Crossing the color line; African American advertising agencies fight to prevent mainstream...

Brown is the new black. In fashion, that trend might last only a season but In advertising it could last a lifetime. Last year the ever evolving "urban market" continued to be redefined as the 2000 Census data sent advertisers scurrying to address o Hispanic market that is predicted to triple

in size by 2050 and account for 24% of the total U.S. population. "There has been this knee-jerk [reaction] away from the African American and even Asian market without forethought, and that's dangerous," says Heide Gardner, vice president, diversity and strategic programs at the American Advertising Federation (AAF) in Washington, D.C. "The truth is that the American marketplace has changed. Based on today's formula, advertisers may not be spending the right amount of money in any of these markets."

Indeed, the Hispanic market cannot be ignored. For years it was a case of "what's yours is yours and what's mine is mine" as Hispanic and African American agencies catered to their respective markets. Some black agencies have tried to answer the needs of their Hispanic clients, but in most cases the language factor drove advertisers to Latino agencies. Last year African American ad agencies not only continued to compete with general market, non-ethnic, and boutique agencies but they also found ways to contend with urban marketing budgets that are becoming increasingly more focused on the Hispanic market.

THE YEAR IN REVIEW

According to a Universal McCann Insider's Report, overall ad spending in 2001 dropped an estimated $233.7 billion, down 4.1% from the previous year. Wracked by a softened economy and the events of Sept. 11, the industry suffered its worst advertising spending decline since World War II; but advertisers kept their eyes and budgets on the lucrative "urban" market estimated to have $890 billion dollars to burn, as reported by UrbanIQ, a New York-based market research firm.

And with African American spending power hovering at nearly $600 billion, according to the BE BOARD OF ECONOMISTS, there's no doubt where most of those urban dollars lay. "It is not that corporate America doesn't believe in African American marketing, it's just that they are trying to do it without African American involvement," states Ken Smikle, president and CEO of Target Market News, a Chicago-based market research firm. Overall 2001 billings for agencies on the BE ADVERTISING AGENCY list rose by 8.74% from $1.2 billion in 2000 to $1.3 billion in 2001. New to the list are Equals Three Communications, SWG&M Advertising Inc., J. Curtis & Co., and Footsteps L.L.C.

A TIME OF SHAKE-UP AT THE TOP

It's a time of opportunity in the midst of chaos. Toyota came under fire for a promotional postcard featuring the smiling mouth of an African American with a gold tooth applique in the shape of its RAV4 sports utility vehicle. They then hired the 2002 BE 100s Advertising Agency of the Year, Burrell Communications Group L.L.C. (No. 3 on the BE ADVERTISING AGENCY list with $181.6 million in billings)--Toyota's first African American agency of record--to help them stave off a Reverend Jesse Jackson boycott and share in part of the $50 million earmarked for African American and Hispanic advertising.

Burrell was named general market agency for Verizon. The Chicago-based firm also won the General Mills account, a former Don Coleman Advertising Inc. account estimated to be worth $15 million to $20 million annually. Meanwhile, Don Coleman Advertising Inc. (No. 1 on the BE ADVERTISING AGENCY list with $330 million in billings) reorganized in April under the new name GlobalHue. The Southfield, Michigan, firm acquired Hispanic firm Montemayor & Asociados of San Antonio in Spring 2002 for an undisclosed amount and is searching for an Asian partner. It also opened a Los Angeles office this Spring.

As of press time, Chrysler had put out some feelers to find a replacement for GlobalHue's Don Coleman Advertising, but not before catching flack over its commercials, done by PentaMark Worldwide, which featured dark haired, bronze skinned actors who were indiscernibly black, white, or Hispanic. Consider this a glimpse of things to come as more advertisers seek to "diversify" their ads with ethnically "neutral" models. "Clearly, Chrysler is not in tune with what's going on," says Smikle in response to Chrysler's multicultural advertising executive's defense of the commercials in a December 18, 2001 Wall Street Journal article. "[Chrysler] has gone from being one of the most sensitive marketers to African American consumers to one that describes its campaign as `neutral.'"

GlobalHue also spun off two of its public relations and research operating units, Ntouch Communications Group and Nsights Worldwide, respectively, and they will service both GlobalHue and outside business as well. The agency will also expand Kmart's "The Stuff of Life" campaign with advertising featuring Chaka Khan, BeBe Winans, and Joe Feliciano. Kmart's spending on multicultural advertising was estimated by AdAge.com to be about $25 million in 2001. Coleman says that the retailer will be in a much better position in the wake of filing bankruptcy with its failing stores now closed. With many Kmart stores located in the suburbs, urban area stores will gain increased focus and the urban consumer will benefit. SpikeDDB (No. 10 on the BE ADVERTISING AGENCY list with $25 million in billings) handled the retailer's general market advertising.

GlobalHue's "Free Up" campaign for Verizon's pre-paid phone card helped grow business from 9% to 22% in seven months, states Coleman. Also in the wings are campaigns for Johnson & Johnson, Tylenol, and Mylanta.

Bcom3 recently merged with Publicis Networks. In other BCom3 news: Its consolidation of its multicultural agencies into Pangea saw Vigilante founders Marc Stephenson Strachan and Mark S. Robinson strike a deal with BBDO New York in January 2001 for an undisclosed amount to launch S/R Communications Alliance. The firm is a holding company for eight minority-owned advertising companies with expertise in everything from research to advertising to media planning and buying.

The UniWorld Group (No. 2 on the BE ADVERTISING AGENCY list with $258.5 million in billings) has leveraged the influence of major black entertainers. Scheduled Burger King ads feature Steve Harvey and Pepsi ads feature rapper Ludacris and television's Bernie Mack. "We have to meet the competition by leveraging our cultural influence on mainstream society and working with black sports, entertainment, and media icons who dominate this urban space," says Chairman and CEO Byron Lewis who aligned with mega-agency WP in 2000. In addition, the national television campaign for colorectal cancer that UniWorld produced for NBC-TV's Today Show host, Katie Couric, has been well received. Last year also saw UniWorld President and COO Greg Walker depart to advertising giant J. Walter Thompson to consult on the Domino's Pizza account after GlobalHue dropped it.

Other new business deals include Spike DDB's acquisition of McDonald's, New York Regional Business, the New York Knicks, and Remy Martin. There is talk that the agency is courting a potential Hispanic and Asian partner. Footsteps L.L.C. (No. 20 on the BE ADVERTISING AGENCY list with $14 million in billings) founders Verdia Johnson and Alvin Gay grew the agency with $3 million in sales revenues, up from $1.1 million in 2000, on $14 million in billings in 2001. Their client roster includes Radio Shack, Johnson Products, Wells Fargo, Continuum Health Partners, Alcon Labs, and Mercedes-Benz.

GOING IT ALONE

In June the industry lost Caroline Jones, founder of Caroline Jones Inc., one of the advertising industry's pioneering African American women, to cancer and the agency has since folded. The other independent agencies continue to thrive but for how long? Of the top five BE advertising agencies, the independents left are Carol H. Williams Advertising (No. 6 on the BE ADVERTISING AGENCY list with $72 million in billings) and The Chisholm-Mingo Group Inc. (No. 4 on the BE ADVERTISING AGENCY list with $100 million in billings). "We continue to be optimistic about our future and will continue to provide targeted services for our clients and provide a place where African Americans can demonstrate their talents," says Chairman and CEO Samuel J. Chisholm of The Chisholm-Mingo Group Inc., the 2001 BE Advertising Agency of the Year.

It was also a good year for Chisholm-Mingo as the firm attracted Pfizer, and Starwood Hotels and Resorts. "These are exciting businesses that gave us entry into two new and powerful businesses," says Chisholm. "With Amtrak and Royal Caribbean as existing clients, the ability to add a hotel was significant." Other accomplishments include the acquisition of Renau Cie brandy and the opening of West Coast office, Sankofa Communications. This new creative media boutique will bring a new perspective to the agency's offerings and allow it to offer services to West Coast clients.

Carol H. Williams Advertising Inc. resigned the Nissan account and picked up all of General Motors' business. New to the list is Equals Three Communications (No. 7 on the BE ADVERTISING AGENCY list with $68 million in billings). Washington Daniel Advertising (No. 13 on the BE ADVERTISING AGENCY list with $24 million in billings) saw a 20% growth in billings. President and Creative Director Bernard Washington attributed much of the agency's success to providing advertising, promotions, and event marketing services to local businesses. Their successful "Fly" print campaign for BMW will hold a space on the mantelpiece with upcoming projects for ABC Chicago and meat distributor Moo and Oink.

The Wimbley Group Inc. fell off the list although it landed Kellogg USA. It is not yet known whether the former Burrell account will be the turnaround the firm needs. Over the past year, the 14-year-old shop suffered catastrophic damage as its president and founder, Charles L. Wimbley Sr., endured kidney failure and a transplant operation. During that same period, the Itasca, Illinois-based agency lost its largest account, the ethnic marketing business of carmaker General Motors Corps' Buick brand.

Anderson Communications Inc. (No. 17 on the BE ADVERTISING AGENCY list with $15.5 million in billings) had an 11.7% drop in business due to delays in project funding. The Atlanta-based business has recently launched Urban Media Mart, an independent, black media planning and buying service. "Many advertisers think that there are only four ways to reach the African American audience: The Tom Joyner Show, BET, Essence and Ebony/Jet," says President Al Anderson. "There are a host of other vehicles, such as black newspapers and Radio One, that can help drive a product and we will try to educate our client and potential clients."

WHERE DO WE GO FROM HERE?

Let's face it--African American agencies will continue to compete with mainstream and non-black boutique agencies for business. "While the pie has certainly gotten bigger, so has competition from global mainstream agencies and urban boutiques. To survive, we have to improve operational efficiency, services, and talent depth," says UniWorld's Lewis.

Agency leaders are optimistic and feel that urban ad budgets will continue to increase. "Areas of growth for African American agencies will come from increased spending from existing clients," says Smikle. AAF's Gardner adds, "Black agencies have done an excellent job of proving to advertisers that community relations is an important factor in the marketing and advertising mix."

The challenge for African American-owned agencies is to maintain their domain by providing service to the urban market that they pioneered. So while colors may change with the season, not one is more trendsetting, classic, or timeless than your basic black.

Top 20 Billings & Employees (2000-2001)

BLACK-OWNED AD AGENCIES        2000         2001   % CHANGE

Number of Employees             933          975      4.50%

Billings *                $1,244.75    $1,353.49       8.74

* IN MILLIONS OF DOLLARS, TO THE NEAREST THOUSAND.
PREPARED BY B.E. RESEARCH.