The Association of Hispanic Advertising Agencies (AHAA) just released its 2010 Report on Hispanic Advertising Spending, which shows a 14 percent increase in budget allocation for these types of campaigns from 2009.
Across the top 500 advertisers, Hispanic ad spending for 2010 was $4.3 billion.
The AHAA analysis also found that the percent of ad-spend allocated to Hispanic markets is an important determinant of a company’s overall revenue growth rate. The AHAA study found with a confidence level of 99 percent that a best-in-class company (defined as a U.S. company with a Hispanic allocation of marketing dollars of more than 14.2 percent) allocating one-quarter of its ad spend to Hispanic media over five years would generate annual revenue growth of 6.7 percent.
Among the best-in-class group, companies with a strong correlation between allocation and revenue growth include: AFC Enterprises, parent company of Popeyes Louisiana Chicken, and Domino’s Pizza.
Non-restaurant brands included Allstate, AutoZone, Colgate-Palmolive, Collective Brands (Payless Shoesource), DirecTV, Echostar Communications, Heineken, JC Penney, Rent-A-Center, SAB Miller, State Farm and Vivendi.
Allocations on a post-recession rise
Hispanic media spend by the Top 500 advertisers stood $163 million below its peak in 2007, but still showed a strong recovery from the past couple of years. Unlike the general market that saw budgets slashed during the 2008 recession, the Hispanic advertising industry has remained constant at 5 to 6 percent of total advertising budgets from 2006 to 2010.
Showing a turnaround in 2010, the Top 500 reversed the previous 2-year trend returning over $500 million to Hispanic media, boosting ad spend by 14 percent over 2009 levels.
“Companies now understand that the Hispanic market is not going to simply assimilate and go away, which means that a targeted approach will deliver long-term benefits,” said Roberto Orci, AHAA president and CEO of Acento Advertising. “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.”
QSR is a leader
The quick-service restaurant industry falls into the “Leaders” category of the AHAA’s list of Hispanic advertisers, divided as such:
•Best in Class, defined by their allocation of more than 14.2 percent of overall ad budgets to Hispanic media;
•Leaders, companies which allocate between 6.4 and 14.2 percent;
•Followers, which allocate between 3.6 and 6.4 percent;
•Laggards, defined by their Hispanic allocations of 1.0 to 3.6 percent; and
•Denial, defined by their allocation of less than one percent.
Among the Leaders category, QSR has showed a significant increase of 30 percent, or $70 million in incremental investment, for $301 million total spend in 2010.
This is the second highest increase in the Leaders category, behind the Telecom industry, which grew 51 percent.
The trend toward Spanish-speaking advertising appears to be accelerating. A 2009 analysis by the Latinum Network found that while the American economy floundered, the spending growth by U.S. Hispanics was twice the growth of general market spending. Additionally, one-third of the nation’s population 19 years old and younger is expected to be Latino by 2015.
Popeye’s and Domino’s are not alone in reaching out to this demographic. Pizza Patron has been aiming its major ad campaigns toward the Hispanic market since 2004.
Within the past year, the AHAA also recognized El Pollo Loco and McDonald’s as among the best marketers for the Hispanic demographic. Wendy’s and Burger King have launched Spanish-speaking campaigns, Baskin-Robbins created a new role to head up the company’s U.S. Hispanic marketing efforts, and Carl’s Jr. developed a format to integrate the chain’s products into primetime lineups of Univision and TeleFutura affiliates.
Also, Whataburger’s first new marketing campaign in nine years launched this week, featuring separate Spanish-language spots, created by San Antonio-based FPO Marketing.
“It is essential to actually build a bridge, provide specific messaging and penetrate this demographic in order to maintain continued success in the market,” said Darren Tristano, EVP at research firm Technomic. “Chains that research Spanish-speaking consumers and hire marketing staff with a deep understanding of the market will have a leg up on their competitors.”
The AHAA’s study analyzed all 35,000 U.S. advertisers and their allocation trends to Hispanic media from between 2006 and 2010.