Hispanic Budgeting – More Like Algebra Than Rocket Science
October 27, 2020 – If you are like me, my love of math was cut short at pre-calculus. Fortunately for all of us, projecting how to budget for the Hispanic Consumer Market for the first time requires less engineering than you might expect. Remember the axiom if A=B and B=C then A=C. Let’s translate.
If Hispanic = Growth
And Growth = A Strategic Opportunity Then Hispanic = A Strategic Opportunity
I’ve been marketing to Hispanic consumers for over 30 years. It is my job to make this sound simple. But the apathy related to this most obvious of growth opportunities has eluded me for just as long. Three market realities suggest that every advertiser in the United States should at the very least be considering the Hispanic Consumer Market as THE GO-TO addressable market for growth.
Reality #1 – Hispanic population grew 29% between 2010-2020
Let’s start with the demographics, which still seems to fall on deaf ears. Between 2010 and 2020, the general population of the US grew by 7.2 percent. The Hispanic population grew almost 29%. Put another way, Hispanics on average are driving over 50% of the growth in addressable consumer markets. This growth comes despite record numbers of deportations, scare tactics and general anti-immigrant sentiment in this country. In other words, if you allocate 100% of your budget growth exclusively to the general market, you are metaphorically investing as much as 50% more than whatever dividend you think you may be earning.
Reality #2 – Hispanics contribute 25% of our GDP growth
We cannot separate population growth from contributions to economic growth, which is taken for granted. Hispanic consumers and businesses already contribute about 25% of our GDP growth. Even after factoring in lower incomes and less purchasing power, the Hispanic Consumer Market still represents $2 Trillion or about 12% of the country’s purchasing power – significantly more than any other multicultural group.
Reality #3 – The Top 10 Advertisers spend up to 24% on the Hispanic Consumer Market
And finally, the proof, which in a growing culture of science denial is easily ignored. I am referring to the top 10 advertisers spend anywhere between 8% and 24% of their ad budgets against the Hispanic Consumer Market. Whether you believe it is coincidence or causation, these are all both general market and Hispanic market share leaders. (See our infographic on this very subject). Spanish-language advertising is on the rise. A Claritas 2018 report shows that Hispanic advertising spend is at 6% of the total ad spend in the US. Still commensurate with the size and growth of the market, but this figure had plateaued at 4% for most of this past decade.
If any of this has nudged you to give this market another look, read on – there are three approaches you can take to help you figure out where to start. Let’s engage in a thought experiment. Calculate the incremental dollar amount of just 50% of your proposed incremental budget and apply it to any of the budgeting approaches below.
For most advertisers, the budget process is limited to a zero-sum calculation. If you add Spanish-language advertising you need to cut somewhere else.
• What does this incremental budget get you in the general market – are you reaching new audiences and expanding your addressable market or just paying more for what you already have? Does your last general market dollar buy you the opportunities that your first Hispanic Consumer Market dollar will?
Can you spend this theoretical incremental budget allocation below the line as a D2C test? By test we refer to measuring what the market can do for your bottom line.
• Forget about the current 6% index of average Hispanic Consumer Market advertising spend. What is important is what you can do to earn a piece of this $2 Trillion consumer market segment.
Follow the Leaders
By this we mean, follow their example, not their spend. Fortune 500 companies can afford to spend more than most in Spanish, and many already have. That is because it pays off in revenue, market share, brand loyalty, lifetime value and other measures of ROI.
• Anything above $500k and you are in a good position to launch your own “proof of concept” Direct-to-Hispanic campaign. A good agency, specializing in the Hispanic Consumer Market will help you model the metrics of how many new Spanish-speaking customers you can add today to the most valuable of addressable market segments for the next few generations.
You decide. Rocket science, advanced business modeling, or just a simple, easily actionable axiom.
If My Hispanic Budget = $___________
And $___________ = A Strategic Growth Opportunity Then My Hispanic Budget = A Strategic Growth Opportunity
For more discussion about the Hispanic Market, check out the infographic in our MARKET IQ section on our website, d2hispanic.com
Marcelino Miyares, Jr. – Managing Partner – D2H Partners, LLC – 2020