Surviving the Game

“There is a real crisis as it relates to African American advertising agencies, and while most are loath to talk about it, I believe there are serious battles when pitches come about for the few opportunities that are coming along,” says Greg Head, president of Atlanta-based HEADFIRST Insights & Strategy.

Head sums up the challenges faced by many black-owned advertising agencies. Though billings have increased for the 15 firms on the BE ADVERTISING AGENCIES list — 2.3% overall in 2007 — most black-owned agencies continue to scrape for every contract and pursue less-profitable income streams to keep the ship from sinking in turbulent waters. “You know you’re a true leader when you can steer that ship through that cyclone,” asserts Carol H. Williams, president, chief creative officer, and CEO of Carol H. Williams Advertising (No. 2 on the BE ADVERTISING AGENCIES list with $345 million in billings).

For the past few years, CEOs of the largest black-owned advertising agencies have held a firm grip on the helm of their creative shops. In 2007, many CEOs held on tight despite a tough climate marked by increased competition from larger general market firms; severe cuts in ad spending by major corporations; a continual shift of dollars toward the growing Hispanic and Asian markets; and an economy teetering on the brink of recession that cut into many black agencies’ revenues, cash flow, and profits.

When General Motors announced its plan to rework its 2008 advertising roster, it temporarily reassigned four of its accounts once managed by Carol H. Willliams Advertising to other agencies, including Sanders Wingo Advertising Inc. (No. 5 on the BE ADVERTISING AGENCIES list with $89.6 million in billings). GM retained Carol H. Williams Advertising to handle African American, urban, and youth advertising for its luxury brands — Cadillac, Hummer, and Saab — as well as Saturn and the GM corporate brand.

According to the Nielsen Co., despite a 23.2% increase in Internet advertising and an 8.4% boost in national magazine ad spending, total expenditures in the first half of 2007 decreased by 0.5%. Media spending took a hit as well, with advertising in national newspapers declining 5.9%, and network radio sliding by 8.5%. Ad spending targeting African Americans reached $2.3 billion last year, but still recorded a 4.4% decrease from media spending used to reach black consumers in 2006.

With the advertising industry more competitive than ever, African American CEOs need to not only change the way they do business to survive the ad game, they must also rely on solid leadership to win. This year BLACK ENTERPRISE looks at what a few of the agency owners on our list are doing to identify new opportunities, motivate their staffs, and keep steering business in an industry that seems resistant to change.

In the midst of these grim business conditions, some black-owned agencies managed to grow. In addition to taking on the Chevrolet account, Sanders Wingo also grew through its existing clients, such as AT&T, State Farm Insurance, the U.S. Postal Service, and others, to boost