How Brands and Agencies Can Win at Multiculturalism

Three Big Bets Companies Need to Place for New Majority Success

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Let's get a few of things out of the way. Yes, the advertising industry needs to hire more people of color. Yes, race relations are strained right now. Yes, immigration is a huge issue for the upcoming presidential campaign. And yes, Silicon Valley is still way too white. Do we all agree? Great. We've now all anted up in this particular game of poker.

None of this is news to brands and agencies. But something is changing fast -- the complexion of America. The general market isn't white anymore. In just a few years, the majority of people under 18 will be from minority populations. In a couple of decades, the majority of the nation will be minorities. And did you hear this? The millennial generation has come up with a new, better word for multiculturalism. They call it normal.

Winning this game is going to take a lot more than showing up and throwing a few pennies in the pot. Here are three big bets businesses need to place. Those that do will be guaranteed a winning hand.

1. Repudiate separate-but-equal marketing. Back in the 1960s, black-owned agencies were finally let into the club of major brand engagements. Now, Hispanic and Asian agencies are part of the mix, but the system is still a simple expansion of the 1960s quota system that first brought minority culture into advertising. We still have two "separate-but-equal" systems.

Procurement departments go out to secure external vendors and allocate a percentage of spend to what is called supplier-diversity programs. Internally, brands use diversity-and-inclusion initiatives to justify hiring and retaining diverse talent. That sounds good, but practically speaking, it's just as flawed as the pre-Brown vs. Board of Education educational system was. As a result, brands are dramatically underinvesting in the fastest-growing parts of the marketplace. Nimble, authentic new brands are going to eat their lunch.

2. Change from the inside out. Today's diversity-and-inclusion and supplier-diversity models falter in part because of the language used inside companies. Brands still speak of diversity as being an exercise in compliance. If they go beyond the strictures of the law, it's a nice thing to do for society, but brands don't yet act as if their future competitiveness depends on diversity -- which it does.

The steady growth of diversity-and-inclusion and supplier-diversity systems has built up a large industry of training, education and organizational consulting. This industry is based on the belief that it is a civil right to have a diverse and inclusive work environment. The workplace that has been built adheres to that right and is compliant with the law. That's table-stakes thinking again.

To succeed, companies need to drop the idea and nomenclature brought to them by compliance with external forces. Instead, brands need to see diversity as a crucial factor in being market-ready. In an era of unprecedented transparency and respect for authenticity, no company can fake diversity.

3. Put your money where your mouth is. Google recently created a new holding company called Alphabet, which got all kinds of press attention and anguished business hot-takes. In 2012, Walmart announced that 100% of its sales growth would come from multicultural segments. No one paid the slightest bit of attention. The former is a largely meaningless corporate reorganization, while the latter reflects a recognition of a massive cultural realignment by one of the world's largest companies. Why no love for that?

Rebuilding companies from the inside-out to reflect the New Majority may not make the news yet, but it is going to shake up the way funds are allocated. Gone will be the days when, as I personally have experienced, shifting spending to the fast-growing Hispanic market means cutting marketing directed at blacks.

Once you place these bets, your brand or business will be open for New Majority customers. That means that, for the first time since the heyday of America's white majority, your business will be ready to sell to every one of your potential customers. You will be targeting the real, total addressable market, not some artificial fraction thereof. And if you are among the first to figure this out, consumers and talent will seek you out.

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