Spending More on Latino Advertising Increases Revenue Growth

Mar 13, 2012

The Latino market currently has over 1 trillion dollars in purchasing power. And some industries, more than others, are investing in Latinos and experiencing returns.

A recent report from the Association of Hispanic Advertising Agencies demonstrates that Latino ad spend positively correlates with revenue growth. The data reveals that spending 25% of total ad budgets on Latino advertising over 5 years, “would generate annual revenue growth of 6.7 Percent.”

The report analyzes the top 500 advertisers in the country from 2006 to 2010 based on how much money they spent on Latino advertising; those that contributed more than 14.2% of their budget are labeled “Best-In-Class,” and the rest follow suit, as shown in the figure below.

 

Prominent industries in the “Best in Class” and “Leaders” groups (16% of companies) are Subscription TV, Auto Insurance, Tax Preparation Financial Services, Telecom and Restaurants-QSR (shown in the figure below)[1].  The report cites Allstate, DirecTV, EchoStar Communications (Dish Network, Dish Latino), and State Farm as notable companies within these industries.

 

“Followers” and “Laggards” include industries like Packaged Goods, Automotive Manufacturers, Financial Services, and Pharmaceuticals. And those who are “In Denial” constitute approximately 285 of the top 500 advertisers in the country (57%).

The data boldly states, “a 5 percentage point shift in ad spend allocation from non-Hispanic towards Hispanic would yield between [a] 1.1 and 6.6 percentage point increase in overall corporate revenue, [and] a 10 percentage point increase in Hispanic allocation will yield between 2.2% and 11.2% acceleration in annual topline revenue growth.”

While the Latino market represents so much financial opportunity, there are many companies either unwilling or unaware of the potential rewards. However, those that continually invest and focus on “the most appropriate cultural insights to develop integrated strategies from communications to customer experience … will turn ad spend into sustainable revenue growth.”

[1] The “B-I-C & Leaders Categories: Hispanic Allocation & $ Change 2010 v 2006” graph, as well as industry breakdown information, is taken from a summary pdf of the AHAA report available at http://ahaa.org/downloads/pdf/AHAA_Advertising_Study_2011.pdf

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