Are
You Spending Enough on the Latino Market?
By
Angela D. Johnson
©
2004 DiversityInc.com
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April 22, 2004
Of
the country's top 10 national advertisers, only two -- Procter
& Gamble and Toyota Motor Corp. --- even come close to achieving
suggested Latino media spending level for their business categories.
That's according to the first comprehensive ranking of national
advertiser spending on Latino media released by the Association
of Hispanic Advertising Agencies (AHAA). (See also, accompanying
chart.)
The results aren't any brighter in the assessment
of specific business categories. Again, only two -- food and drug
retailers and telecommunications -- are investing amounts that
are in line with Latino consumption behavior in those categories.
"Retailers are a lot closer to the cash
register … and they see the power of the Hispanic consumer,"
said Carlos Santiago, president of the Santiago Solutions Group.
"However, manufacturers are still lagging behind that."
Pharmaceutical manufacturers and financial-services
companies -- areas in which health disparities and language issues
necessitate targeted outreach to Latinos -- are missing the mark.
On the individual company level, Xerox, Apple Computers, Hallmark
Cards, Schering-Plough and Astrazeneca are among a number of companies
delivering goose eggs when it comes to the percentage of total
ad spending directed at Latino media.
These are just a few of the findings from "Ad
Budget Alignment: Maximizing Impact in the Hispanic Market,"
part of a series of studies presented by AHAA over the past six
years that assess advertising spending in Latino-targeted media.
The study monitored the ad-buying activities of 671 companies
that have been among the top 500 U.S. television and print advertisers
at least one year between 2000 and 2003. (Radio was not surveyed
for this study). These advertisers represent approximately 80
percent of all U.S. advertising spending.
Why all the fuss about how much companies and
industries are spending on Latino media? The decision of whether
to reach Latinos through targeted media has serious business implications.
According to Aida Levitan, president of AHAA, those who turn a
blind eye to Latino media are missing out on the opportunity to
tap into more than $600 billion in Latino buying power. In addition,
companies that are underallocating spending within the Latino
market are most likely overallocating in other areas, thus creating
a lower return on investment among advertising directed at non-Latino
consumers.
"I think it's up to the CEO to realize
if they want to grow or preserve their brands, they need to take
a serious look at what they are investing in the market,"
said Levitan.
AHAA determined that "right spend"
-- the percentage of a company's overall ad spending that Latino
advertising should comprise -- for 2003 was 8.6 percent (This
number will rise to 8.6 percent this year and will top 9 percent
in 2005.) A company's right spend level is determined by Latinos'
consumption behavior in the company's business category.
With spending growing at four times the rate
of the general market, the broader picture provides a better showing
than individual company and industry analysis. However, at 5.1
percent of national corporate advertising budgets in 2003, these
investments account for slightly more than half of the 9 percent
allocation recommended by AHAA for Latino-targeted media.
The study found that in the area of Latino
television, resource allocations rose from 4.7 percent in 2000
to 7.4 percent in 2003. Print allocations doubled during the same
time period but still only account for 1 percent of spending.
Much of the overall resource allocation
growth has been driven by the country's top 250 advertisers, particularly
those ranking between 101 and 250. Between 2000 and 2003, the
top 100 advertisers increased spending in Latino media from 3.7
percent of their budgets to 5.5 percent, while those in the second
tier jumped from 3.2 percent to 8.9 percent.
