Whether it’s the halftime show at the Super Bowl or the entry of words like bling-bling into the mainstream, it’s quite apparent that hip-hop’s urban influence exudes from almost every fiber of the American experience. Advertising helps solidify the integration of black style, music, and language into American popular culture. However, black ad agencies — even in a promising economic environment — may have to fight for opportunities to cultivate and deliver the message.
As focus on the ethnic market increased, African American-owned ad agencies continued to compete with general-market rivals for a controlling stake in the urban market. Recent 2000 census data revealed that people of color will make up more than 50% of the U.S. population by 2050. Last year, in an increasing trend, some black-owned agencies formed strategic partnerships with general-market shops to target brass ring accounts. Smaller independents gleaned new business and defined themselves as the industry’s new area of growth.
In 2003, advertising breathed a sigh of relief after several years of sluggish U.S. economic growth, albeit with a fingers-crossed sense of fragility. General-market agencies grappled with new corporate media policies and advertising budget audits, while seeking innovative ways to grab a moment of response-generating consumer attention in an age of TiVo, iPod, and everything wireless.
Advertising spending increased by 6.5% in 2003 to $155 billion, according to Universal McCann’s Insider’s Report. That number is projected to keep pace as the Summer Olympics and presidential campaigns chip away at the ad-spending recession. According to the Minority Media & Telecom Council, roughly 1% of total ad spending is targeted to minority consumers, of which black ad agencies shared 30%. Billings for the top 15 agencies on the BE ADVERTISING AGENCIES list rose by 14.55% from $1.35 billion in 2002 to $1.55 billion in 2003. New to the list is Compas Inc. (No. 5 on the BE ADVERTISING AGENCIES list with $140 million in billings), while the Chisholm-Mingo Group Inc., and J. Curtis & Co. dropped off the list.
Leaders Building Bench Strength
It was an exceptional year for Carol H. Williams Advertising (No. 2 on the BE ADVERTISING AGENCIES list with $300 million in billings). With new offices in New York, Detroit, and Chicago, Williams’ self-titled agency became the first black agency of record for Washington Mutual Inc. Industry insiders say the business will help catapult the Oakland, California-based agency to the top of the list of black-owned agencies. “We increased our regional business with General Motors and became the agency of record for several Procter & Gamble brands,” says Williams. According to Automotive News,
UniWorld Group Inc. (No. 4 on the BE ADVERTISING AGENCIES list with $183 million in billings), down from last year’s $233 million, entered into a business relationship with Earvin “Magic” Johnson as spokesperson for the Lincoln Navigator, and placed the SUV in an upcoming movie with Cedric The Entertainer. The agency’s Burger King commercials featuring Steve Harvey ranked No. 3 in consumer appeal according to a recent Ad Age/Intermedia Advertising Group Quarterly Ad Recall Report.
Competition Remains Stiff While Accounts Shift
Many corporations still prefer to partner with general-market agencies to deliver hip-hop-infused messages to the masses, while relegating minority-owned agencies to creative help and advertising for ethnic media in efforts to attract multicultural consumers. “Very few companies are comfortable with the reality that African Americans drive a multitude of trends beyond fashion and music in the general-market,” says Greg Head, president of HEADFIRST Market Research in Stone Mountain, Georgia.
However, Robert J. Dale, president and CEO of Chicago-based R.J. Dale Advertising & Public Relations (No. 14 on the BE ADVERTISING AGENCIES list with $26.4 million in billings), notes there are a few companies “redirecting their general-market agencies to partner with African American agencies from the start, rather than developing general campaigns and plugging the black segment into it. That is one trend that is going to change the face of advertising over the next 10 years.”
Williams made news when after a year, she resigned a deal with Bank of America, citing “philosophical differences and disagreement on how to market effectively to the African American community.” Others in a dizzying square dance include Kmart, a onetime client of GlobalHue (No. 1 on the BE ADVERTISING AGENCIES list with $325 million in billings), who sided with Carol H. Williams, and GlobalHue’s acquisition of the Microsoft business once held by UniWorld. Spike DDB (No. 8 on the BE ADVERTISING AGENCIES list with $45 million in billings) picked up the Pepsi account formerly with UniWorld, and Nationwide Insurance Co. changed hands from Burrell (No. 3 on the BE ADVERTISING AGENCIES list with $190 million in billings) to Atlanta-based Matlock Advertising & Public Relations (No. 10 on the BE ADVERTISING
AGENCIES list with $38 million in billings). “No company leaves a black agency and goes into a vacuum. Typically, they go directly to another agency,” says Ken Smikle, president of the research firm Target Market News in Chicago. “If they don’t, they give up market share that’s hard to regain.”Several agencies met challenges. And in the midst of it all, the industry also lost advertising pioneer Vince Cullers, founder of the first black agency, Vince Cullers Advertising.
“It’s been a tough year,” says Don Coleman, president of GlobalHue. The 2003 BE Advertising Agency of the Year saw billings remain the same at $325 million. In addition to Microsoft, GlobalHue acquired the United States Navy recruitment account.
For Samuel Chisholm, chairman and CEO of The Chisholm-Mingo Group, which was founded in 1977, a reduction in billings would have been a welcome challenge. Poor management and the company’s inability to provide a broad range of services while growing it’s client base contributed to its filing for Chapter 11 bankruptcy this year.
Smaller Agencies Gained Ground
“The smaller shops are where the growth is,” says Smikle. “The black agencies, many of them in partnership with larger white agencies, may be blocked from pursuing new business.”
Billings for Spike DDB, for example, rose from $10 million to $45 million with new Pepsi and Frito Lay accounts as well as assignments with TNT. The agency was also the first African American-owned agency to create an ad specifically for the Super Bowl, with its Pepsi commercial featuring The Parker’s Mo’Nique.
There were other winners among the BE firms. Billings for Matlock jumped from $25 million to $38 million with the acquisition of BMW, Nationwide Insurance Co., and Turner Broadcasting System. Prime Access Inc. (No. 12 on the BE ADVERTISING AGENCIES list with $28.3 million in billings) in New York acquired Cendant, Volvo, Hyatt, and Johnson & Johnson corporate diversity business. Muse Cordero Chen & Partners (No. 6 on the BE ADVERTISING AGENCIES list with $80 million in billings) of Los Angeles won the U.S. Department of Health and Human Services and DHS Five-A-Day account. And Dallas’ The King Group Inc. (No. 15 on the BE ADVERTISING AGENCIES list with $23.8 million in billings) landed Kinko’s and re-acquired the Texas Lottery.
E. Morris Communications (No. 13 on the BE ADVERTISING AGENCIES list with $28 million in billings) saw a turnaround with new accounts from Tyson Foods, A
bbott Labs, new assignments for American Family Insurance, and additional work from Wal-Mart.
Admittedly, there were some agencies that lost money. El Paso, Texas-based SWG&M Advertising Inc. (No. 11 on the BE ADVERTISING AGENCIES list with $32 million in billings) dropped $4 million, despite securing accounts from USPS, Shell Oil, Fuddruckers, and SBC. “Our business is both general-market and minority and we saw pullbacks in both areas,” says President and CEO Robert V. Wingo. Equals Three Communications Inc. (No. 7 on the BE ADVERTISING AGENCIES list with $70 million in billings) dipped from $80 million. But the Bethesda, Maryland-based shop has joined forces with Spier New York, a leader in publishing marketing, to form Nclusive Communications to target multicultural publishing markets.
On the corporate front, Ann Fudge, former president of Kraft Food Inc., became chairwoman and CEO of powerhouse general-market agency Young & Rubicam Inc. Fudge and Renetta McCann, CEO at Starcom North America, are the only two African American women at the helm of general-market agencies. Ken Gilbert returned to UniWorld where he was named president and COO. The former chief marketing officer at Snapple Beverage Group is thought to be Byron Lewis’ heir apparent. In addition, Chuck Morrison was recently promoted to take over the reins at UniWorld’s new Detroit office as executive vice president. GlobalHue will not be filling the president position made available by the exit of Kevyn Lewis, who was replaced by Cristián Dobles, the new senior vice president and executive creative director. L. Renee Richardson was named director of African American markets for Tapestry, the multicultural arm of Starcom Mediavest Group charged with placing $130 million in African American and Hispanic media for Kraft Foods, Allstate, Walt Disney World, and other SMG clients.
On The Horizon
The future is hopeful. “There is a great opportunity ahead in partnering,” says Constance Cannon Frazier, senior vice president, Mosaic Center and Education Services of the American Advertising Federation in Washington, D.C. “African American agencies need to forge relationships with the various industry entities and share information.” Morris agrees, and adds that being flexible and more client-conscious will also be strong strategies. “As these mega holding companies continue to grow, their ability to turn things around is much more limited. We don’t have six layers of review. When a client says they want something, we do it without four conferences on it,” says Morris. “Their size has nothing to do with having a good idea. Being a $3 billion holding company doesn’t give you a monopoly on creativity.”
Advertising Agencies Eligibility
An advertising agency must be at least 51% black-owned and have been fully operational for the previous calendar year. To qualify as a full-service advertising agency, the company must provide creative services as well as make media placements: purchasing time and/or space for a clients’ advertising. Companies that only provide consulting services, create or produce advertising, or do media placements do not qualify as full-service agencies. (We canvassed the Standard Directory of Advertising Agencies, combined industry publications, and made inquiries in the field to identify full-service agencies.)
An agency’s financial status is measured in terms of billings — monies allocated by an advertiser to its agency to buy time on television and/or radio, or space in publications. These media outlets then pay a commission back to the agency in the form of a discount, typically between 15% and 20%, which the agency counts as revenue. Other sources of revenue include production fees that the agency charges to its clients and fees for adjunct services such as public relations, consulting, and promotional work. Our ranking of the 15 top agencies is based on a combined total of actualized billings, in addition to capitalized billings (commissions that haven’t been paid but the media buys were completed), and other agency fees reported as revenues — an accepted industry practice for reporting earnings.
Additional reporting by Rebecca Rohan
TOP 15 BILLINGS &Â EMPLOYEES
| Black-Owned Ad Agencies | 2003 | 2002 | % Change |
| Number of Employees | 961 | 945 | 1.69 |
| Billings* | $1,551.419 | $1,354.373 | 14.55 |
* In millions of dollars, to the nearest thousand. As of Dec. 31, 2003. Prepared by B.E. Research.* Reviewed by the certified public accounting firm Edwards & Co.