NEWSLETTERS - Study: Connection between Hispanic marketing, revenue growth

Study: Connection between Hispanic marketing, revenue growth

The Association of Hispanic Advertising Agencies released its 2010 Report on Hispanic Advertising Spending, which revealed that there is a connection between consistent and significant investment allocations of more than 14.2 percent in Hispanic marketing and high levels of overall topline revenue growth.

Rent-A-Center is named as one of the "best-in-class" companies that exhibit a strong correlation between Hispanic marketing allocation and revenue growth.

The report also shows strong 2010 recovery in Hispanic ad spending across the top 500 advertisers -- reversing a two-year slowdown, increasing the aggregate Hispanic ad spend by 14 percent over 2009 levels to $4.3 billion in Hispanic media.

The AHAA analysis found that there is indeed a strong, positive relationship between the percentage of overall ad spend allocation to Hispanic media and a company's revenue growth.  For Best-In-Class companies, which are defined as U.S. companies with a Hispanic allocation of marketing dollars of more than 14.2 percent, the percent of ad spend allocated to Hispanic markets is a very  important determinant of a company's overall revenue growth rate.

Consistent ad allocations greater than 14.2 percent explain about half of the best-in-class companies' revenue growth rate. The AHAA study found with a confidence level of 99 percent that a Best-In-Class company 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 (Popeyes Chicken, Church's Chicken, Cinnabon), Allstate, AutoZone, Colgate-Palmolive, Collective Brands (Payless Shoesource), DirecTV, Domino's Pizza, Echostar Communications, Heineken, JC Penney, Rent-A-Center, SAB Miller, State Farm and Vivendi.  

Coming on the heels of the recession, Hispanic media spend by the Top 500 advertisers stood only $163 million below its peak in 2007 showing a strong recovery. However, unlike the general market which saw budgets slashed during the 2008 recession, the Hispanic advertising industry has remained constant at five to six percent of total advertising budgets, from 2006 to 2010.

Showing a steep turnaround in 2010, the Top 500 reversed the previous two year trend returning over $500 million to Hispanic media, intensifying their ad spend by 14 percent over 2009 levels.

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