Gov't ad accounts fuel ethnic shops

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At the cramped Manhattan headquarters of A Partnership, President-CEO Jeannie Yuen is doubling the 2-year-old Asian-American agency's office space and hiring six new people. Her husband Aok Yuen, the agency's exec VP-chief creative officer, is embarking on a five-country ad shoot in Asia with a well-known director from Hong Kong.

While general-market agencies are handing out pink slips as their clients cut back, A Partnership's small staff is tripling up in cubicles. They're not alone. A number of multicultural agencies are displaying surprising resilience in a gloomy economy, and one reason is that at least a portion of their billings comes from U.S. government accounts.

A Partnership, for example, already had one government account and in late September won $10 million in work from the Centers for Disease Control to promote healthier eating habits for tweens.

Another multicultural shop, Garcia LKS, San Antonio, was awarded $10 million, while a trio of general-market agencies got a total of $75 million from the same CDC contract.

"The federal government and select state governments are among the best multicultural marketers in the country," says Saul Gitlin, exec VP at New York-based Asian-American agency Kang & Lee, partly owned WPP Group. "Not a single [request for proposal] comes out of the state of California without Hispanic and Asian and African-American [components] at least implicit. In tough times, the government continues public awareness and educational and small-business programs. We keep a careful eye on every RFP from Sacramento."

It's not always easy. Vast numbers of agencies may be involved. More than 200 pitched for different aspects of the $95 million CDC account. During one protracted government account shift, Ms. Yuen had her second child during the nine-month review process. Sometimes multicultural agencies get to pitch in their own right and are hired directly by the government agency, as with the CDC business. But more often a general-market agency is chosen and subcontracts to multicultural agencies the different ethnic segments required by the government department.

The White House Office of National Drug Control Policy sets aside $25 million of its $125 million account for ethnic agencies. But the nine minority shops working on the business are subcontracted to the general-market agency, WPP's Ogilvy & Mather Worldwide. After parting company with Ogilvy over alleged accounting irregularities, the White House anti-drug office issued a new RFP in October, effectively forcing the minority agencies to repitch for the business.

"That's kind of the Catch-22 in this whole scenario," says an executive at one of the White House office's minority agencies.


Even getting into the game is complicated and time-consuming. The new RFP for the anti-drug work, for example, runs 111 pages.

"You have to have expertise in the bidding process," says Jo Muse, chairman-executive creative director of Muse Cordero Chen & Partners, Los Angeles. "You don't get that with a single RFP. The hardest hurdle with government business is learning to do the RFP."

But once an account is won, the contract frequently is renewed, a particular advantage for multicultural agencies that often work on more of a project basis than do general-market agencies.

"It's steady," Mr. Muse says. His agency, for instance, is well into its second five-year contract with the California Department of Health Services, handling tobacco education for African-Americans, worth $3 million a year.

"Government accounts tend to be a little bit more secure," says Sam Chisholm, chairman-CEO of Chisholm-Mingo Group, New York. "Although they're cost-plus, so if your tasks diminish, your time decreases. They're not 100% recession-proof, but they tend to be long-term contracts."

"The issue is what is the most effective way to reach the minority audience, and certainly the buying and skills of minority agencies are important, but so is research and the testing and the creative, and media consumption habits of ethnic audiences," says Alan Levitt, director of the White House anti-drug office's advertising program. "There are a lot of other issues besides simply the ethnic, things like reaching the hip-hop culture, the behavior patterns of Asian immigrants and does the message resonate."


In California, state spending on advertising runs at an estimated $400 million a year, with the biggest budgets going to smoking education and energy conservation at about $45 million each, and $25 million for the state lottery. General-market agencies get the lion's share of government ad dollars, but compared with the scant 3% of total U.S. ad spending that goes to minority agencies, their share of government spending is a lot more generous.

"We have just seen the tip of the iceberg in terms of multicultural [contracts]," says Coleen Stevens, chief of the tobacco education media campaign for the California Department of Health Services. "Tobacco control, to be effective, has to reach all Californians."

In fact, Census 2000 breaks down California's inhabitants as 32.4% Hispanic, 10.9% Asian and 6.7% African-American-50% of the population.

"I know I have solid funding until the next budget cycle," Ms. Stevens says. State contracts offer multicultural agencies a "source of consistent baseline funding," which can help them get other business, she says.

And even when priorities may be shifting as the Centers for Disease Control, for example, focuses on anthrax and other bioterrorism threats, the government needs to communicate.

"We may see a public information campaign," says Mr. Muse, whose agency works with the CDC. "We believe our work with them may change a bit."

Contributing: Ira Teinowitz

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