How Brands Must Adapt to the 'New Majority Marketplace'
There is considerable buzz in the marketing industry over the recent release of the 2010 Census' racial and ethnic data -- most loudly, among multicultural advertising agencies. And on the other side of the boardroom table, advertisers are undoubtedly reading and listening to various interpretations of what this means for their businesses. The takeaway is simple: America is more ethnically diverse than ever; 50% of babies born today are non-white. And when these babies grow to be adults, they will be in the majority, as so-called ethnic minorities.
The impact this will have on marketing is more complicated. To say that the widely accepted multicultural marketing paradigm is outdated would be an understatement. In many cases, marketers are still employing the same ethnic strategies as the very first multicultural campaigns of the 1950s and 1960s -- step 1: identify the largest ethnic segment(s); step 2: assume that they engage with your category/brand differently than whites do; step 3: use a multicultural specialist to convey a targeted message relying heavily on in-culture casting and language, with a sprinkling of cultural nuances and passion points; step 4: be disappointed by (lackluster) return on (minimal) investment.
But this isn't a story about why brands should invest more in ethnically targeted research and marketing. The drama we're watching unfold is a much more complex one: There is a race to evolve the multicultural-marketing paradigm, and the prize is the lucrative and growing multicultural consumer marketplace. General-market and multicultural agencies are competing in the first heat, and brands are up to the line next.
For multicultural agencies, their read on the ethnic population boom toggles between hope and fear. They hope it will lead to greater emphasis on multicultural marketing among Fortune 500 brands, leading to a spike in their value, visibility and revenue streams. But many of them also fear that general-market agencies will swoop in, under the veil of new cultural competency initiatives and "steal" the opportunity to market to America's "new majority" (the collective minority population plus whites, influenced by these cultures). Some niche shops have responded by positioning themselves as "cross-cultural." However, their resources are no match for general-market powerhouses like Ogilvy & Mather, which have established in-house cross-cultural practices, allowing them to claim expertise in reaching both ethnic and white consumers.
While the inter-agency debate brews on, I have been troubled by the lack of dialogue on what these changes mean for brands and businesses. There seem to be a few consistently emerging perspectives from brands seeking to adapt to what I call "The New Majority Marketplace:"
- "Our ethnic agency says that America is still racially divided and always will be. We work with them because they have a long track record of creating culturally targeted advertising. Besides, they are the target , so they have firsthand experience with what resonates."
- "We have a multicultural person in marketing, who acts as an internal consultant to the brand teams when there's a multicultural component."
- "We know the paradigm is broken, but we're working with agencies that are the most progressive in this space. They use words like 'cross-cultural' in their decks, and the creative director wears a baseball cap over his dreadlocks."
- "Our general-market agency consults with their multicultural agency partner on relevant assignments, so we're covered."
For those brands findings themselves in any of the above segments, I would suggest the following:
- General market does not mean white. Your general-market agency (or your own marketing department) should have demographic representation of your target audience.
- Try not to relegate multicultural responsibilities into an organizational silo. Brands that are successful in this regard make it a cross-functional responsibility and tie incentives to growth against KPIs.
- Always include ethnic consumers in major foundational research. It's much easier to be inclusive on the front end than to adapt strategies and communications on the back.
- Don't forget that your ethnic agency partners are part of the general market too. They are, by nature of their positions, bicultural. Leverage their deep understanding of both markets.
- Your consumers do not live in "ethnic" vs. "general-market" worlds. Their identities are mosaic in nature, and their identifying cultures go beyond race and ethnicity. Work with agencies that understand this.
- Cultural distinctions are the livelihood of some niche agencies. Some ethnic agencies have struggled hard and long for a seat at the table, and will fight tooth and nail to keep it. For a more objective perspective, make sure that your insights on the multicultural market come from more than just this one source.
- You wouldn't work with a full-service agency that doesn't understand digital, nor would you work with a digital agency that doesn't understand the world beyond their niche. Apply this same thinking to agency selection.
So, will traditional multicultural marketing eventually go extinct? Probably. But it's very likely that it will be replaced by a new multicultural marketing paradigm that's even more relevant to contemporary consumer culture than today's "general marketing." So the question should be, "Is the traditional 'general-market' paradigm dying?" I've got my money on yes.