As CMOs and ad agencies try to grapple with the changing face of American demographics, they are scrambling to find and keep qualified marketers who are able to understand minority consumers.
Over 80% of the U.S. population growth in the last 10 years has come from ethnic minority groups, according to the Brookings Institution. And according to the Selig Center for Economic Growth at the University of Georgia, they have a lot of money to spend: In 2009, the U.S. African-American market's buying power was $910 billion, while the Hispanic-American market's was $978 billion.
That combined buying power is larger than Brazil's entire economy was in 2009.
The traditionally white and male-dominated Madison Avenue agencies are starting to realize that marketing to this growing consumer segment means finding talent who knows how to talk to them. According to agency heads, there is a talent war being waged between general market and multicultural agencies over marketers with multicultural experience.
While it's hard to get exact numbers, Lisa Skriloff, president of Multicultural Marketing Resources Inc., estimates that there are anywhere between 350 and 500 agencies devoted to doing multicultural marketing, including Hispanic, African-American and Asian marketing. The Asian American Advertising Federation's member roster lists 40 agencies, while the Association of Hispanic Advertising Agencies, which claims to represent 98% of the Hispanic advertising industry, has nearly 200 members.
One-Stop Shops, Consolidation and Poaching
Multicultural ad agencies are feeling the squeeze from the bigger, general ad shops.
Big agencies are either absorbing multicultural agencies or creating new ones entirely. To staff the new units, they are poaching talent from multicultural-only agencies.
In August, Burger King pared down its agency roster and consolidated all the duties, minority and otherwise, at Crispin Porter & Bogusky, dropping its former Hispanic agency LatinWorks.
Earlier in the year, Home Depot moved its $37 million Hispanic account to a Hispanic agency fielded by Home Depot's general market shop Richards Group, what Ad Age then called a "stunning upset" for Hispanic ad agencies.
And in July, Kirshenbaum Bond Secencal & Partners brought under its roof Hispanic agency Adrenalina, making it one of its eight specialty units.
"We found that the notion of a standalone is not in the client's best interest, so we baked in a truly integrated solution," said Bill Grogan, chief global marketing officer at KBS&P.
According to Detavio Samuels, executive vice president of client services in the Southfield, Michigan office of GlobalHue, a multicultural agency, the consolidation trend among general market agencies is "just business," but multicultural agencies still have a leg up, because of the research dollars they have invested into studying minority communities.
But Grogan of KBS&P points out that the Hispanic market today is very different from that of five years ago. "Just because you have that tradition behind you doesn't stand for much," he said.
As competition heats up, talent becomes a hot commodity. Jose Villa, president of Sensis, an L.A.-based interactive agency, estimates that there are somewhere between 3,500 to 6,450 people employed in multicultural agencies. And these are marketers in high demand.
Every agency head we spoke to said that his firm is recruiting talent in order to strengthen their multicultural offering. For general shops, that talent has to come from multicultural agencies. For example, Greg Andersen, CEO of BBH New York, admits that as his agency tries to become "multiple in our resources," some of the people he is hiring do come from multicultural shops.
"This is the beginning of a talent war," said Samuels of GlobalHue.
Diversifying Offerings
Luis Miguel Messianu, president of Alma DDB, which specializes in Hispanic advertising, said that general-market shops' strategy just won't work, because they haven't made minority marketing a priority in the last 30 years, whereas agencies like his, have.
And as the general ventures into the niche, the formerly niche firms are making inroads into general marketing. Even at Alma DDB. Last year, Messianu's firm absorbed DDB's Miami office in order to do more general market work. Messianu thinks that's the way forward. For him, it is reflective of the America we now live in, where minority and majority are all bundled together. "We are a mirror of society," he said.
Andersen of BBH New York calls this the "race to the middle." General agencies are changing their complexion to make sure they are covering all ground while multicultural agencies try to provide more general services.
But what gets marketers, who, as the talent behind these initiatives are caught in the middle, to move shops? General market shops are giving them a chance to do a broader set of work, said Andersen. Those coming from multicultural shops have more credibility, he said, so they are the ones in most demand.
Despite the consolidation and increasing competition for the multicultural dollar from general market and other minority agencies alike, Messianu of Alma DDB said the competition is good. "The more homes you build in your neighborhood, the more valuable the neighborhood gets," he said. Some clients may consolidate to save money, but it will have a backlash," he said. "Yes, it causes competition, but I welcome it."
Write to Shareen Pathak
