By Isaac Mizrahi – SVP, Managing Director at Alma
As we witness economic recovery beginning to reach the Hispanic market, we’re uniquely positioned to be able to offer an economic boost to our clients that no other market segment can.
The recovery will have a positive impact on Hispanic employment, income and consumption levels. Companies now preparing their 2013 plans will be considering crucial decisions around investments targeting the Hispanic consumer. Those that don’t allocate adequate resources to this segment will be at a competitive disadvantage.
Two recent studies reached similar conclusions.
First, in December2011 Credit Suisse published “Reaching Hispanic Consumers.” Authors Robert Moscow, Marcela Giraldo and William Sawyer focused their research primarily on direct-to-consumer food companies. They concluded that companies with a sustained focus on the Hispanic segments are growing their total U.S. sales faster than the companies who are not. Even better, the difference in sales growth also impacts the corporation’s stock price valuation, adding an estimated premium of up to eight percent.
What does “sustained focus” translate to strategically? Top tier advertising commitment, according to the study, with levels of Hispanic media investment as a percent of total media above the ten percent threshold.
Other important factors include commitment from senior leadership, the importance of building a learning curve, the need to establish reliable measurement tools and the willingness to take risks.
The second study was prepared by Carlos Santiago and his team at Santiago Solutions Group, on behalf of the Association of Hispanic Advertising Agencies (AHAA). This study was able to analyze public sales data for almost 40 corporations among traditional CPG and retail companies and correlate them to the levels of investment in Hispanic measured media.
This second study confirms the findings of the Credit Suisse work, showing that there’s a direct and positive correlation between Hispanic media investments and sales growth. The study was able to attribute 35 percent of the growth to the Hispanic investment. This number is very significant because the Hispanic population is only about sixteen percent of the total U.S. population, and has a proportionally lower disposable income.
The AHAA study also assessed different Hispanic media allocation thresholds and concluded that higher investment in Hispanic media (above eight percent of total media for this study) was associated with higher sales growth.
Now critics are quick to identify limitations and concerns with the studies, like the absence of digital, shopper marketing or grass root investments, or the fact that there’s no qualification of the message used in the Hispanic media. In my opinion, these limitations don’t take away from the quality of the studies and more importantly, that they represent adequate proxies for overall commitment to Hispanic marketing.
In my experience, a company that has a healthy allocation towards Hispanic media (above ten percent of their total media budget) tends to also be investing in Hispanic Digital, Shopper Marketing, Community and Grass Root programs. Besides, they also tend to have a leadership team committed and experienced enough to hire great agencies and develop high quality work.
In an era where CMOs last for months rather than years, in a moment that companies are starving for any glimpse of growth they can identify, these two studies provide a great insight into who is best positioned to win in the marketplace.
For many years Hispanic marketing investments have been treated as a “nice to have” line items by many organizations that did not consider them a meaningful source of growth. These studies confirm what visionary companies have known for some time now — focusing on Hispanic marketing is core to their resource allocation plans because they directly correlate to growth.
While some companies are still assessing, analyzing, discussing, trying to create new models in regards to Hispanic marketing, those riding this trend are simply winning. They are further consolidating their competitive advantages until the point that it will either be too late or too expensive to challenge them in consumers’ minds and hearts.
Courtesy of ALMA.