Inside the state of DE&I media investment—an ‘illusion of inclusion’ as rapid growth fades

Diverse-owned media companies were optimistic about the growth of their ad business when they made the rounds at industry upfront events earlier this year. Despite looming economic headwinds, multiple media buyers predicted continued momentum in ad commitments to diverse-owned media companies that largely began in 2020 after the murder of George Floyd. Months later, those same executives paint a far more grim picture of the state of DE&I media investment. “Early this year, we were still at the tail end of the George Floyd time frame,” said Lynnwood Bibbens, CEO and founder of airport TV network Reach TV. “Plenty of [advertisers] were done last year, but this year it felt very over to a lot of people in the Black-owned media space.” Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here While upfront commitments for the five diverse-owned media companies surveyed by Ad Age varied, some showed indicators of a reversal of momentum for the already slow progress made in equitable media investment. As a quickly shifting political and cultural climate poses new problems for brands, diverse-owned media executives prepare for the worst. “My job as CEO is to read the tea leaves,” said Detavio Samuels, CEO of Black-owned media company Revolt, who called the past three years an “illusion of inclusion.” “It very clearly feels like what used to be tailwinds are now turning into headwinds.” DEI upfront In last year’s upfront, ReachTV saw a 100% increase in dollar commitments from advertisers compared to the year prior, albeit off a low base. This year, the Black-owned media company saw an increase of 25% compared to 2022. This comes as the travel and tourism economy approaches 2019 levels, according to Bibbens. In the 2023 upfront, ReachTV increased the number of advertisers it made deals with by six, to 184, up from 178 in 2022. ReachTV has “benefited from being a Black-owned media company,” said Bibbens. “And it’s also been hurt by it because I’m getting pushed into segments that are Black versus what my audience is,” meaning some advertisers relegate spending with ReachTV to their fraction of marketing budget set aside for diverse media, despite it publishing content for general audiences in airport waiting areas. Recent news: TikTok videos come to airports in ReachTV deal Another Black-owned media company executive, who shared data from its upfront negotiations on condition of anonymity, saw volume growth “across the board,” as well as single-digit pricing increases, over 20% increases in the dollar amount per deal and signing new advertisers. However, the media company noted that the majority of its growth this year came from one to two major clients at each agency it signed deals with, some described as 20 times the average spend of other advertisers. While the executive said the few big spenders continue to increase commitments because they get greater returns, “all of the other low-spending blue chip brands create a base level of business that will never equate to a meaningful amount if they sit flat or grow at small annual percentage increases. It does feel like they’re checking a box.” Other diverse-owned media companies have seen similar trends. Revry, an LGBTQ+-owned and targeted connected TV programmer, doubled its ad revenue from the second quarter of 2022 to the second quarter of 2023. However, while Revry has seen advertisers spending more, some offer micro budgets over short test periods that don’t give the media company enough time or means to secure positive results, said Alia J. Daniels, co-founder and chief operating officer at Revry during Ad Age’s Media Summit. “If you’re going to do a test buy, don’t just do it for one month—you and I both know that’s not going to give you any type of results,” said Daniels. “Actually do a real test buy that’s substantial enough that you can start to see something.” For Latino-owned Fuse Media, the upfront saw double-digit growth in volume and high single-digit growth in CPMs, or the cost to reach a thousand viewers. Fuse CEO and chairman Miguel Roggero said Fuse is “seeing some momentum” from agencies increasing budgets for diverse-owned media, but “we need to see more and more of those allocations increase.” “Success is going to be when we reach parity with big media,” said Roggero. The economic impact Spending was challenged across the entire TV upfront this year. As one agency executive said, “Flat is up in the market.” Companies such as Disney and NBCUniversal reported performance flat with 2022’s negotiations, with the majority of major networks describing increases in volume of commitments with declines in overall pricing. A second agency executive said diverse-owned media suffered comparably to all other media because of the economy and budgets generally being down. A third executive said the majority of their clients grew budgets for diverse-owned media, but rather than spending across a wide swath of partners were more particular about placing more dollars with select diverse-owned media partners for particular product rollouts. “Some [diverse-owned media companies] wanted a lot higher [pricing] than really was feasible,” said a fourth agency executive. “The momentum is there for us … our clients are doing a great job in terms of diversifying spend,” but said that there’s a lack of inventory for national TV campaigns from diverse-owned media partners. Inventory scale has long been a source of tension for advertisers looking to invest in the diverse-owned media space, claiming that the media companies don’t have enough content or that content isn’t amassing the audience necessary to fulfill the terms of large ad buys. The fourth executive also specified that much of the inventory available from diverse-owned media companies focused on local TV, podcasts and radio rather than national TV inventory. “We’re not just going to pay for inventory that doesn’t run,” said the fourth executive. “It’s media dollars—it’s not like we’re buying shoes that we just decide not to wear.” The first media executive cited the scale of diverse-owned inventory as the primary reason their agency didn’t set a percentage commitment for DE&I investment growth this year. While the executive said every client on their roster maintained or increased their spend with diverse-owned media, they knew of other agencies that had to go back on committed percentages because the media partner couldn’t spend all of their committed dollars. “It’s very misleading if you put a percentage out there and you can’t clear it, because you would literally have a spot on every single commercial break every single hour and day of the year on these partners,” said the executive. However, the inventory argument is often one that diverse-owned media companies push back on. Revry, for example, launched an LGBTQ+-targeted ad network earlier this year that uses the platform’s first-party data to place advertisers against its audience on additional platforms. At the time of launch, Revry’s ad network included 10 CTV partners and 5 LGBTQ+ programmers, which the company teased would grow. “The inventory is endless—we’re across so many different platforms targeting our audience, so as far as LGBTQ+ inventory, we’ve got plenty,” said Revry’s Daniels. “That’s something that’s happening across the board with different segments as well … That’s something that we at Revry have solved for because we did hear that from brands.” More news: Black media is being hurt by agency blocklists Multiple buyers brought up the issue of measurement. Many diverse-owned media companies are not measured by companies such as Nielsen because of costly deals. The fourth buyer said advertisers should increase content creation partnerships with diverse-owned media companies to both up the amount of programming pulling audiences to watch as well as to generate more funds for securing measurement partnerships. “That’s where I think the industry is struggling—there’s still a lot of non-measured [diverse-owned media] and we need to see the measurement,” said the fourth executive. The executive said in some cases the lack of measurement impacts media mix modeling software, which might reject diverse-owned media inventory because there is no data showing a marketer’s return on investment. To be sure, not all diverse-owned media is un-measured. ReachTV, for example, has measurement partnerships with Nielsen and iSpot.tv. Business, not charity Diverse-owned media companies “definitely had a leg up on the overall marketplace,” said the first media buying executive. “Where you saw a marketplace that was down and a lot of media partners were getting negative rollbacks, on the diverse base, they were still seeing a plus market. It just wasn’t like last year where it [growth] was double digits. This year, it was definitely more in the realm of reality.” In 2022, investment with diverse-owned media rose more than 50% while overall spending was nearly flat, according to the Association of National Advertisers’ Alliance for Inclusive and Multicultural Marketing based on data from Standard Media Index. Still, diverse-owned media investment only made up only 1.85% of total spending measured by SMI in 2022. In May Ad Age tracked major advertisers’ commitments to Black-owned media companies from 2021 to 2022. The survey of seven Black-owned media companies found that, among others, Target and McDonald’s had increased its spending substantially, and a mixture of increased and decreased investment from Walmart across the companies. Revolt’s Samuels said the three advertisers are among “a handful of brands” growing investment in Black-owned media. But for some, the numbers are less important. Cavel Khan, chief growth officer for Group Black, which represents a collective of Black-owned media companies in brand outreach efforts, said they’re more concerned that diverse-owned media is still seemingly in a phase of education and test partnerships three years after brands’ initial commitments. Rather, the issue to Khan is “more brands and agencies not shouting from the rooftops about the success of investing in Black-owned media that is driving growth and delivering results.” “[Advertisers] look at it as charity, and if more brands would speak up about the success they’ve had when they work with Group Black or even the others in the space, you would see more dollars,” said Khan. “That’s what happened with TikTok. That’s what happened with YouTube. When they were in their first two or three years, they showed great success and then there was a natural growth. That’s what I’m looking for.” Political factors Revolt’s Samuels said that outside of the economy, the slowdown in support for diverse-owned media is political. When the U.S. Supreme Court overturned affirmative action in college admissions this summer, Samuels said the decision led brands to fear prioritizing DE&I initiatives. “Nobody wants to have to fight what Starbucks just beat,” said Samuels, referring to the shareholder lawsuit that was dismissed in August claiming the coffee company’s corporate diversity policies violated its fiduciary duty to investors. “Nobody wants to do that work. And so we’re about to start watching brands adjust to de-risk the situation because for some reason supporting DE&I is now—people view it as an illegal or discriminatory activity.” The idea of brands fearing consumers’ response to supporting diverse media came clearly into view around Pride Month, after Bud Light partnered with transgender influencer Dylan Mulvaney. The partnership led to groups of consumers boycotting AB InBev’s products and, as a result, a decline in sales. Recent news: Is football marketing enough to save Bud Light? Previously, brands had feared appearing as inauthentic to the diverse groups they were marketing to, said Paul Kontonis, chief marketing officer of Revry. Initially, Kontonis said hesitancy from brands had to do with members of the LGBTQ+ community calling out brands for inauthentically marketing to them. What changed this year after Bud Light’s pushback for partnering with Mulvaney, according to Kontonis, was brands now fearing consumers outside of diverse communities calling them out for marketing to LGBTQ+ people. Revy said its advertising partnerships were not impacted by the Bud Light boycott. “Our consumers and our audiences are no longer looking for politicians and government to create change, they’re looking to corporate America to create change,” said Revolt’s Samuels. “When you have this battle over race being waged in corporate America, it is more important now than ever before that brands who believe in creating an equitable and just future stand up. The unfortunate part for me is that I don’t trust the ecosystem to be on the right side of history.”

Inside the state of DE&I media investment—an ‘illusion of inclusion’ as rapid growth fades

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