The Madison Avenue Initiative

Millions could be at stake as minority media outlets face an ongoing "blackout" from national advertisers

Let’s say you knew a corporation valued you significantly less than some of its other customers, based solely on your skin color. Would you still cheerfully plunk down your hard-earned money to purchase its products? If you were aware that this same company considered you a "suspect, not a prospect," and not only insisted but expected to pay less money to advertise to you, would you still wait in line to buy its merchandise? Or what if it wouldn’t pay at all to advertise to you? Would you still want its products in your home?

Those questions have all come center stage following the revelation last year of an inflammatory memo and a recently released Federal Communications Commission report that, together, illustrate just how some of Madison Avenue’s top advertisers and advertising agencies have carried out a covert campaign to systematically deny advertising revenue to minority media companies. In fact, the campaign may have begun as far back as the 1970s.

The catalyst for the current debate is a memo from the Katz Radio Group that, in part, stated, "When it comes to delivering prospects not suspects, the urban[-formatted] stations deliver the largest amount of listeners who turn out to be the least likely to purchase. The median age is 23. Very young and very, very poor qualitative profile."

This memo in large part sparked the recent FCC report, When Being No. 1 Is Not Enough: The Impact of Advertising Practices on Minority-Owned & Minority-Formatted Broadcast Stations. There is evidence that for years many advertising companies have exercised policies that denied advertising to urban- or Spanish-formatted media, or forced minority media to accept less compensation than white-owned media delivering an audience of comparable size. As a result, minority radio stations that place near the top in audience in their markets wind up placing in the middle of the pack in revenues.

The impact on minority-owned newspapers and magazines has yet to be studied, and the impact on minority consumers has only recently been entered into the equation.
How much money is at stake? According to the American Association of Advertising Agencies (AAAA), 7% more was spent in overall U.S. advertising in 1998 than in 1997. Of the $160 billion spent marketing to consumers, only $870 million was targeted to the african american market, and less than 30% of that went to African American advertising agencies, according to Chicago-based Target Market News, a marketing research firm that tracks black consumers.

The news that minorities can play by the rules and still lose in a competitive marketplace is not a revelation. But it has set off a flurry of meetings and conferences to uncover just how deeply the racially discriminatory practices of "no urban/Spanish dictates"-in which an advertiser dictates that an agency not buy advertising on urban/Spanish-formatted stations-and "minority discounts"-in which minority-formatted radio stations are paid less for ads than general-market stations with audiences of comparable size-have seeped into the fabric of the advertising

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