Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Section 1

Section 1

INTRODUCTION

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

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About the Author & Sources

The study was commissioned by AHAAs Research Committee and developed and executed by Santiago Solutions Group (SSG), a growth strategy consultancy. Independent methodological review performed by Dr. Cristina Garcia, professor of mathematics & statistics at USC.
Data Contributors Financial revenue growth data extracted from companies 10Ks. Parent company advertising spend data for 2006-2010 Hispanic/Non-Hispanic media (TV, Radio, Print) collected from The Nielsen Company. Nielsen Video Census 2012; Mobile Insight Survey: Netview 2012, Mobile Bill Panel, Nielsen TV Panel 2011 GfK Roper & 2011 Doublebase GfK MRI - Base: All Adults 18+; n=6.6K Hispanics & 46.5K Non-Hispanics. (Sampling details in Appendix E). 2010 Geoscape - Consumer Spending Dynamix Scarborough USA+ 2011 Release 2 Total; Base: Adults 18+; Respondents: 151,099 White Non-Hispanics & 27,301 Hispanics
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Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Background
Since 1998, AHAA has been helping its members serve its clients through breakthrough independent studies that
increase understanding of what it takes to win the market, share new concepts, and identify best practices of marketing to Latinos.

Study 2 Hispanic Ad Allocation Consumer Packed Goods Study 1 Hispanic Ad Allocation

Revenue Growth Study Series

AHAA has led the industrys first empirical studies to quantify the relationship and impact of Hispanic investment allocation on annual revenue rate of growth.
In October 2011, Part 1 uncovered a strong positive relationship between allocation of Hispanic ad resources and topline growth among Best-In-Class companies, those allocating over 14% of their budgets to Hispanic media.

Current Study (Study 3) Hispanic Ad Allocation Technology

In March 2012, Part 2 demonstrated that Hispanic Allocation positively affects revenue growth rates for Consumer Packaged Goods companies, explaining about 35% of changes in revenue growth.
This third part of AHHAs Revenue Growth study focuses on Technology, Telecom and Entertainment companies including:
manufacturers of consumer hardware (computers, TVs, cell phones) content (media, movies, games) connectivity providers (cable, satellite, wireless)

Top 500 Overall U.S. Advertisers

Other Sectors Future studies

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Hispanics have generated about a third of the Tech consumer base growth; expanding 3x faster than NH
While Hispanics accounted for 17% of the population in the US, they also contributed to 34.8% of the growth in the Tech-TelecomEntertainment consumer base. During 2006-2010, the Hispanic consumer base in the Tech-Telecom-Entertainment category grew 3 times faster than the NonHispanic consumer base.

Source: SSG Analysis of 2006-2010 GfK MRI

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Study Objectives
To understand if there a significant difference in the revenue growth rate attained by Tech-Telecom-Entertainment advertisers which designate higher allocation of ad resources to the Hispanic market and those that focus less.

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

40 Tech-Telecom-Entertainment Companies In Sample Set

For GE, only its Media & Entertainment revenues while owners of NBCU were included in the analysis; excluded all other LOBs revenue streams.

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Summary Findings
1. There is positive relationship between Hispanic allocation and Revenue CAGR, meaning, the more a company allocates Hispanic budget, the higher the corporate growth.
As Hispanic Allocation increases, the revenue rate of growth of Tech competitors soars sharply

2.

Tech-Telecom-Entertainment companies show that Hispanic Allocation accounts for 30% of increase in revenue growth.
Including Apple & Samsung, Hispanic Allocation explains about 17% of the fluctuations in revenue growth rates, accentuating the need for Hispanic allocation among tech convergence companies that dont have revolutionary innovations and brand experiences.

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Hispanics offer high Lifetime Value

Cumulative total Tech-Telecom-Entertainment spending is 38% greater for Hispanic households than that of White Non-Hispanic households
Driven by 16 years longer Hispanic household lifespan and higher expenditures than non-Hispanic Whites.

Average Aggregate Household Lifetime Spending

NH White Black Asian Hispanic $435,690 $319,359 $1,043,365 $601,991

Source: 2010 Geoscape Consumer Spending Dynamix. 9

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

Section 1

Section 4

IMPLICATIONS

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

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Hispanic Allocation Impact on Growth Key Takeaways

This study shows that Tech-Telecom-Entertainment companies which allocate higher share of their ad resources at Hispanics, return higher growth rates than those that apportion less.
Devoting adequate resources to Hispanic has a critical role in optimizing Hispanic growth

Hispanic allocation is a significant driver to healthy organic growth in this discretionary category

Hispanic Allocation is substantial enough in the winning equation to transform company results --propelling players, obstructing competitors, building sustainable advantages This is especially so for companies that dont have revolutionary product innovations in their pipeline like the first iPhones, iPads or Google/Android smartphones. Compromising Hispanic Allocation can have negative short and long-term growth effects.

Huge growth opportunity lies ahead as Hispanics continue to lead adoption and usage
Brand loyalties will be increasingly at stake as Hispanics dominate segment growth.

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

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Implications for Tech Convergence Sector

Real bottom-line benefits come from consistent allocation investments. Allocations to communications is only the beginning; decisively as important is corporate-wide strategic and operational integration
Developing holistic strategies from communications and product innovation to brand-customer experience. Broad use of all elements of marketing: above and below the line. Responding to the most appropriate cultural insights. As in the CPG sector, successful sustainable growth advantages in Hispanic market might enhance valuation differentials.

Many companies may be falling short of their optimal revenue generation or handing off growth points to competitors with higher allocation and cohesive Hispanic-centric strategies.

Tech-Telecom-Entertainment Hispanic Allocation Impact on Revenue Growth

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