Media Meltdown

With urban marketing hot, black agencies are the prime targets for aquisitions and mergers

In the 1970s they were brand-new, in the ’80s they were novel, by the ’90s they had forged a niche and come into their own. Now, in 2000, they’re being snatched up like gold: they’re America’s black-owned advertising agencies.

“There’s no ‘irrational exuberance’ to be found among those aggressively pursuing African American ad agencies and the consumers they represent,” says Ken Smikle, president of Chicago-based Target Market News, a marketing research firm that tracks the trends of black consumers, in quoting Federal Reserve Chairman Alan Greenspan. “The trends of 1998 have continued, and the landscape, while it hasn’t grown much in acreage, has certainly gotten a lot greener.”

Like a Siren at sea, the urban market lured marketers with the thumping sound and in-your-face attitude of hip-hop culture. This phenomenon changed the face of mainstream advertising, having a major influence not only on the youth market but also on society as a whole. General-market agencies now sought to capture this business by aligning with black-owned agencies with their fingers on this pulse. And last year proved to be the year of the alliance, with the top three African American-owned agencies talking merger with the behemoth general-market firms. Two of them actually aligned.

Overall, business was good for the industry. Chalk that up to a bullish economy that continues to foster an increase in all advertising, especially on the Internet. Total U.S. advertising revenues for 1999 were $ 215.2 billion, according to Robert J. Coen, senior vice president and forecasting director at Universal McCann in New York, the media arm of McCann-Erickson Worldwide — a 6.8% increase over 1998′s $ 201.6 billion. Of that, $ 1.1 billion was targeted to the African American market, with some 30% pocketed by black-owned ad agencies, according to Target Market News, Last year, billings of the 20 black-owned ad agencies on the BE ADVERTISING AGENCIES list increased 21.3% from 1998.

“It was a spectacular year for both general-market and multicultural agencies, and great work correlates with great years,” notes Michael Donahue, executive vice president of member services at the American Association of Advertising Agencies (AAAA) in New York. “Contributing to that growth is the fact that the total dotcom business was so large that it had an impact on the revenue stream of any agency doing dotcom business.”

A RUSH FOR BLACK GOLD
There’s no mistaking it. In the past, black-owned agencies faced the problem of convincing major advertisers to take the ethnic market seriously. No longer is this the case. With the multibillion-dollar urban market so hard to ignore, mainstream advertising agencies and marketers alike can’t harvest the talent and resources required to capitalize on it fast enough. Fashioning their own boutique agencies — specialized smaller agencies within an agency — they still foundered as they tried to keep pace with the market’s volume, demand and nuances. Finally, the big boys decided that they needed more than input from the agencies; they needed the agencies themselves.

“Clients realized that there was great opportunity in this market and didn’t want to lose the profitability [so they opted

Pages: 1 2 3 4 5
ACROSS THE WEB