Corporate
Leaders in Hispanic Marketing Also Lead in Creating Shareholder Value.
Hispanic
Ad
No Author given
2/6/06
The breakthrough results of the first phase of a study that
indicates that companies seriously investing in Latino markets have a significant
edge in accelerating shareholder value creation, according to the Santiago Solutions
Group (SSG) study "Does a Well-Resourced Hispanic Corporate Strategy Translate
into Shareholder Value Creation?" The study found that the companies that
allocate the highest percentage of advertising resources to Hispanic marketing
produce an average return on equity that is four times higher than the followers.
"Until now, chief marketing officers, chief financial
officers, as well as brand and segment managers, lacked reliable proof to substantiate
moving dollars from the 'General' Market to the booming Latino segment" said
Carlos Santiago, President and CEO of Santiago Solutions Group. "This study,"
continued Mr. Santiago "begins to validate that committing to a well resourced
corporate Hispanic initiative not only can generate accelerated top line growth,
but also contribute to shareholder value creation."
The study found that between 2000 and 2004 the 10% of the
companies allocating the highest resources to Hispanic advertising as a percentage
of their total advertising spending created a mean cumulative return on shareholder
equity of 9.0, while the remaining 90% of the companies had a return of only 2.2.
This means that every $100 invested in a "top decile" company, leading
in allocation to Hispanic marketing, in 2000 will return $900 in 2004, as compared
to a $220 return from an investment in the remaining 90% of companies.
Preliminary findings also indicate that the relative impact
of a commitment to Hispanic marketing differs by industry. Further analysis on
the Consumer Packaged Goods (CPG) industry, which led the other industries in
the study for investment in marketing to Hispanics, revealed that the leaders
within the CPG industry had a mean cumulative return on shareholder equity 12
times higher then the followers. The 10% of the companies, or top decile, allocating
the highest resources to Hispanic advertising as a percentage of their total advertising
spending in the CPG industry created a mean cumulative return on shareholder equity
of 33.8, while the remaining 90% of the companies had a return of only 2.8. This
means that every $100 invested in a "top decile" company in 2000 will
return $3,380 in 2004, as compared to a $280 return from an investment in the
remaining 90% of companies.
Therefore, an investment in a company that is a leader in
seriously investing in the Latino markets is much more likely to reap a higher
reward than an investment in a company that is not committed to investing in this
crucial segment of the marketplace.
For this phase of the study, the preliminary sample of companies
was generated from companies that were the top 500 U.S. advertisers ranked by
TV and print expenditures for the years 2000, 2001, 2002, and 2003, based on data
from TNS Media Intelligence. 2004 marketing data was collected from the AHAA 2004
Media Trend report. The final sample was selected based on multiple factors, including
status as a public company and financial performance data available from Value
Line. The return on shareholder equity, according to Value Line, was used to calculate
the cumulative return between 2000 and 2004. Various statistical analyses were
applied to ensure significance and integrity of the results.
SSG continues to investigate these findings and pursue new
areas of research related to this study, such as understanding the first-mover
advantage in an industry as it applies to Hispanic marketing and understanding
how internal corporate culture and infrastructure impact the external marketing
campaigns to Hispanic markets.
For more information at
>http://www.santiagosolutionsgroup.com
