Massacre on Madison Avenue: in the toughest year ever for advertising firms, African American agencies struggled to hold on to business and meet the bottom line

The Barbies were stacked high in local supermarkets last August. Little girls clamored around the display of Mattel and Nabisco's recent brainchild--a back-to-school doll based on one of the cookie maker's most popular brands. From a distance it appeared to be a harmless marketing alliance. But upon closer inspection, any African American would have noticed that the cookie was Oreo and half the dolls were black. Oreo is an old, politically incorrect term used for "oreos" who are said to be "acting white." Like the cookie, blacks are told they are black on the outside and white on the inside.

While the doll was soon withdrawn from the shelves, Mattel and Nabisco would have been made aware of the derogatory comparison--and saved millions of production dollars--had they consulted a black company with a culturally savvy marketing and advertising team. The Barbie episode is indicative of the inability of mainstream companies to "get it" and of the creative sensibility that black agencies possess when targeting the African American community.

Even though black agencies have the inside track, they still face strategic and operational challenges. For one, in order to stay competitive, they must provide killer customer service. Secondly, they must maintain control of media buying, developing large organizations and servicing multicultural markets. If not, the number of black ad agencies will shrink or be relegated to boutique status.

It is not surprising that 2002 witnessed African American ad agencies pitted against a tide of general market and boutique agencies clamoring for ever-increasing multicultural ad dollars. "The general market shops are trying to position themselves as capable of effectively speaking to the urban market, citing that the urban market doesn't just consist of black consumers," says Ken Smikle, publisher of Target Market News, a trade magazine based in Chicago. "The very essence of how we define the African American market is being eroded away. Many non-African Americans are trying to get in the game and redefine the market."

Add to that the increase in Hispanic ad spending, an upswing in the number of creative accounts up for review, and requests for proposals (RFPs). Not to mention the growing demands placed on independent companies and clients, as well as merged companies with their conglomerate parent company. "It's been a war" on Madison Avenue, says Smikle.

A SLOW START

At the dawn of 2002, advertising agencies, both general market and multicultural, continued to feel the brunt of the 2001 recessed economy, the volatile stock market, and the Sept. 11 terrorist attacks, according to Universal McCann's Insiders Report. Nonetheless, for the first half of 2002, the Winter Olympics helped increase television ad spending and agencies felt some small respite as overall ad spending rose 2.6% to $237.4 billion. According to the Minority Media & Telecom Council, roughly 1% of total ad spending was targeted to minority consumers in 2000, of which black ad agencies shared 30%. However, because of business failures and the challenges facing advertising agencies overall, our summary of the top billings and employees is comparing the top 15 advertising agencies this year to the top 15 agencies from last year. Therefore, billings for the top 15 agencies on the BE ADVERTISING AGENCIES list rose by 5.89% from $1.28 billion in 2001 to $1.35 billion in 2002. New to the list is Prime Access Inc. (No. 10, with $27 million in billings) while Images USA (No. 12, with $24.5 million in billings) returned.

Black advertising agencies are facing competition from every angle. True, a black Los Angeles-based boutique agency, launched last July with Nissan as its first client, came under fire for a billboard ad for the carmaker. The ad featured the words "Black History Month" with the word history crossed out and replaced with future. Also under the microscope is New York-based PASS. The agency unsuccessfully tried to win the Chrysler account; they failed to prove black ownership to the NMSDC.

African American ad agencies must now contend with the exodus of "urban" ad dollars, some $400 billion, to the Hispanic market. "Because there is some institutional bias as it relates to African American consumers, the Latino market is going to be given more dollars until [companies] figure out that the market is so fragmented, it would be more cost effective to concentrate their dollars in the African American market," says Greg Head, president of HEADFIRST Market Research in Stone Mountain, Georgia.

Regardless of the victimization they may feel, black ad agencies must take a proactive stance. There are an exceptional few that are looking to strategically tap into multiple markets--Latino, Asian, Gay and Lesbian, and urban youth--such as Equals Three Communications in Bethesda, Maryland (No. 6 on the BE ADVERTISING AGENCIES list with $80 million in billings) and GlobalHue in Southfield, Michigan (No. 1 on the BE ADVERTISING AGENCIES list with $350 million in billings).