Armed with statistics that show the African-American population will reach 39 million by 2010, and that spending by the demographic group has reached $300 billion, marketers are spending more than ever to reach black consumers.
Black-owned ad agencies have long hoped for such a trend, but they're not popping champagne corks just yet. Many of the ad dollars being used to reach a multicultural audience aren't going to the agencies specializing in multicultural marketing.
According to Target Market News, a newsletter tracking minority marketing trends, marketers spent $834 million targeting blacks in 1994, up 12.2% from '90. But only $297 million, or 35.6%, was handled by black-owned ad agencies, compared with 33.3% in 1990. Figures for 1995 aren't in yet.
Competition over target-marketing budgets has intensified as more general shops vie for the minority accounts and some companies keep in-house campaigns once handled by black agencies.
"Even the general marketing agencies that once said there was no black consumer, now they are scrambling to get a piece of it-from us," said Tom Burrell, chairman-CEO of Burrell Communications Group, Chicago.
"There's wider competition," agreed J. Melvin Muse, chairman-executive creative director of Muse Cordero Chen, a Los Angeles agency specializing in marketing to black, Hispanic and Asian consumers. "And it often happens before the accounts even go up for review .*.*. Every client I have ... I've had to compete against a general-market agency."
"I'm competing with big agencies for $1 million contracts," said Caroline Jones, whose New York agency bears her name. "Everybody goes for whatever business they can get."
Some bigger black agencies are benefiting from the attention marketers are paying to black consumers. Billings at Uniworld Group, New York, were up 21.2% to $104.1 million in 1994 from '93, and Uniworld in '95 won a coveted general-market assignment from Mars Inc.
At Burrell, billings were up 23.4% to $90 million in 1994, and in '95 the agency gained target-marketing assignments from Mobil Oil Corp. and from Nabisco Foods for its A.1. sauce. It also received additional billings in direct-response work from Nynex Corp. and won general-market work for Polaroid Corp., an existing client.
Many black agencies consider general-market work a key to survival. But it is hard to come by, as few black agencies are considered when mainstream accounts go into review.
Mars' choice of Uniworld to handle 3 Musketeers candy bar was unique because the agency wasn't on its roster before getting the account.
Muse handles general-market assignments for Horse Shoe Casino near Dallas, a $3 million-to-$5 million account. Equinox, Chicago, last year got general-market work from Allstate Insurance Co.
Equinox was handling black-consumer project work for Allstate for several months when agency executives proposed a new campaign called City Smart to better position the company with urban consumers. Allstate liked what it saw and gave the agency additional responsibilities.
The agency knew the account wouldn't go into review anytime soon- Leo Burnett USA has been Allstate's main agency for years. "So we invented it," said Bernie Washington, president-creative director at Equinox, now in the process of changing its name to the surnames of the shop's principals: Washington, Daniel, Rankin.
General-market media buying is one parcel of business-the most lucrative parcel-the black agencies seldom get. Burrell's Polaroid business, for example, doesn't include media buying. Equinox handles black-media buying for Allstate but not for its Anheuser-Busch account.
"There is a significant amount of work where black agencies are just acting as creative boutiques," said Ken Smikle, president of Target Market News. "When black agencies get media buying, it's only for African-American media outlets."
"It's a Catch 22: They need more money to establish bigger media departments, but they don't get the money," said Mr. Smikle.
Vince Cullers, president-CEO of the Chicago agency bearing his name, said the project-work dilemma is not exclusive to black-owned agencies-many general-market agencies struggle with the same issue. But, he added, project work can be detrimental to black agencies in the long run.
On top of intense competition with general ad agencies, black agencies face a static client pool. Much of the growth in target-marketing is coming from the same companies that have been targeting black consumers for decades-marketers of fast-food, automobiles, soft drinks and liquor-and they're just increasing their budgets, agency principals say.
And since agencies can only handle one client in any given category, pickings are slim even as ad budgets expand.
The companies that do target blacks wind up cycling their accounts among a small pool of shops. For instance, Burrell's win of Ford Motor Co.'s black-consumer marketing account was Uniworld's loss.
The trend of integrated marketing, too, works against many agencies-particularly smaller ones. Often they get fees for project work-community events, public relations, etc.-in lieu of the big budgets that accompany traditional ad campaigns.
"One problem black agencies are having is the fact of not having full responsibility of an advertising budget," said Uniworld Chairman Byron Lewis.
Luring new talent also is a problem black agencies face. There are only 17 agencies listed in the Standard Directory of Advertisers as African-American market specialists, and only a few of those boast more than a dozen employees. No new black-owned agencies with sizable employee rosters have opened in years, and few black college graduates even enter the ad business.
"There are fewer African-American agencies now than there were 20 years ago, and in the next five years there will be further shakeout," said Mr. Muse.
Late last year, Proctor & Gardner, Chicago, filed for Chapter 11 bankruptcy protection, an action followed in a few weeks by the Chapter 13 filing of the agency's president-CEO, Barbara Proctor.
Samuel Chisolm, president-CEO at Mingo Group, New York, said the problems of the few effect the many in the black-owned agency niche. "Clients begin to look closely at all African-American-owned agencies," he said.
Mr. Burrell is more optimistic. After 25 years in the business, he said, "hope springs eternal."