Winds of Change

When it comes to operating an African American-owned ad agency, change is good.

Perhaps no one knows better than Tom Burrell, chairman emeritus of the highly successful Burrell Agency. The founder of the Chicago-based firm stepped down from his post last year to make room for a new leadership team.

Since ownership of the company was transferred to industry execs McGhee Williams-Osse and Fay Ferguson, the agency has not skipped a beat. In fact, Burrell (No. 4 on the BE ADVERTISING AGENCIES list) maintained its billings of $190 million in 2004.

To ensure longevity in the industry, many black agencies like Burrell took time last year to beef up their game plans. In an increasing trend to gain staying power, many realized they had to think outside the proverbial “black” box to compete against general-market rivals for plum accounts. Others expanded their services to offer more nontraditional methods of reaching multicultural consumers.

“Agencies have to be broad. They have to be responsive to the ebb and flow of the market,” says Ken Smikle, president of the Chicago-based research firm Target Market News. “Right now the smaller shops are making bigger noise and are positioning themselves to do more of the kinds of marketing that clients are looking for now — meaning a mix of events, PR, promotions, and advertising — as a way to create some buzz about the product,” Smikle says.

That’s not to say that black ad agencies have abandoned their niche. In fact, in 2004, African American-owned agencies had to compete with mainstream shops for opportunities to reach urban audiences.

According to Universal McCann’s Insider’s Report, ad spending increased by 7.4% in 2004 to more than $263 billion. “I think the industry is just coming back,” says Constance Cannon Frazier of the American Advertising Federation. “Also, as a general rule, usually during an election year you have an increase in advertising spending.”

While a rebounding economy and money-generating events such as the presidential election and the Summer Olympics helped increase spending overall, Smikle contends that last year’s gains meant little for black ad agencies. “We’re seeing some incremental growth, but there have not been major new accounts that have come on board, nor have we seen a really big increase in current spending by most of the clients that agencies already have,” says Smikle. “I think it has to do with companies second-guessing themselves about where they ought to focus their marketing dollars. And African American marketing is now competing with Hispanic marketing and Internet-based media.”

Agency owners are standing their ground amid what they say is ongoing insensitivity to black consumers, increased focus on a growing Hispanic market, and constant competition from mainstream agencies convinced they have a finger on the pulse of the ethnic market.

Overall, 2004 was a year of recovery for black ad agencies. The abysmal performances during the 2001–2003 recession left many agencies reeling, or worse. Advertising pioneer Chisholm-Mingo Group failed to survive the downturn and closed its doors in New York after 27 years of operation.

Still others formed strategic alliances, restructured