Does a Growing Multicultural Market Threaten Multicultural Agencies?

General-Market Shops Move in as Segments Move Beyond 'Niche'

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José Villa
José Villa
I'm sure you've heard the old saying "you can never get too much of a good thing?" That's been the prevailing notion in regards to the rapidly growing Hispanic population in the U.S., which, together with continued population growth among African-Americans, Asians and other ethnic minority groups, has resulted in a huge multicultural population.

That's definitely been the prevailing opinion among ethnic ad agencies -- the hundreds the Hispanic, African-American and Asian ad agencies out there that have made a good living off of these changing demographics. I've seen many a capability deck or presentation from multicultural ad shops that starts with some variation of this compelling vision of the future: "By 2050, more than half of the U.S. population will be non-white" (that particular stat comes from Nielsen).

What I wonder is if this rapid demographic shift, and the sheer size of some of these minority populations will start to create more of a problem than an opportunity for multicultural ad agencies. Specifically, at what point does a group become too big to be considered a niche requiring a specialist agency?

At some point doesn't the balance tip and the notion of "general market" inevitably change to include Hispanics, African-Americans and Asians? I wonder if the future of general market means creating advertising that works across ethnic audiences.

As I wrote on my blog, with big Hispanic population numbers expected from the 2010 Census, won't that finally awaken the sleeping giants that are the big general-market advertising agencies? They see the writing on the wall -- the Hispanic population is growing so fast and its numbers are getting so big, that they risk losing control, budgets and relevancy if they don't begin to offer Hispanic advertising services. Large ad agencies like McCann Erickson have been dabbling in Hispanic advertising for years, and big players like DraftFCB are moving rapidly to position themselves as a new "full service" ad agency.

I wonder if that overused "full service" moniker might not soon evolve to describe large agencies that offer general market, Hispanic, African-American and Asian advertising services under one roof?

From the client/marketer's perspective, isn't there a tipping point when hiring specialist agencies to reach niche audiences no longer makes sense? The business of hiring specialist Hispanic or African-American ad agencies is based on a model where those agencies and their respective markets never represented more than a collective 20% of a client's advertising programs. Clients aren't set up to have multiple "lead" agencies, and the cost efficiencies they enjoy from having 80% of their advertising spend go through one large agency would be threatened if they had to spread the money out 25-20-15-40, right?

Going one step further and "futurecasting" out 10 to 20 years, aren't millennials going to blur the nice, clean lines of ethnicity that have dominated advertising spend and agency structure? Everyone talks about millennials being the first "multicultural" generation -- the first generation that is truly color-blind and has been able to break through the racial prism that influenced their parents and grandparents. If this is true, won't advertising (both the message and the media that carries it) have to be representative of this new multicultural world?

ABOUT THE AUTHOR
José Villa is president of interactive advertising agency Sensis, which has offices in Los Angeles and Washington. Clients include the U.S. Army, United Healthcare and Sempra Energy. José also blogs at ThinkMulticultural.com and can be followed on Twitter at @jrvilla.
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