Agency Network Embraces Multicultural MarketAdvertising giant True North Communications has formed a network of agencies that offer turnkey solutions to advertisers in the fast growing but vastly underserved multicultural market, and a network executive predicts direct marketing will be a leading channel into the dynamic Hispanic, African-American and Asian consumer segments.
True North, Chicago, introduced the New America Strategies Group at the 5th Annual Ethnic Marketing conference in Chicago last month, where the network released the results of its New America Marketplace Index study. Tracking household spending since 1995, the study found that multicultural household spending grew 17.8 percent compared to growth of 13.2 percent for white households.
The study also revealed spending of multicultural families has outpaced that of white families in 10 of 13 consumer product and service categories. The highest increases have come from discretionary purchases on entertainment (30 percent higher), vehicles (24 percent), clothing (21 percent) and health care (20 percent).
Despite such growth, of the $200 billion spent annually on consumer advertising, just $1.5 billion is allocated to ethnic campaigns. That translates to less than 1 percent being spent on a segment that makes up 25 percent of the U.S. population and is projected to be 33 percent in the next five to seven years.
"True North has said, 'We'll make the investment because we see where the clients are going and where the marketplace is going and we need to be there,' " said New America managing partner Alfred Schreiber. "We think this is the next wave."
The network includes True North subsidiaries Siboney USA, New York, which specializes in the Hispanic market; Stedman Graham & Partners, Chicago, which specializes in African-American programs; and consulting firm Skunkworks Marketing Lab, New York. Independent agency Imada Wong Communications Inc. San Francisco, will handle the Asian market.
Asian language specialist Admerasia, New York, helped organize the conference in Chicago at which New America was launched and could be involved on a project-by-project basis, but general manager Atsuko Watanabe said her agency isn't part of the network, as announced earlier.
"It's a great idea because those are the three areas that are growing tremendously," said Rick Blume, president of Database Management, New York, which manages Hispanic, African-American and Asian lists. "Any marketer is likely to be in all three eventually."
Both agencies intend to expand their limited direct marketing services while Skunkworks has developed the Multicultural Marketing Opportunity Model, a database and modeling tool that can predict return on investment and help plan media mix for each ethnic segment. MMOM, working with a combination of data supplied by the client and newly constructed ethnic databases, can weigh measurement criteria by established ethnic preferences.
New America was formed as an alternative for the many corporations that are organizing themselves around a multicultural marketing group or a marketing director. Instead of relying on one individual to reach all the multi-ethnic consumers within a company's target market, the network proposes to bring a turnkey capability that crosses ethnic lines.
Direct marketing will be a key multicultural media approach for New America because of its intimacy and ability to communicate in the native language of the recipient. Schreiber pointed out that multicultural recipients are more responsive to in-language mail and telemarketing than mainstream consumers, especially Asian recipients who speak a number of dialects.
While the appeal of in-language communication is well known, New America also wants to shatter the myth that language is the only barrier marketers must overcome. Schreiber said marketers have been making this mistake for years in campaigns aimed at African-Americans. By creating a mail piece with art and visuals that embrace African-American culture, the rates of response can be twice as high as a piece aimed at the mainstream market.
"Certain media appeal more to different ethnic groups and we look to build our efforts in this area as we go forward," Schreiber said. "We think [direct marketing] is and will be a really strategic channel."
New America already has received a dozen inquiries from Fortune 200 companies regarding the network and its proprietary MMOM.
"Companies need to understand who today's customer is better," Schreiber said. "They used to do this on a hunch. For the first time, clients can approach these markets in the same strategic way that clients approach general market with a real insightful and predictive ROI model."