Ad groups see potential in new multicultural rule

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Minority shops and ad groups are hopeful President Clinton's executive order "increasing opportunities and access for disadvantaged businesses" could positively affect both government and private industry.

The order, signed Oct. 6, requires that federal offices take "an aggressive role in ensuring minority-owned entities' participation" in advertising contracts. "Each department shall ensure that all creation, placement and transmission of federal advertising is fully reflective of the nation's diversity," said the order.

It also asks that every federal office that advertises take "special attention" to see that ethnic media is used and that payment to that media "is commensurate with fair market rates in the relevant market." It furthermore directs federal offices to make sure that goals set for use of minority and smaller contractors by prime contractors are enforced. The order requires federal offices to do a better job of publicizing the availability of contracts to minority and small agencies.

"It will have a definite impact," said Sam Chisholm, president-CEO of Chisholm Mingo Group, New York. "If nothing else, it will shift the light on some of the unfairnesses that have occurred over time. It's a real clear step in the right direction."


American Advertising Federation President-CEO Wally Snyder, whose group had pushed for the order, called its signing "a historic day for the advertising industry." Mr. Snyder said he hoped President Clinton's endorsement of the AAF's "Principles for Effective Advertising in the American Multicultural Marketplace" would also push marketers to use more minority agencies and media.

The executive order, however, isn't very clear on whether federal offices have to use minority agencies as prime contractors.

The U.S. Army was criticized early this year for limiting bids for its $130 million account to ad agencies or consortiums of agencies with at least $350 million in billings, effectively forcing minority agencies to be sub-contractors. At the time, minority agencies complained that as sub-contractors in government contracts their budgets and ability to generate revenue from media buying often put them at odds with their bigger agency partners' desires to maximize their own profits.

Sally Katzen, deputy director for management for the Office of Management & Budget, said the order requires federal contracting officers to establish a comprehensive plan to track federal offices' use of minority and small business agencies, and to better publicize contracts. Because of that, she said, the use of minority agencies should improve. "In advertising, we know that diversity in creation and diversity in transmission brings forth diversity in message," she said.

The order also limits the ability of federal offices to bundle together ad contracts that are now awarded separately and requires federal contracting officers to help smaller, newer businesses compete for government contracts.

Legislators praised the new order. U.S. Rep Al Wynn (D., Md.) said the order helped to reaffirm the administration's commitment to affirmative action "and send out the signal [to each federal office] that women-owned businesses and minority businesses are still very important and that we do need goals in the contract area to achieve this diversity."

Hal Shoup, exec VP of the American Association of Advertising Agencies, cautioned that the order's mention of a cost-benefit analysis before new bundling takes place could pose some difficulties. He said that until an ad agency plans a campaign, it usually is hard to look at the cost benefit of doing it one way vs. another.

Copyright October 2000, Crain Communications Inc.

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