• by Larry Dobrow , April 21, 2004

Marketers are parceling out more of their ad dollars to Hispanic publications and television stations, with percentage growth since 2000 quadrupling the pace of the general market. Despite this growth, a new study suggests that most companies are under-allocating resources to this market, with many ignoring Hispanic media entirely.

"Ad Budget Alignment: Maximizing Impact in the Hispanic Market," conducted by the Association of Hispanic Advertising Agencies in conjunction with multicultural specialist Santiago Solutions Group and TNS Media Intelligence/CMR, found that 5.1 percent of national corporate ad budgets are now devoted to Hispanic print and television media. The AHAA, however, believes this figure should be closer to 9 percent, given the size (38 million consumers) and spending power ($630 billion annually) of the market.

"The investment has not been commensurate with the opportunity," said AHAA President Aida Levitan during a Wednesday conference call. "Progress has been made and we're very encouraged by that... [but] there's still not as much [spending] as we'd like to see."

The study compared expenditures in Hispanic media with general market media in five areas: network TV, national cable TV, spot TV (19 markets), consumer magazines, and newspapers (nine markets); radio was not evaluated. The Hispanic media allocations of 671 U.S. advertisers were examined.

According to the report, around 20 percent of product categories are devoting what the AHAA deems to be the "correct" amount (ascertained by Hispanic consumption behavior) in Hispanic TV outlets and publications. Leading the way were consumer electronics retailers and manufacturers, food and drug retailers, and telecoms. Lagging behind were pharma companies, apparel manufacturers, and financial services firms.

Levitan singled out the track record of pharma companies as particularly disturbing, noting that these companies allocated a mere 0.8 percent of their spending to Hispanic media. She attributed this to a "lack of information about the Hispanic market and its potential" as well as "myths" about Hispanic consumers, such as that many of them receive money for these products from the government.

Santiago Solutions Group President and Chief Executive Officer Carlos Santiago, on the other hand, commended retail-level and direct marketing advertisers, who have shifted 7.3 percent of their national ad spending to Hispanic media. He said it wasn't difficult to understand why retailers have eagerly targeted Hispanic consumers with their ads: "Retailers are a lot closer to the cash registers. They're seeing customers coming into the store and hearing the phone ringing." At the same time, he criticized financial services companies for "not recognizing the wealth of Hispanics."

The AHAA also released its list of the top 250 U.S. advertisers, a project designed to identify the companies that are dedicating the highest percentage of their ad budgets to Hispanic media. Of the companies on the list, 61 out of 250 aren't spending a cent in Hispanic publications or TV stations ("that's a pretty shocking reality," Levitan said), and 49 are allocating less than 1 percent of their dollars to those venues. Companies singled out for spending a comparatively high percentage of their budgets in Hispanic media include PepsiCo, Sears, Roebuck and Co., Wal-Mart, and McDonald's; the U.S. Government and organizations like the AARP and American Legacy Foundation also earned high marks.

Levitan said her highest hope for the study is that it will "get the attention" of corporate America's chief executive and chief marketing officers. "If they want to grow their brands--in fact, if they want to preserve their brands--they should take a much closer look at the Hispanic market," she said. "Advertising dollars are being reduced because of the economy being what it is, but if they don't start paying attention... many of their brands will deteriorate."

As for why companies have been slow to increase their ad spending in Hispanic media, she added: "Sometimes people take a long time to discover what's facing them every day."