As they seek new revenue sources, Madison Avenue firms are beefing up their multicultural offerings, posing a challenge to specialist Hispanic and African-American agencies.
Kirshenbaum Bond Senecal + Partners has hired Sandra Alfaro to lead its newly created multicultural division, dubbed Ramona, which was formed several months ago after its parent company, MDC Partners, folded a multicultural agency into Kirshenbaum.
Ms. Alfaro, a former managing partner at the independent Hispanic agency Vidal Partnership, is one of the rash of high-profile multicultural ad experts who have been wooed into joining generalist ad agencies over the past year as those firms look to take advantage of the dollars flowing to multicultural advertising.
Over the past few months, Interpublic Group's DraftFCB and MDC's Crispin Porter + Bogusky have both hired several high-ranking executives from multicultural firms.
Multicultural marketing is one of the "fastest growing parts" of DraftFCB's business, says Laurence Boschetto, Draft's chief executive. Its business in the space has "doubled in the past two years," the agency says. Draft declined to reveal its revenue.
Mainstream ad agencies have dabbled in multicultural ads for years, but many are becoming more aggressive because, they say, some marketers are now more open to working with general ad firms for this part of their business.
Earlier this year, for example, Burger King shifted its Hispanic and African-American ad work to Crispin. The burger baron says it wanted "to create advertising that speaks with a consistent brand voice while continuing to respect and embrace the ethnically diverse population."
Church's Chicken, which works with Kirshenbaum, says that pooling everything at a generalist agency helps the multicultural component of the marketing campaign be part of the initial ad strategy, not just an "afterthought."
But Andy Bonaparte, Church's Chicken's vice president of advertising, says the approach works only if the general agency has invested in hiring the right multicultural talent. (The fast-food chain is owned by private- equity firm Friedman, Fleischer & Lowe LLC.)
Meanwhile, having generalist firms bulk up on minority ad talent is a worrisome trend for multicultural agencies. It "might lead to the demise of this segment," says Byron Lewis, chief executive of UniWorld Group, a multicultural ad firm. "There are so few [minorities] in the [ad] industry, so to deplete the staffing would be a major problem," he adds.
Ad executives say they expect ad spending directed at minority audiences to jump significantly when new data emerge from the 2010 Census. Some noticed an uptick earlier this year when the Census released data suggesting that whites are on the verge of becoming a minority among newborn children in the U.S.
Mr. Lewis says it took the 2000 Census results to wake up many marketers to this segment initially.
Last year, ad spending on Spanish-language media in the U.S. fared better than the overall ad market, falling 9.3% to $5.3 billion, while ad outlays on all other media slid 13% to $121.3 billion, says Kantar Media, an ad-tracking unit of WPP PLC.
Still, marketers have a long way to go to make their advertising proportionate. Advertisers spent an average of 7.8% of their total television spending on Hispanic TV in 2009, according to Kantar. There has been a lot of "lip service," adds Jon Swallen, senior vice president of research at Kantar.
The industries that have been creating ads for minority audiences most aggressively include fast-food companies, department stores, telecommunication companies and TV-service providers, says Kantar. Sectors that still lag include pharmaceutical companies.
Marketers such as the Subway sandwich chain and Coca-Cola say they are spending more of their ad dollars to woo minority consumers. Coke has recently made a multicultural approach part of every major ad push it launches.
"Multicultural consumers currently consume nearly three out of every 10 Coca-Cola products sold in the U.S. And in 10 years, all indications are that percentage will be closer to four out of 10," says Bea Perez, chief marketing officer for Coca-Cola North America. Still, Coke continues to work with several agencies that specialize in the space. Ms. Perez says Coke's general market agencies "need to partner with the agencies that have the core insights."
Ms. Perez says Coke's general market agencies are expected to come up with ads for multicultural audiences. For example, Wieden + Kennedy recently did an outdoor ad for the holidays that showed a young African- American boy sharing a gift-wrapped six-pack of Coke.
Suzanne Vranica, The Wall Street Journal. November 28, 2010
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