Brands Prepare for a More Diverse 'General Market'

With Generational Shift Afoot, Ethnic Insights are Standard in Ad Efforts

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CHICAGO ( -- With traditional marketers such as McDonald's and State Farm embracing ethnic insights as an integral component of their general-marketing work, it may seem that "ethnic" is finally going mainstream.

MONEY TALKS: State Farm ad
MONEY TALKS: State Farm ad
But marketers shouldn't expect to be hailed as civil-rights warriors. After all, outside of the industry, increasing consumerism isn't exactly a noble pursuit. And ethnic agencies shouldn't expect the dawn of a new era in which they're given a seat at the agency-of-record table. Indeed, there are signs that as "general" comes to mean something other than "white," spending will drop in ethnic niches—and research and ethnic findings will be handed over to traditional general-market agencies.

Whatever the case, it's clear that as the ethnic makeup of the U.S. continues to shift, marketers in certain industries are preparing for a more diverse general market.

"I think industry-wide, as America becomes more multicultural, you will see more ethnic insights across the board," said State Farm VP-Marketing Pam El. "I think you're seeing it already, but I think you'll see it two-, three, four-, five-fold going forward."

One of the key drivers is a generational shift. Younger consumers seem to be blending faster than their older ethnic counterparts. Pepper Miller, an ethnic-marketing consultant, said more marketers are looking for "urban mindset" insights, which come from a blend of African-American and Latino cultures, from big cities. While African-American boomers may be put off by "urban" interests, the segment continues to enjoy aspirational status.

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Ms. El said that State Farm has shifted its marketing based on the understanding that young people across ethnic groups may have more in common than older folks of the same race. That's why State Farm uses Lebron James to communicate with the entire youth demographic, rather than relegating him to campaigns directed specifically at African-American youths. The insurer has also recently chosen animated spots from African-American agency Sanders Wingo for general-market communications.

McDonald's has contemporized its brand over the past five to seven years with help from marketing that incorporates ethnic insights. The chain now does 40% of its U.S. business with ethnic minorities, and 50% of that group is 13 or younger. And so to build its U.S. advertising, McDonald's constructs focus groups with disproportionate minority representation, giving equal weight to Hispanic, African-American, Asian and general markets whenever possible. Neil Golden, chief marketer of McDonald's USA, said the result has been more-entertaining advertising that has helped drive the chain's business well ahead of its competition. Part of the reason it's working, Mr. Golden said, is that "consumers more and more are not only accepting, but embracing diversity and embracing it in lifestyle and in food." He said the company has instituted a performance-evaluation model for all of its agencies, measuring how well each agency's work "delivers against ethnic insights."

Golden rules
McDonald's does 40% of its U.S. business with ethnic minorities; 50% of that group is 13% or younger.

When McDonald's takes its ads to market, the chain makes sure that spending behind certain spots represents the country's ethnic makeup, such as: 15% behind Hispanic marketing, 12% behind African American and 5% behind Asian.

Insights gleaned from ethnic research have the added benefit of offering a perspective that is a part of mainstream culture while also being separate from it. Robert Brooks, a consultant and former P&G marketer and longtime champion of Burrell Communications, explained, "African-American agencies had people who were in the minority of society who were always looking up—an 11% minority against 80% of the population—so they lived among us and observed us, so they were keen observers, which led to great consumer insights that led to great advertising ideas"

But it's important for marketers to tread carefully—especially when it comes to executing these insights. One bone of contention is the issue of handing the research over to general-market agencies that have historically woeful records when it comes to their own diversity practices. Hadji Williams, an advertising and social-media consultant who has worked at both general market and ethnic agencies, said that this approach can be seen as disingenuous. It's akin to saying, "We're going to help general-market agencies with their deficiencies and then we're still going to marginalize our ethnic agencies and keep them at the back of the bus. It doesn't make good business sense."

There's also the risk of offending consumers by either playing on stereotypes, or appearing to be inserting actors of color and calling it culture. Ms. Miller noted that a number of marketers still spring for cheap laughs, casting Asians as martial artists, Hispanic women as loose, and black women as mean. Beyond issues of offensiveness, there are matters of cultural cluelessness. She recalled a Joe Boxer commercial with an African-American man bouncing around in a cutesy way. The spot was geared at women, who make a substantial portion of the men's underwear purchases among whites. But the same isn't true in the African-American market, in which men buy their own underwear.

Getting it right means finding imagery both appealing to the general market and believable to the segment in which it is based. Ms. Miller recalled a Tide commercial in which an African-American man, wearing a wedding ring, was drying his son off after a bath. It scored huge with African Americans, and was a hit in the general market as well.

It stands to reason that if ethnic agencies are the source of much of this research, they'd regularly be considered for—and win—agency-of-record status for major brands. But a quick look at most AOR reviews will disabuse anyone of that notion. "That's something ethic agencies struggle with," Mr. Williams said. "Black, Hispanic and Asian agencies may do great work, but you can never be an AOR."

Mr. Brooks added that he has campaigned for ethnic agencies as AOR's for decades, and never gotten a satisfactory answer as to why it wouldn't be considered.

And another issue to consider: As ethnic insights trickle up into general-market work, marketers may cut back on some targeted spending—especially in a recession. Ruth Gaviria, VP-multicultural ventures, Meredith Corp., said that targeted spending, at least on Hispanic advertising, has fallen against general-market spend. In general, she said that ethnic work has been "a luxury." But waiting on the sidelines is a luxury marketers can only afford for another year. "When the Census data is released and we have the come to Jesus meeting, then we all regroup," Ms. Gaviria said. "We have a game-changing opportunity in 2011."

Contributing: Jack Neff

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