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Bolstered by the census 2000 data but wary about cutbacks imposed by the recession, the multicultural leaders at six major marketers gathered to discuss the challenges of one of the economy's brighter spots: the growing multicultural market. The six marketers, who each work with up to five multicultural agencies, talked with Advertising Age International Editor Laurel Wentz at the end of the Association of National Advertisers' third annual Multicultural Marketing Conference in Miami on Nov. 6. The following is an edited transcript of the roundtable discussion.

Advertising Age: How are the Census 2000 data affecting marketers' multicultural approach?

Brett Savage: From a strategic standpoint, I'm disappointed at the reaction internally. But the census data are important on a tactical level, helping us decide where we should do things such as the money-by-wire service to Mexico. Recently we sent information on the response to the anthrax situation-we had to identify a Spanish-speaking community where the postcards that went out had to be in Spanish.

Paul Mendieta: It's a singular validation. In our business model, we do not sell beer directly to the consumer. We sell to distributors. So there are three different sources of funding that have to be in line: corporate, our field business area and distributors.

Finally with the census, we were able to break down the information to the state and city level, and begin educating and showing proof to people in the different regions why this market is so important. We have a lot more opportunities than resources. So the company has to decide, "Do we continue to invest just against the general market?"

Julie Chan: Instead of us always having to go out and educate people, they called and asked us. You couldn't miss the story. So it was just a natural conversation starter.

AA: How do you get corporate America to take multicultural marketing more seriously? What is your biggest obstacle?

Michael DeLeon: It's bottom-line results for us. And what's difficult is having the infrastructure to obtain those results accurately and separate them from general market so I can say, "This happened because of my Hispanic advertising."

Gilbert Davila: A champion is clearly very important, but making sure that champion has the ears of upper management is critical. That's where the strategic and the big funding decisions are going to be made.

Ms. Chan: We're always in a Catch-22. We always seem to hold multiculturalism up to a higher standard and demand to know, OK, if I'm going to invest this, tell me how much I'll get in return.

AA: We're at war and in a recession. How will that affect multicultural ad budgets?

Mr. Davila: Sept. 11 will forever change the way we think and conduct ourselves, both personally and professionally. It has forced us in the short term to recalibrate many of our efforts. It's very important not to lose sight of the vision and that the demographical realities that exist today are not going to change.

Mr. DeLeon: I think our company will be affected just like the general-market side in terms of cuts. We've had downsizing and budget cuts begin to occur in our company, but I feel fortunate that there remains a commitment for diversity.

James Speros: More than two-thirds of the ANA members [surveyed before the multicultural conference] said they would increase spending in multicultural communications in 2002.

AA: Many advertising holding companies are buying multicultural agencies and even setting up their own multicultural holding companies, like Bcom3 Group's Pangea. Is that what clients want?

Ms. Chan: It's what the client wants as long as it really works. The individuality and flavor of what the smaller ethnic agency has to offer tend to get lost in big companies. If that happens, we fail. But if the flavor comes to the top and truly integrates into the whole communications process, we win.

Mr. Speros: General-market agencies have woken up to the concept of multicultural marketing and its importance. I think they're just getting smarter. The WPPs, the Bcom3s, the Interpublics and so on know this is a place they can grow and make money. The other parts of their business are in decline in many cases.

One of the big issues is these larger holding companies is public companies. Not only do they work for clients but also for shareholders. When stock price goes down and cost cuts need to be made, many of the smaller agencies inside the larger holding companies get cut very drastically. So time will tell how these major acquisitions work out. I think we as advertisers will continue to cherry-pick those agencies that work best for us.

Mr. Davila: I see great benefit in having one source where we could actually go and engage a multitude of segments with one conversation. And yet there is still something to be said about the minority-owned ad agency that sometimes can give you the boutiqueness that can get a bit lost with a very big entity.

Mr. DeLeon: The fear is that they don't get overly controlled to the point that you're beginning to lose your value. Hang onto that sensitivity. [Mr. DeLeon oversaw a 17-agency Hispanic review last year and picked LatinWorks, Austin, Texas, a new independent shop.]

Mr. Mendieta: In 1985, I joined a Hispanic shop that was owned by a large general-market agency. It was frustrating for a couple reasons. One is ego, the second is money. The guy overseeing the general-market business in the agency wants to be the one who determines the strategy. And because he has the ear of the client, and is responsible overall for that piece of business, it didn't matter if it was the wrong concept or the wrong strategy. Sometimes they forced it down.

Then there is the financial implication. The large agency is going to subcontract with the ethnic agency. The client will never see it, but there is internal fighting going on with how much commission and how much money and how much revenue.

AA: How do you make your general-market and multicultural agencies work together?

Mr. DeLeon: The smartest thing you can do is to get them to work [together] from the very beginning when the ideas just begin. So that one particular agency doesn't get too far down the road and you find yourself trying to adapt to a situation that's already been bought off on by upper management.

Mr. Speros: Have them sit in the room and get briefed at the same time, with the same facts and information. What you don't want is a cookie-cutter approach where one is driving it.

Mr. Mendieta: Having somebody inside your corporation who understands the diverse ethnic groups is critical for that integration. There are egos involved. Sometimes an ethnic agency might tell you, "No, it won't work," because in the back of their mind, the creative director might want to come up with his own campaign or his own commercials.

Mr. Savage: [The Postal Service] just selected new agencies last year after an intensive review process. What I wanted going in representing the interest of multiculturalism is that we have a seat at the table, that [the multicultural agencies] would be seen as an equal partner. And that's a somewhat naive expectation.

In many cases, it's the multicultural agencies that are being asked or forced to follow the strategy dictated by the general market. And sometimes that's not the right thing to do. Sometimes it is, which means the client has to figure that out.

Mr. Davila: It's part of the DNA of an agency to be competitive. So it's a challenge to make sure that all our agencies work together, particularly with many of us that have a multitude of agencies. One way we ensure our agencies work together is by placing it as part of their incentive from a bonus perspective. And you measure them as to the level of cooperation as well as the business results. So now general-market agencies have a vested interest for multicultural to do well and vice versa.

AA: How should companies structure multicultural marketing?

Mr. Davila: One of the things we do need to strive for is to ensure that the multicultural marketing effort is elevated to the right level. Having the ears of upper management, the proper level of funding, the right level of accountability for results, regardless of how you are structured. Whether you are part of a brand team, whether you're an independent unit.

Mr. Savage: One of the frustrations I have is we actually are within marketing. We're in the silo and so we don't have the influence with the information systems group to build out the Asian-language Web site. Or to do more minority contracting because that's the purchasing purview, or have our retail group get bilingual folks at the post office. Because multicultural marketing is within the silo of marketing, it actually limits us.

AA: How do you adapt products for multicultural consumers? Sears designates 180 stores as Hispanic and publishes the biggest Spanish-language magazine, Nuestra Gente, as a quarterly with 800,000 circulation.

Mr. Davila: Our Hispanic stores tend to demand smaller shoe sizes and more petite apparel. There are cultural aspects we need to take into consideration. The African-American communities are church-going communities. They dress up. Things like church hats become a very important item to carry in our stores. In some parts of the country, we might have breadmakers. In Los Angeles, we have tortilla warmers.

AA: Do marketers have to advertise in Spanish? And then must they segment the Spanish-speaking marketplace?

Mr. Mendieta: You can segment the Hispanic market until you go crazy. But there are enough commonalities between all the Hispanic groups that you can have effective advertising that is going to work with everyone. With TV, you do it with the common denominators.

Then with radio, you can begin making different segmentations according to the marketplace, not necessarily the type of Latino. Miami now is only 50% Cuban among the Latinos. If you focus 100% on the Cuban-American, you're going to ignore the rest of the segment.

Mr. Davila: You absolutely, unequivocally need to communicate in-language. Over 50% of Hispanics are either completely Spanish-dominant or prefer Spanish. Same thing in the Asian languages, by the way.

We also understand that as you evolve in this country, you might become more bilingual. There are some TV shows that are beginning to address that bilingual customer. It's also incumbent in our general-market advertising to ensure that advertising reflects the America of today, and incorporates not only faces but relevant nuances of those ethnic customers.

Ms. Chan: If your media plan says you're reaching 75% of people 3.4 times, you're fooling yourself. You're reaching 75% of people who speak English. And non-English-speaking people buy your product too in Sears.

AA: Do you have an Internet strategy?

Mr. Davila: Earlier this year, we launched SearsTodoparati.com. I saw it as a necessary investment to position us for leadership in the future. It's content-based but connects with our Sears.com e-commerce engine, and very soon you'll be able to apply for your Sears card or Sears MasterCard in-language. [We advertise] with many of the portals including Univision.com, Terra and StarMedia.

Mr. Mendieta: We did a test for the Hispanic market around our sponsorship of the rock band La Ley and its 30-city tour. Con-sumers could go to the Web pages and look up information about the tour and either listen to La Ley's music or see commercials we have produced with them.

Mr. DeLeon: We're kind of in the developmental stages. We do have some in-language information on our Web site. We've done a little [online advertising] for some product launches. I can't say it was a real success.

Mr. Savage: Last year, I led development of the launch of the Spanish-language Web site. It's a corporate resource we use as an information dissemination channel. I'm not a big believer in the Internet as an advertising channel. So I don't necessarily look favorably upon agencies' media recommendations for Internet advertising.

AA: Are there enough multicultural media?

Mr. Savage: I certainly don't think there are a lack of multicultural media, because they call me all the time. Sometimes I say, "How did you get my number?"

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