to grow total market annual revenue by nine percentage points.

"This year, we have found in our study series that consumer packaged goods, retail, financial services and insurance companies shifting ad spend allocation from English to Hispanic-dedicated media experience a significant boost in corporate revenue growth while companies decreasing Hispanic allocation tend to see a slow down," said Santiago. "The numbers we are seeing in the auto sector is far greater. This is one of the highest allocation growth impacts found in any category studied thus far, pointing to the vast untapped opportunity available across all categories."

There is a direct relationship between progressive increases in Hispanic media spending, dedicated allocation and total market revenue growth. In fact, the financial-insurance services sector has boosted total market revenue by 6.4 points in compound annual growth rate because of Hispanic market spending, which is one of the highest allocation growth impacts found in any category studied thus far by AHAA, suggesting vast untapped opportunity. Additionally, a 5-percent reallocation from English media to Hispanic media would generate 1.75 percent acceleration in U.S. revenue growth rate.

According to the report, since 2010, Hispanic media allocation has doubled to 8.4 percent in the auto sector. Increases made by Nissan, Honda, Kia, Hyundai, Ford Dealers and Honda. Hispanic consumers have been drawn to auto marketers, who effectively tease them with luxury auto brands and higher end model. Brand awareness, equity, value, social responsibility, social presence and talent all entices the Hispanic market. Hispanic spending and 5 percent reallocation has led to revenue acceleration of 8.9 points annually in the auto sector.

For nearly two decades, AHAA has been developing independent studies to track "above-the-line" spending and the allocation trends of marketers. Also, the reports offer an increased understanding of the best ways to win over the Hispanic market, identifying dedicated efforts and growth.

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