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Hispanics Surpass Blacks As Growth Market for Ads

Henry H. Osborne fights to keep from becoming a statistic: His agency is one of the few remaining African American marketing firms in the region.

The year before last, his Osborne Communications Inc. lost its largest client, the Freddie Mac Foundation, the philanthropic unit of the federally backed mortgage company and one of the area's biggest charities. The account, which the foundation took in-house, was worth $2 million.

These days Osborne, 57, staffs the agency mostly with freelancers and operates from two desks in his Silver Spring home.

Some of Osborne's troubles are characteristic of most small businesses. Some are peculiar to smaller advertising agencies, gobbled up or squeezed by ever larger competitors as the industry consolidates.

And some are because of one of the biggest trends in the business these days, as advertising dollars shift to the fast-growing Hispanic market and its Spanish-language publications and broadcasters.

In 2002, for the first time Hispanics surpassed blacks as the nation's largest minority -- 38.8 million, or 12.5 percent of the population, compared with 38.3 million blacks, or 12.3 percent. Many Hispanics speak mostly Spanish, requiring a special marketing effort.

In the Washington region, Hispanic newcomers are changing communities in the District and the suburbs. Hispanics account for 7.9 percent of the D.C. population, according to the 2000 Census, creating new enclaves in Adams Morgan, Mount Pleasant and other areas.

Spending on advertising to Hispanics is outpacing advertising aimed at blacks. At the 23-year-old Viacom Inc. unit Black Entertainment Television Inc., based in the District and the only cable TV channel in the nation aimed specifically at blacks, ad revenue rose 12 percent to $287 million in 2002, said market researcher Nielsen Monitor-Plus.

But that pales compared with the $2 billion that year -- an almost 15 percent jump -- for the two Spanish-language networks, Univision Communications Inc. and Telemundo Communications Group Inc. Los Angeles-based Univision, with 50 stations and 43 affiliates, began small as the Spanish International Network in 1961. Univision's chief rival is Telemundo, founded in 1987 and owned by General Electric Co. Telemundo has 15 stations and 32 affiliates.

Last year, Procter & Gamble Co., one of the world's largest advertisers, aired its first national network Spanish-language TV commercial for Crest toothpaste during the Grammy Awards on CBS. (There was an English voice-over at the end.) Coca-Cola Co. debuted its first bilingual general-market commercial last fall, featuring Mexican-born actress Salma Hayek.

That has meant hard times for black agencies. One of the largest, New York-based Chisholm-Mingo Group Inc., filed last fall for Chapter 11 bankruptcy protection.

In the past five years, three black agencies and eight Hispanic firms have joined the American Association of Advertising Agencies, the industry's trade association, for a total of 23 Hispanic members and 15 black-oriented firms, said Harley Griffiths, vice president of membership for the AAAA.

So it's adapt or die these days for black firms. In Bethesda, Eugene M. Faison Jr., chairman and chief executive of Equals Three Communications Inc., said he couldn't afford to focus solely on African Americans and has produced mainstream ads as well as campaigns targeted at Hispanics, Asians, gays and others. The company was the only local ad firm last year in Black Enterprise magazine's annual list of the nation's top-grossing black businesses.

"The pure African American agency is not the survival mode anymore," Faison said. "There's a risk these firms could become extinct."

The small Washington ad market never had a large number of black firms, and in the past few decades has lost some of the rest. In 1988 the area's most prominent, District firm JAM Corp., filed for bankruptcy. At one time, it had developed ads for the D.C. Lottery.

Hispanic agencies, however, have steadily grown in the region. New York-based AD Rendon Communications Inc. opened a District office last year to go after government contracts.

A local Hispanic agency, Elevacion, also opened last year and has already produced a pro bono advertising campaign for the Department of Homeland Security.

In Rockville, Claudia Preza held a pre-Christmas party last month to celebrate the opening of a new two-floor office for her seven-year-old firm, CPR Communications Inc., which she had been running out of her Bethesda home. The agency has grown to 30 clients from two, and includes local doctors, grocery stores, car dealerships and Banagricola, a unit of Banco Agricola, the largest bank in El Salvador. Her specialties are public relations, Spanish-language television and radio commercials and advertising jingles.

The 33-year-old El Salvador native has even more ambitious plans for this year: She wants to triple her agency's number of clients. Part of her strategy is to win more mainstream projects.

"I'm going to do the crossover -- I'm going to even take Anglo clients," she said.

Some Hispanic agencies have even begun working for African American clients. For example, there's the Washington Informer, a black-owned weekly newspaper in the District, with falling advertising revenue that has forced it to look beyond the black community for readers.

It recently picked Luis Vasquez-Ajmac, president of District-based Maya Advertising and Communications, to help market the newspaper's 40th anniversary in 2004.

Posted on aef.com: January 9, 2004


Sabrina Jones, Washington Post. January 5, 2004

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