Internal units aimed at multicultural consumers are growing in line with the markets they target
The 2000 US Census created a chain reaction in the volatile world of marketing. After it made marketers realize there were more than just white people in the US who had money to spend on their products, these marketers got their ad agencies on the phone and demanded research on these multicultural markets followed by fully integrated marketing campaigns... ASAP.
Some targeted campaigns were launched, but it's probably a good thing multicultural consumers didn't hold their breath.
While marketers looked to their ad agencies to launch multicultural campaigns, the demand on their PR agencies wasn't as great. That is changing, and so is the way major PR firms are handling their multicultural efforts.
Traditionally, a big firm would hire a smaller specialty/boutique agency to handle the multicultural part of a marketing effort.
Kim Hunter, president of Lagrant Communications, a marketing and PR firm specializing in the African-American and Hispanic consumer markets, calls this approach "the sharecropping of the new millennium."
"A general market agency may need an agency with my specialty; we partner, and once we get the business, a multitude of things happen," he says. "One, I may not hear from them for a while. Two, when I do hear from them, the scope of work has been gradually reduced. And third, the budget is absolutely whacked out, and when they allocate those dollars, they are much smaller than what we originally talked about."
But as the focus on the bottom line grows more intense, many PR agencies no longer want to part with potential revenue. As a result, many have tried launching their own internal multicultural units.
Some view this as a problem, believing that agencies are either bringing in the wrong people or not enough people to handle such projects, therefore short-changing the consumer. Others, such as Bill Imada, chairman of the IW Group, a PR agency specializing in targeting Asian Americans, see it as healthy competition.
Imada, whose group is regularly brought in by agencies such as Burson-Marsteller and Edelman, says more mass-market agencies are trying to create internal divisions because their clients say, "If you can't do this, we will go outside your company."
In 2005, Weber Shandwick launched its own multicultural unit, the Axis Agency. Up until last month, it focused on Hispanic campaigns. Armando Azarloza, president of Axis, says the hiring of Kevin Hooks as SVP of the African-American and urban market practice, has expanded Axis' focus.
Axis' African-American practice currently has three people working within it, but Azarloza says he's confident that number will grow over the next 12 months.
"We can provide the insight that boutique agencies can and have people who are just as talented," he says. "The benefit of working with us is that we also have the resources of a Weber Shandwick behind us."
Imada says there's no reason any of the top 10 PR agencies shouldn't have a multicultural unit. "I just don't think most of them do it well, and they make the same mistakes over and over," he says.
One recurring problem: when a large agency buys a smaller one and tries to change the way it operates. "They can't buy them and then ask them to fit into some template of corporate structure," Imada says. "Let them run their companies in a manner that speaks to the communities they target. I see big agencies cherry pick from the ones they acquire and sap them of all their energy."
Specialty agencies have to be allowed to be more entrepreneurial, have their own P&L, and have someone in charge who reflects the community they're targeting, Imada says.
Hunter says another problem is that, to many PR agencies, the word multicultural means Hispanic and nothing else. "When you talk about multicultural, you should talk about the ethnicity, gender, sexual orientation, religion, baby boomers, and the urban market," he says.
Hunter says his agency doesn't necessarily lose business to big agencies, but finds it more challenging to secure and close.
Azarloza believes boutique agencies will always have a place "just as there are smaller agencies that service the general market," Azarloza says. "But I think the market will dictate that the major agencies will have to create internal multicultural units to meet the needs of their clients."