AHAA INSIGHTS SERIES Financial-Insurance Services & Auto Hispanic Media Allocation Trends & Impact on Total Market Revenue Growth Study

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1 AHAA INSIGHTS SERIES Financial-Insurance Services & Auto Hispanic Media Allocation Trends & 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 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. 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. 2

3 Methodology Began with 340K parent companies advertising spend data from Nielsen Monitor Plus for 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 English Media Included Cable TV FSI Coupon Local Mag Local Newspaper Local Sunday Supplement National Magazine National Newspaper National Sunday Network Radio Network TV Spot Radio Spot TV Syndicated TV Hispanic Media Included Cable TV FSI Coupon Local Magazine Local Newspaper Local Sunday Supplement National Magazine National Newspaper National Sunday Supplement Network Radio Network TV Span/Hisp Language Cable TV Span/Hisp Language Network TV Spot Radio Spot TV Syndicated TV Applied advanced analytics to uncover statistical relationships between Hispanic Media Allocation and overall (Total Market) topline revenue CAGR Excluded English Media B2B Display Outdoor National Cinema Regional Cinema Excluded Hispanic Media B2B Display Outdoor 3

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 $90.0 $80.0 $70.0 $60.0 $50.0 $40.0 $30.0 $4.3 $77.5 US Top 500 Advertisers Ad Spend in $Billions Eng Media AdSpend Hisp Media AdSpend 5.3% -7% -4% 5.1% $4.0 $ % $7.1 $74.6 $74.6 $ % 5.5% +61% +2% 8.5% 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 English Media Ad Spend increased by 2% from $74.6 Bn in 2010 to $76.0 Bn in $20.0 Total $81.8 Bn $78.6 Bn $79.0 Bn $83.1 Bn AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 4

5 Financial-Insurance Services* Among Top 500 US Advertisers Shifted Only about 1%, well below average, of their English Media AdSpend to Hispanic Media Financial-Insurance Sector AdSpend & Allocation by Media Type Eng Media AdSpend 4.7% +39% +20% Hisp Media AdSpend 5.5% Millions 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 English Media Ad Spend increased by 20% from $5.1Bn in 2010 to $6.1Bn in 2014 $5.3Bn +20% $6.4Bn *Financial-Insurance Services category includes Banks, Mortgage, Credit Cards, Investment, Life/Auto Insurance Firms Among Top 500 US Advertisers AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 5

6 Financial-Insurance Services Category Among Top 500 US Advertisers 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 Aggregate Hispanic AdSpend* $253M $$ Millions +1.4x $352M Average Financial- Insurance Services Hispanic AdSpend* $$ Millions $7.5M +35% $10.1M Hispanic Media % of Overall Financial Services AdSpend* 4.7% +0.8 points 5.5% *Among Top 500 in 2014 AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 6

7 INVESTMENT TIER Financial-Insurance Services Remains As Follower But Edging Closer to Leader Allocation Tier 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) % Allocation Hisp Media # of Companies Hispanic Media (Span+Bilingual) Dedicated AdSpend $ Hisp Media % Allocation BIC > 14.2% 2 4 $ 156,938 $ 258, % 17.7% Leader 6.4% % 3 3 $ 52,386 $ 50, % 8.6% Follower 3.6% - 6.3% 1 1 $ 5,586 $ 5, % 5.7% Laggard 1.0% - 3.5% 7 5 $ 34,475 $ 35, % 1.8% On-The-Sidelines < 1% $ 3,964 $ 1, % 0.1% TOTAL $ 253,348 $ 352, % 5.5% +$98.7M AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 7

8 State Farm & Wells Fargo lead in Hispanic Dedicated Allocation State 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. Hispanic Media Ad Spend $ ( Millions) B-I-C Hispanic Media % of Overall Allocation Above Avg. AdSpend Laggard Leader Follower Avg. Hisp Media Allocation Below Avg. AdSpend On-the-Sidelines AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 8

9 Change in Hisp Ad Spend 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 Financial-Insurance Services: Hispanic Media AdSpend & Hispanic Media Allocation Change Nationwide (3.3%, $25,176) Increase in Hispanic AdSpend & Decrease in % Hispanic Allocation Progressive (3%, $14,451) American FamMut (7.2%,$14,271) Increase in Hispanic AdSpend & Increase in % Hispanic Allocation BofA (-6.4%, -$17,506) Change in % Hisp Allocation Decrease in Hispanic AdSpend & decrease in % Hispanic Allocation Decrease in Hispanic AdSpend & Increase in % Hispanic Allocation AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 9

10 Why Should Financial-Insurance Services Companies Care About Hispanic Dedicated Allocation? 10

11 TM Revenue Growth ( ) 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 R 2 = Y=0.9097X 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. Change in Hispanic Media Ad allocation ( ) Linear regression: y=0.9097x , R2= All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better. 11

12 TM Revenue Growth ( ) There Is A Direct & Positive Relationship Between Hispanic Allocation Among Financial- Insurance Services And Total Market Revenue Growth Hispanic Allocation and Revenue Growth 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. Hispanic Media Ad allocation (2014) Linear regression: y=0.3475x ; R2= All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better. 12

13 Revenue growth ( ) 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. 25.0% Change in Hispanic Allocation and Revenue Growth 20.0% POST HOLDINGS CONSTELLATION BRANDS BOSTON BEER 15.0% KAO 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. 10.0% LVMH KROGER CHURCH & DWIGHT SABMILLER y = x HJ HEINZ ESTEE LAUDER R² = ACE HARDWARE CONAGRA HERSHEY 5.0% KELLOGG FAGE DANONE CAMPBELL SOUP DR PEPPER SNAPPLE WALGREENS CVS TARGET PEPSICO SHISEIDO CLOROX DIAGEO STAPLES BIG LOTS Change in Hispanic Ad allocation ( ) 0.0% KRAFT -15.0% NESTLE P&G UNILEVER -5.0% 5.0% 15.0% 25.0% 35.0% 45.0% ENERGIZER SCOTTS MIRACLE GENERAL MILLS GNC LINDT & SPRUNGLI RECKITT BENCKISER JM SMUCKER -5.0% NUTRI/SYSTEM -10.0% All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better. 13

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

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16 Automotive Category (Auto Manufactures, Auto Dealers, Auto Repairs) Among Top 500 US Advertisers 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. Auto Sector Total Hispanic Media AdSpend* +2.6x $$ Millions $1,079M Average Auto Company Hispanic Media AdSpend* $$ Millions $26.3M Hispanic % of Overall Auto Media AdSpend* 8.4% $411M $10.3M +156% 4.4% +4 points *Among Top 500 in 2014 AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series 16

17 Change in Hisp Ad Spend 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 Automotive: Hispanic Media AdSpend & Hispanic Media Allocation Change Increase in Hispanic AdSpend & Decrease in % Hispanic Allocation Increase in Hispanic AdSpend & Increase in % Hispanic Allocation Decrease in Hispanic AdSpend & decrease in % Hispanic Allocation Change in % Hisp Allocation AHAA 2015 Hispanic Media Allocation Impact on TM Revenue Growth Study Series Decrease in Hispanic AdSpend & Increase in % Hispanic Allocation 17

18 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 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. Linear Regression: Y=0.2205X ; R 2 = All findings discussed in the presentation are statistically significant at a 90% confidence level or better. 18

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

20 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 Change in Hispanic Allocation Media Allocation Financial-Insurance Services* alone explains about 10-30% of the Other Drivers of Growth 78% change in topline revenue growth 22% 28% Hispanic Marketing Automotive Category* Other Drivers of Growth 10% Hispanic Marketing 90% CPGs & Retailers* Other Drivers of Growth 72% Hispanic Marketing Tech-Telecom-Entertainment Other Drivers of Growth 70% 30% Hispanic Marketing 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. All findings discussed in the presentation are statistically significant at a % confidence level. * **

21 In Relation To Other Categories, Auto Allocation Falls Near The US Top 500 Marketers Average While Financial-insurance Is 35% Below The Average Categories by Hispanic Media Allocation Tiers CPG Retailers Home Repair-Furnishing Automotive 8.4% Apparel Financial-Insurance 5.5% 7.1% 9.3% 10.9% 8.8% CPG Manufacturers Tech-Telecom-Entertainment Restaurant 11.4% Appliance-Electronics 3.5% Pharma 2.5% Top % Allocation Tiers Nielsen Monitor Plus data; Santiago Solutions Group analysis & interpretation for AHAA: The Voice of Hispanic Marketing 21

22 Next From AHAA Getting Total Market Right Measuring The Impact of Effective TM Strategies Measuring our Definition Phase A test Effectiveness & Impact based on which TV/Digital campaigns followed the TM consensus definition. Measuring Role of Relevance Phase B test the Relevance of spots by measured Impact to gauge the weight of Cultural Relevance in effectiveness. Both Phases will have two tests, one among CPG/Retail marketers, and another among Service categories. 22