July 24, 2021

By Isaac Mizrahi - Co/President of ALMA

As companies kickoff their 2022 business planning process, CMOs and their teams face a perennial challenge: allocating their limited resources among a variety of brands, projects, programs, and opportunities, while still achieving the necessary ROI and expected growth rates.

To complicate matters, marketers face a constantly changing marketplace that challenges past assumptions regarding consumer behaviors, media choices, and demographic shifts.

Unfortunately, most organizations will allocate their 2022 resources based on antiquated models that, at best, provide room for some “fine-tuning” over what used to work years ago.

However, outdated resource allocation models based on the past are no longer good enough for most brands. Some marketers have started to realize there’s an ever-widening gap between where most resources are being allocated versus where most of the incremental growth is coming from.

Nowhere is this problem more accentuated than in the multicultural marketing space. Most organizations have notoriously underinvested in the core targets of this segment (Hispanic, Black, and AAPI consumers), and the gap between business importance and intentional investments only grows larger.

For example, according to Nielsen data, the industry’s investment in measured Spanish-language advertising was only 5.9% of the total investment in 2020, despite the fact that the Hispanic segment, with almost 20% of the country’s population, represents the largest minority ethnic group in the U.S. To make this gap even more critical, nearly 70% of this population has a high affinity for Hispanic culture, including media consumption in Spanish.

A few key factors drive this myopic behavior:

Difficulty in Defining the Opportunity – Most marketers still see multicultural marketing programs as an extension of advertising, negating a more significant opportunity to impact the whole business positively.

Absence of Multicultural Key Performance Indicators – If you don’t track your business performance by multicultural segment, you can’t know a segment’s contribution to your business. If you don’t know this, you can set proper objectives, strategies, and programs to grow it.

Lack of Specific Multicultural Strategies – Most organizations ignore multicultural marketing efforts or treat them as an appendix of their mainstream marketing efforts. Consequently, multicultural marketing investments are often the first line to be cut when budgets need to be reduced.

In addition, even companies that tentatively invest in multicultural advertising do so based on stereotypical insights or creative ideas, and worst of all, merely translate existing messages to Spanish without considering consumer barriers or drivers.

The Illusion of Total Market – This is still prevalent because a brand already connects with multicultural consumers via their existing mainstream investments (the spillover or halo effect of media). Several studies have already debunked the perception that this spillover is effective, confirming what experts have always said, “Reaching is different from connecting with multicultural consumers.”

It still surprises me how some marketers continue to pour millions of dollars in multicultural media buys only to place sub-par, ineffective messages to air on these vast investments. The inability to invest in multicultural insights and relevant multicultural messages, which in most cases represent only 10%-20% of a marketer’s investment, makes the remaining 80%-90% almost irrelevant. The irony is that precisely this 10% to 20% range is called “non-working dollars” by many, but in reality, this is the part of the budget that makes the bulk of the investments work.

Misunderstanding the Way Multicultural Advertising Works – Most marketers still don’t fully understand how highly effective multicultural messages work. Most of the recent studies that dissect the components of the effectiveness of multicultural advertising indicate elements that increase cultural fluency, nuances, relatability to everyday situations, use of dialogue, and humor.

In other words, the more specific you are in your approach, the more authentic your message will ring. That authenticity is key to building your brand in consumers’ eyes and driving disproportionally higher ROI versus brands that ignore multicultural consumers or merely translate messages targeting anglo consumers, hoping that some part of that message will connect with multicultural audiences.

But there is some good news to report. Not all companies are trapped in past assumptions and models and are starting to put their money where the growth is. According to Nielsen, last year, fourteen companies out of the top 20 Hispanic-focused advertisers in the country showed an increase in their relative Spanish-language investments vis-à-vis their total expenditures.

While most advertisers hesitate to openly discuss their resource allocation strategies, based on our experience, most do follow some or all of these best practices:

  • Adopt a zero-based budget where past years don’t influence future marketing investments.
  • Consider a proportionality between investments by multicultural segment and their importance as existing customers or clients.
  • Consider a relationship between sources of growth or incremental sales derived by multicultural segments and investments towards these segments.
  •  Surround yourself with experts (internal and external) that can help you with the allocation of resources and with the implementation of your plan.

As we embark on a new year, it is time to revisit old assumptions and place your brand on a growth path by allocating your resources wisely. Marketers should consider a constant rebalancing of their budget allocation criteria, similarly to what investors do with their own portfolios.

Growth will reward companies with the courage to break up with old paradigms and fully embrace the new marketplace reality.


isaac photo

Leave a reply

Enter the characters shown in the image.