AHAA INSIGHTS SERIES

CPG/Retailers Hispanic Media Allocation Trends

2010-14 & Impact on Total Market Revenue Growth

1

July 14, 2015

Presenter:

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

Moderator: Gaby Alcantara-Diaz, AHAA Education Chair and President, Semilla AD, Inc.

Methodology• Advertising spend data including over 340K parent companies

was collected by Nielsen Monitor Plus in English and Hispanic

(Spanish/Bilingual/English) media. This data was analyzed by

Santiago Solutions Group for AHAA.

• SSG classified the Top 500 advertisers into 5 allocation Tiers

according to their share of overall ad spend dedicated to

Hispanic Media corresponding to previous AHAA Ad Spend

Allocation reports:

Best-in-Class (more than 14.2%)

Leaders (6.4%-14.2%)

Followers (3.6%-6.3%)

Laggards (1.0%-3.5%)

On-The-Sidelines (Less than 1%)

• Moreover, SSG also segmented the Top 500 Overall Spending

(English + Spanish) Companies. This was done for Multiple years

2010-2014, thus permitting the analysis of trends in the

marketplace. 2

English Media Included Hispanic Media Included

Cable TV Cable TV

FSI Coupon FSI Coupon

Local Mag Local Magazine

Local Newspaper Local Newspaper

Local Sunday Supplement Local Sunday Supplement

National 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 Radio

Spot TV Spot TV

Syndicated TV Syndicated TV

Excluded English Media Excluded Hispanic Media

B2B B2B

Display Display

Outdoor Outdoor

National Cinema

Regional Cinema

$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 3.2% 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.

2010-2014 Nielsen Monitor Plus data; Santiago Solutions Group analysis & interpretation for AHAA: The Voice Of Hispanic Marketing3

5.6%8.5%

$79.0 Bn $83.1 Bn

+2%

+61%

5.1%5.3%

$81.8 Bn $78.6 Bn

+10%-7%

Total

$17.2 $16.1

$18.4 $17.1

$1.0

$0.9

$1.2

$2.0

$10.0

$11.0

$12.0

$13.0

$14.0

$15.0

$16.0

$17.0

$18.0

$19.0

$20.0

2006 2008 2010 2014

CPG/Retailers* Among Top 500 US Advertisers Shifted over

4% of their English Media ad spend to Hispanic Media

2010-2014 Nielsen Monitor Plus data; Santiago Solutions Group analysis & interpretation for AHAA: The Voice Of Hispanic Marketing 4

5.5%

$18.2 Bn $17.0 Bn

6.1%10.7%

5.4%

$19.6 Bn $19.1 Bn

• While overall CPG/Retailers ad spend among the top 500 advertisers decreased by 7% from $18.4 Bn to $17.1 Bn from 2010 to 2014, marketers made the largest increase so far in Hispanic Ad Spend, jumping 67% from $1.2Bn to $2.0Bn.

• CPG/Retailers Hispanic allocation jumped to 10.7% of all US top 500 marketers ad spend from 6.1% in 2010.

-7%

+67%

*CPG/Retailers Category includes Beverages, Consumer Products, Packaged Goods, Health & Beauty Products,

Over-the-Counter Drugs, Supermarkets, Mass Retailers and Drug Chains Among Top 500 US Advertisers

Total

The CPG/Retailers category allocation to Hispanic dedicated media, among the Top 500 U.S. Advertisers, increased to 6.3% in 2010 and nearly 11% in 2014.

Since 2006, the Aggregate Hispanic AdSpend By CPG/Retailers Increased 100%,

the Average CPG/Retailer AdSpend increased to $22M in 2014,

& Allocation shifted from English Media to Hispanic by 5.2% points

5

CPG/Retailers marketers among the top US advertisers increased their aggregate Hispanic Ad Spend by 20% between 2006 and 2010 to $1.2 Bn and increased 67% between 2010 to 2014 to 2.0Bn.

Hispanic % of Overall

CPG/Retailers AdSpend*

20142010

10.7%

6.3%

*Among Top 500 in 2014

The mean Hispanic Ad Spend by CPG/Retailers companies increased 16% from 2006 to 2010 followed by a 74% increase from $12.6M in 2010 to $21.9M in 2014.

$1.0Bn

$2.0Bn

$12.6M

Average CPG/Retail

Hispanic AdSpend* $$ Millions

2014200620142006

$21.9M

+65%

+74%+4.4%

points

2010

$1.2Bn

Total CPG/Retailers

Hispanic AdSpend* $$ Billions

+20%

2010

+16%

$10.9M

2006

5.5%

+0.8%

points

The CPG category allocation to Hispanic dedicated media increased to 10.9% in 2014, Retail category allocation increased to 9.3%.

Aggregate Hispanic AdSpend By CPG Retailer & Manufacturer Increased 60% & 65%,

Allocation jumped 3.4% & 4.5% points, the Average CPG & Retail Company Hispanic

Dedicated AdSpend increased to $15.5M & $23.4M respectively.

6

CPG marketers increased their aggregate Hispanic Ad Spend by 65% between 2010 and 2014 to $1.8 Bn, Retail Marketers increased their Hispanic Ad Spend by 60%.

Hispanic % of Overall AdSpend*

20142010

9.3%

5.9%

*Among Top 500 in 2014

The mean Hispanic Ad Spend by CPG companies increased 70% from $13.8M to $23.4 in 2014, Retail Companies increased 87%.

$175M

$280M

$8.3M

Average Hispanic AdSpend* $$ Millions

2014201020142010

$15.5M

+60% +87% +3.4%

points

20142010

201420102010

Retailers

Manufacturers

Total Hispanic AdSpend* $$ Millions

6.4%$1.1M

$13.8M

+65% +70% +4.5%

points

201420102014

$1.8M$23.4M

10.9%

CPG/Retailers Further Ramped-up Their Hispanic Dedicated

Investments From Follower to Leader Allocation Tier in 2014with Retailers at 9.3% and Manufactures at 10.9%

7

23%

CPG/Retailers Allocation Index: 126 ( )CPG/Retailers Companies

Average Top 500

CPG/Retailers vs

Advertisers Average Hispanic Dedicated Allocation

CPG/

Retailers

Best-In-ClassOn-the-Sidelines0.1%

Laggards

Followers

Leaders

All CPGs10.7%

Top 500

Top 500 Avg.

Hisp. Allocation

By Tier

CPG

Manufacturers

10.9%CPG

Retailers

9.3%Hispanic Media Allocation Tiers

Best-in-Class (more than 14.2%)

Leaders (6.4%-14.2%)

Followers (3.6%-6.3%)

Laggards (1.0%-3.5%)

On-The-Sidelines (Less than 1%)

INVESTMENT

TIER

% Allocation

Hisp Media

# of CompaniesHispanic (Span+Bilingual)

Dedicated AdSpend $Hisp % Allocation

2010 2014 2010 2014 2010 2014

BIC > 14.2% 6 16 $ 149,013 $ 1,185,883 21.3% 20.7%

Leader 6.4% - 14.2% 20 24 $ 808,179 $ 757,476 8.9% 9.6%

Follower 3.6% - 6.3% 13 8 $ 241,082 $ 59,463 5.4% 4.8%

Laggard 1.0% - 3.5% 15 11 $ 26,309 $ 32,164 1.9% 1.8%

On-The-Sidelines < 1% 44 34 $ 12,348 $ 2,087 0.3% 0.1%

TOTAL 98 93 $ 1,236,931 $ 2,037,074 6.3% 10.7%

CPG Hispanic Ad Spend Nearly Doubled since 2010 from $1.2Bn to $2.0Bn

8+65%

Distribution of CPG/Retailers Companies By Investment Tier in 2010 & 2014 (Among Top 500 Advertisers)

40 CPG/Retailers companies allocated more than 6.4% to Hispanic dedicated efforts in 2014 from 26 in 2010

27%

27%

46%

23%

50%

9%

18%

Where Is The Increase Commitment Coming From?

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

9

Best-In-Class

Sources of

Growth

BIC in 2014 grew mostly from Leaders in 2010

but also from On-the-Sidelines in 2010

Leaders

Sources of

Growth

Leaders in 2014 grew mostly from

Followers in 2010 but also from lower

tiers in 2010

CPG/Retail CPG/Retail

BIC BIC

On-the-Sidelines BIC

Leader BIC

Leader Leader

Follower Leader

Laggard Leader

On-the-Sidelines Leader

Why Should Companies Care About Hispanic Allocation?

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Methodology Highlights

Top 500 U.S. Overall Advertisers 2010-

2014 (500)

CPG& Retailer Category

(98)

Consistent Advertisers

(93)

Publicly Traded

w/ clear Organic US Revenue

(59)

Final Sample of CPGs

(59)

Unadjustable M&As

Inconsistent Data

(-34)

Inconsistent Advertisers

(-5)

Other Category

(-402)

14

2010-2014 CPGs & Retailers in Study

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%

Are CPGs Growth Rates Related To Change In Hispanic Focus?

There Is A Direct & Positive Relationship Between Allocation Shifts From English To Hispanic Media And Accelerated Total Market Revenue Growth

Change in Hispanic Allocation and Revenue Growth

Change in Hispanic Ad allocation (2010-2014)

Rev

enu

e g

row

th (

2010

-201

4)

15

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

Findings:

• The expected range for 1% in Hispanic Allocation is an increase of .26% to .40% in overall corporate revenue growth rate.

• For every additional point in Hispanic allocation we would expect revenue growth of .35% over the 4 years for CPG & Retailers.

• In other words, 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.

CONSTELLATION BRANDS

POST HOLDINGS

CHURCH & DWIGHT

MCCORMICK

P&GDIAGEO COLGATE

PEPSICO BIG LOTS

SABMILLER

CLOROX

HERSHEY

KRAFT

LOREAL

WAL-MART

KAO

TARGET

KROGER

SCOTTS MIRACLE

ESTEE LAUDERS

NESTLE SA NEWELL RUBBERMAID

LVMH

KELLOGG FAGE

LINDT & SPRUNGLI

NUTRI/SYSTEM

BOSTON BEER

HJ HEINZ

STAPLES

GENERAL MILLS JM SMUCKER

ACE HARDWARE

y = 0.2417x + 0.01R² = 0.1805

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

Are CPGs Growth Rates Related to 2014 Hispanic Focus?

There Is A Direct & Positive Relationship Between 2014 CPG/Retailers Share Of AdSpend Dedicated To Hispanic Media And Their Topline Revenue Growth.

Hispanic Allocation 2014 and Revenue Growth

Rev

enu

e g

row

th (

2010

-201

4)

16All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better.

2014 Hispanic Ad allocation

Findings:

• The expected range for 1% in 2014 Hispanic

Allocation is an increase of .17% to .31% in

overall corporate revenue growth rate.

• For every additional point in 2014 Hispanic

allocation we would expect revenue growth

of .25% over the 4 years for CPG & Retailers.

• In other words, on average, a 5% increase in

2014 Hispanic allocation would generate a

1.26% acceleration in U.S. revenue growth

rate.

The Analysis Proofs at 99.9% Confidence Level That

Resource Shifts Behind Hispanic Consumers Are a

Critical Formula in Boosting Total Market Growth Rates

• Change in Hispanic Allocationalone explains about 28% of CPGs change in topline revenue growth

• 2014 Hispanic Allocation alone explains about 18% of CPGs change in topline revenue growth

– The other 72% or 82% includes other critical factors such as brand awareness/equity, new product development, management focus, measurement tools, distribution, sales force, past performance, community position, organization structure, talent, overall segmentation expertise, etc.

Hispanic Marketing

28%

Other Drivers ofGrowth

72%

CPGs & RetailersRevenue Growth Drivers

17All findings discussed in the presentation are statistically significant at a 99.9% confidence level or better.

Hispanic Marketing

18%

Other Drivers of

Growth82%

Change in Hispanic Allocation

2010-2014

Hispanic Allocation

2014

Conclusions

CPG/Retailers Hispanic Dedicated Media skyrockets between 2010-2014

• CPG/Retailers outpaced Top 500 advertisers peers in Hispanic Media Allocation increases

• CPG/Retailers shifted over 4% of English Ad Spend to Hispanic Media– Currently focusing 11% of their overall ad resources to Hispanic Media

– Retailers allocation moving in tandem with Manufacturers

– With nearly the same number of companies among Top 500 the category saw enormous growth –a 65% dollar increase behind dedicated Hispanic media

• The main benefit of shifts from English Media to Hispanic Media is increased Total Market topline revenue acceleration– There is a strong direct correlation (@ 99.9% confidence level) between shifts to Hispanic Media and

overall U.S. revenue growth

– Consistent/significant Hispanic dedicated efforts drive superior overall revenue growth for companies

– For every 5 points of shift from English to Hispanic media, companies would on average experience a 1.75% increase in annual revenue growth in the U.S.

• Hispanic as a priority drives sustainable growth into future

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Q & A

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Released In 2015

2010-2014 Nielsen Monitor Plus data; Santiago Solutions Group analysis & interpretation for AHAA