AHAA INSIGHTS SERIES

Financial-Insurance Services & Auto

Hispanic Media Allocation Trends 2010-14

& Impact on Total Market Revenue Growth Study

November 8, 2015

ANA Multicultural & Diversity Conference

Presenter:

Carlos Santiago, Chair of AHAA Research Committee and Chief Strategist, Santiago Solutions Group

2

Authors

• Study commissioned by AHAA

• Analytics and interpretation performed

by Santiago Solutions Group (SSG), a

growth strategy consultancy.

Sources

• Parent company ad spend data collected

from Nielsen Monitor Plus.

• Financial revenue growth data extracted

from companies 10Ks.

2015 AHAA Hispanic Media Allocation & Impact on Total Market Revenue Growth Study Series -Financial-Insurance Services & Auto Sector

Context, Author & Sources

Since 1998, AHAA has been helping its

members serve its clients through

breakthrough independent studies. The

Hispanic Media Allocation & Impact on

TM Revenue Growth series aims to:

• Track above-the-line Hispanic spending &

allocation trends among top US marketers by

category

• increase understanding of what level of

allocation is needed to win the market

• Identify relationships between Hispanic

dedicated efforts and Total Market topline

growth.

Methodology

3

English Media Included Hispanic Media Included

Cable TV Cable TV

FSI Coupon FSI CouponLocal Mag Local Magazine

Local Newspaper Local NewspaperLocal Sunday Supplement Local Sunday SupplementNational Magazine National Magazine

National Newspaper National Newspaper

National Sunday National Sunday Supplement

Network Radio Network Radio

Network TV Network TV

Span/Hisp Language Cable TV

Span/Hisp Language Network TV

Spot Radio Spot RadioSpot TV Spot TVSyndicated TV Syndicated TV

Excluded English Media Excluded Hispanic Media

B2B B2B

Display Display

Outdoor Outdoor

National Cinema

Regional Cinema

Began with 340K parent companies advertising spend data from Nielsen Monitor Plus for 2010-2014.

Classified Top 500 Total Market advertisers by year into 5 Hispanic Dedicated Media (Spanish, Bilingual, English) allocation tiers according to their share of overall ad spend targeted to Hispanic Media.

Identified US operational revenue for publicly reported companies

Applied advanced analytics to uncover statistical relationships between Hispanic Media Allocation and overall (Total Market) topline revenue CAGR

$77.5 $74.6 $74.6 $76.0

$4.3

$4.0 $4.4 $7.1

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

2006 2008 2010 2014

US Top 500 Advertisers Ad Spendin $Billions

Eng Media AdSpend Hisp Media AdSpend

+0%-4%

Top 500 Advertisers Increased Hispanic Media Spend by $3Bn or 61% vs. only 2%

in English Ad Spend, Shifting 3% of their Ad Resources to Hispanic Media

• While overall ad spend among the top 500 advertisers increased by 5%from $79.0 Bn to $83.1Bn from 2010 to 2014, marketers made a steep increase in Hispanic Ad Spend, jumping 61% from $4.4Bn to $7.1Bn.

• Hispanic allocation jumped to 8.5%of all US top 500 marketers ad spend from 5.6% in 2010.

• English Media Ad Spend increased by 2% from $74.6 Bn in 2010 to $76.0 Bn in 2014.

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 4

5.5%8.5%

$79.0 Bn $83.1 Bn

+2%

+61%

5.1%5.3%

$81.8 Bn $78.6 Bn

+10%-7%

Total

5

• While overall Financial-Insurance ad spend among the top 500 advertisers increased by 20% from $5.3Bn to $6.4Bn from 2010 to 2014, marketers increased Hispanic Media AdSpend at twice the rate, jumping 39% from $253M to $352M.

• Hispanic Media allocation increased to 5.5% of all US top 500 marketers ad spend from 4.7% in 2010.

• English Media Ad Spend increased by 20% from $5.1Bn in 2010 to $6.1Bn in 2014

4.7%5.5%

$5.3Bn $6.4Bn

+39%

+20%

+20%

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series*Financial-Insurance Services category includes Banks, Mortgage, Credit

Cards, Investment, Life/Auto Insurance Firms Among Top 500 US Advertisers

Financial-Insurance Services* Among Top 500 US Advertisers Shifted Only about

1%, well below average, of their English Media AdSpend to Hispanic Media

Eng Media AdSpend Hisp Media AdSpend

Millions

Financial-Insurance Sector AdSpend &

Allocation by Media Type

$352M

6

Financial-Insurance

Services Aggregate

Hispanic AdSpend* $$ Millions

Hispanic Media % of Overall

Financial Services

AdSpend*

5.5%

4.7%

*Among Top 500 in 2014

$253M$7.5M

$10.1M

Average Financial-

Insurance Services

Hispanic AdSpend* $$ Millions

2014201020142010

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

2010 2014

+0.8

points

Aggregate Hispanic Media AdSpend By Financial–Insurance Services Increased 1.4 times

since 2010 while the Average Company augmented its Hispanic Media AdSpend by 35%

to $10M and Hispanic Media Allocation surpassed 5% for the first time

Financial-Insurance Services Category Among Top 500 US Advertisers

+1.4x+35%

INVESTMENT

TIER

% Allocation

Hisp Media

# of CompaniesHispanic Media (Span+Bilingual)

Dedicated AdSpend $Hisp Media % Allocation

2010 2014 2010 2014 2010 2014

BIC > 14.2% 2 4 $ 156,938 $ 258,034 20.8% 17.7%

Leader 6.4% - 14.2% 3 3 $ 52,386 $ 50,574 9.2% 8.6%

Follower 3.6% - 6.3% 1 1 $ 5,586 $ 5,971 5.5% 5.7%

Laggard 1.0% - 3.5% 7 5 $ 34,475 $ 35,509 2.0% 1.8%

On-The-Sidelines < 1% 21 22 $ 3,964 $ 1,925 0.2% 0.1%

TOTAL 34 35 $ 253,348 $ 352,013 4.7% 5.5%

Financial-Insurance Services Remains As Follower But Edging Closer to Leader Allocation Tier

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series7

• There are only 2 more companies in BIC allocation tier. • Serious Hispanic marketers are very concentrated, only 7 Best-In-Class tier firms invested

83% of the Financial-Insurance sector aggregate Hispanic AdSpend.• 2 in 3 competitors are still ‘On-the-Sidelines’.

Distribution of Financial Services Companies By Investment Tier in 2010 & 2014 (Among Top 500 Advertisers)

+$98.7M

State Farm & Wells Fargo lead in Hispanic Dedicated AllocationState Farm, Allstate, Nationwide, Chase, Wells Fargo, Progressive & Geico lead in AdSpend.

State Farm, Wells Fargo, Nationwide, Allstate rank in Hispanic Best-In-Class allocation tier.

8

Hispanic Media % of Overall AllocationHispanic Media Ad Spend $ ( Millions)

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

B-I-C

Leader

Avg. Hisp Media

Allocation

Follower

Laggard

On-the-Sidelines

Above Avg.

AdSpend

Below Avg.

AdSpend

9

Financial-Insurance Services: 2010-2014 Hispanic Media AdSpend & Hispanic Media Allocation Change

Increase in

Hispanic AdSpend &

Increase in

% Hispanic Allocation

Increase in Hispanic AdSpend & Decrease in %

Hispanic Allocation

Change in % Hisp Allocation

Decrease in Hispanic AdSpend &

Increase in % Hispanic Allocation

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

American FamMut

(7.2%,$14,271)

Seven marketers led the sector increases: AFLAC, American Family, JPMorgan Chase, Wells Fargo, Nationwide & Progressive Increased Hispanic Media Allocation by > 3 points and Hispanic AdSpend > $5M since 2010

BofA

(-6.4%, -$17,506)

Nationwide

(3.3%, $25,176)

Progressive

(3%, $14,451)

Decrease in Hispanic AdSpend & decrease in % Hispanic Allocation

Ch

ang

e in

His

p A

d S

pen

d

10

Why Should Financial -Insurance Services

Companies Care About

Hispanic Dedicated Allocation?

There Is A Direct & Positive Relationship Between Hispanic Allocation Shift Among Financial-Insurance Services And Total Market Revenue Growth

Change in Hispanic Media Allocation and TM Revenue Growth

Change in Hispanic Media Ad allocation (2010-2014)

TM

Rev

enu

e G

row

th (

2010

-201

4)

11

R2=0.2242

Y=0.9097X + 0.0182

A 5 point AdSpend allocation shift from English to Hispanic

Media in the Financial-Insurance Services sector results in a Total Market

revenue boost of 6.4 points in Revenue CAGR.

Linear regression: y=0.9097x + 0.0182, R2=0.2242

All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better.

There Is A Direct & Positive Relationship Between Hispanic Allocation Among Financial-Insurance Services And Total Market Revenue Growth

Hispanic Allocation and Revenue Growth

Hispanic Media Ad allocation (2014)

TM

Rev

enu

e G

row

th (

2010

-201

4)

12Linear regression: y=0.3475x + 0.1036; R2=0.1331

All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better.

A 5 point AdSpend allocation in Hispanic Media in the

Financial-Insurance Services sector results in a Total

Market revenue boost of 3.1 points in Revenue CAGR.

As comparison, in CPG there is also a positive strong correlation between allocation shifts from English to Hispanic media and TM revenue growth,

but the lift for every 5 points of Hispanic media allocation change in such a competitive field already allocating at higher levels seems lower.

Change in Hispanic Allocation and Revenue Growth

Change in Hispanic Ad allocation (2010-2014)

Rev

enu

e g

row

th (

2010

-201

4)

13All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better.

CONSTELLATION BRANDS

POST HOLDINGS

CHURCH & DWIGHT

DR PEPPER SNAPPLE

P&G

DIAGEO

PEPSICO

BIG LOTS

SABMILLER

CLOROX

HERSHEY

KRAFT

KAO

TARGET

KROGER

SCOTTS MIRACLE

CAMPBELL SOUP

ESTEE LAUDER CONAGRA

NESTLE

LVMH

KELLOGG FAGE

LINDT & SPRUNGLI

NUTRI/SYSTEM

RECKITT BENCKISER

BOSTON BEER

HJ HEINZ

GNC

CVS

STAPLESSHISEIDO

ENERGIZER GENERAL MILLS

JM SMUCKER

WALGREENS

UNILEVER

DANONE

ACE HARDWARE

y = 0.3323x + 0.0168R² = 0.2814

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

-15.0% -5.0% 5.0% 15.0% 25.0% 35.0% 45.0%

On average, a 5% shift in allocation from English media to Hispanic media would generate a 1.75% acceleration in U.S. revenue growth rate.

Financial-Insurance Services Conclusions

The Financial-Insurance sector made modest progress towards Hispanic dedicated marketing efforts. • Financial-Insurance companies shifted almost $100 million in four

years to Hispanic Media, 2x English media increase.

• Hispanic Media allocation reached 5.5% --less than 1 point away from Leader allocation tier.

• The sector is expanding from the top with only 2 additional marketers at the Best-In-Class & Leader allocation level and these top tiers represented 8 in 10 new Hispanic AdSpend $.– State Farm, Wells Fargo, Nationwide, Allstate, JPMorgan Chase,

American Family, AFLAC & MasterCard are setting the pace.

– 2 in 3 companies remain On-the-Sidelines investing less than 1% in Hispanic media.

• For Financial-Insurance marketers, a 5 point allocation shift from English to Hispanic media results in 6 points boost to Total Market annual revenue growth –one of the highest Allocation-Growth impacts found in any category studied thus far pointing to the vast untapped opportunity still available.– As comparison, every 5 points shift from English to Hispanic media by

CPG/Retail companies yields on average a 1.75% increase in annual revenue growth rate.

14AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

15

$1,079M

Aggregate Hispanic AdSpend in Auto Sector Increased 2.6 times since 2010 with

the Average Auto Company augmenting its Hispanic Media AdSpend by 156% to

$26M and Hispanic Allocation doubling to 8.4% of overall AdSpend.

16

Auto Sector

Total Hispanic Media AdSpend* $$ Millions

Hispanic % of Overall Auto

Media AdSpend*

8.4%

4.4%

*Among Top 500 in 2014

$10.3M

$26.3M

Average Auto Company

Hispanic Media AdSpend* $$ Millions

2014201020142010

Automotive Category (Auto Manufactures, Auto Dealers, Auto Repairs) Among Top 500 US Advertisers

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

+156%

2014

$411M

+2.6x

2010

+4

points

Nissan, Honda, Kia, Hyundai, Fiat-Chrysler, Ford Dealers Assn, & Honda Dealers Assn have all increased Hispanic Media AdSpend more than $30M and have increased Hispanic Allocation By >5 points since 2010

17

Automotive: 2010-2014 Hispanic Media AdSpend & Hispanic Media Allocation Change

Ch

ang

e in

His

p A

d S

pen

d

AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

Change in % Hisp Allocation

Increase in

Hispanic AdSpend &

Increase in

% Hispanic Allocation

Increase in Hispanic AdSpend & Decrease in %

Hispanic Allocation

Decrease in Hispanic AdSpend &

Increase in % Hispanic Allocation

Decrease in Hispanic AdSpend

& decrease in % Hispanic

Allocation

A 5 point AdSpend

allocation shift from

English to Hispanic Media

in the Auto sector results

in a Total Market growth

revenue acceleration of

8.9 points annually.

Automotive Category

There Is A Direct & Positive Relationship Between Allocation Shifts from English Media to Hispanic Media & Total Market Revenue Growth

Change in Hispanic Media Allocation and Revenue Growth

18

Linear Regression: Y=0.2205X + 0.0778; R2=0.0973All findings discussed in the presentation are statistically significant at a 90% confidence level or better.

Auto Sector Conclusions

Auto marketers which greatly increased their allocation to

Hispanic dedicated media since the Great Recession benefited

directly from Hispanic’s car expenditures. • Auto sector shifted nearly $700M in AdSpend to Hispanic Media.

• Hispanic Media allocation doubled to 8.4% since 2010.

• The breadth and depth of investment levels in Hispanic media

allocation is unprecedented.

• 6 companies took major leaps increasing investment >$30M and

shifting more than 5 allocation points to Hispanic media: Nissan,

Honda, Kia, Hyundai, Ford Dealers and Honda Dealers.

• In general, a 5 point allocation shift from English to Hispanic media

resulted in 9 points lift of accelerated growth in Total Market annual

revenue.

• As Auto marketers have succeeded at migrating Hispanic

consumers towards higher end models, luxury auto brands are

making their entry into the Hispanic segment.

19AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series

The Hispanic Media Allocation-Revenue Growth Study Series

Proves That Resource Shifts Behind Hispanic Consumers Are a Critical

Component in Boosting Total Market Growth Rates

Change in Hispanic Media Allocationalone explains about 10-30% of the change in topline revenue growth… 28%

Hispanic Marketing

Other Drivers of Growth72%

CPGs & Retailers*

20All findings discussed in the presentation are statistically significant at a 90-99.9% confidence level.

Change in Hispanic Allocation

Other Drivers include critical factors

such as Brand Awareness & Equity,

Value:Price perception, Messaging

Relevance, new product

development, measurement tools,

distribution, sales force,

implementation performance,

customer experience, social

responsibility, organization

structure, talent, overall

segmentation expertise, etc.

78%

22%

Financial-Insurance Services*

90%

10%

Automotive Category*

Hispanic Marketing

Hispanic

Marketing

Other Drivers of Growth

Other Drivers of Growth

* 2010-2014

** 2006-2010

70%

30%

Tech-Telecom-Entertainment

Hispanic Marketing

Other Drivers of Growth

CPG ManufacturersCPG Retailers

Top 500

2010-2014 Nielsen Monitor Plus data; Santiago Solutions Group analysis & interpretation for AHAA: The Voice of Hispanic Marketing21

Categories by Hispanic Media Allocation Tiers

1.0%

Allocation

Tiers

2.5%

3.5%

8.8%

10.9%

11.4%

7.1%

Restaurant

Pharma

Appliance-Electronics

Home Repair-Furnishing

Apparel

Tech-Telecom-Entertainment

In Relation To Other Categories, Auto Allocation Falls Near The US Top 500 Marketers Average While Financial-insurance Is 35% Below The Average

Financial-Insurance 5.5%

Automotive 8.4%

9.3%

22

Measuring The Impact of Effective TM Strategies

Both Phases will have two tests, one among CPG/Retail marketers, and another among Service categories.

Phase Atest Effectiveness & Impact based on which TV/Digital

campaigns followed the TM consensus definition.

Phase Btest the Relevance of spots

by measured Impact to gauge the weight of Cultural Relevance in effectiveness.

Next From AHAAGetting Total Market Right

Measuring our Definition Measuring Role of Relevance