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Agencies Risk Becoming Irrelevant In A Multicultural America

From Forbes
As ad agency honchos descended on LA Last week for their annual convention, the executives would have benefited from a short ride to Hollywood Boulevard, home of the Kodak Theatre, for a moment of reflection. Just as disregarding the impact of digital technology led to making the Kodak brand irrelevant, general-market agencies are risking becoming irrelevant as well by ignoring the cultural and ethnic diversification of America.

Our society is moving toward becoming truly multicultural. According to the 2010 Census, the so-called minority population, mostly Hispanic, African-American and Asian-American, is rapidly rising and now makes up 35% of the population. It is an unmistakable trend that will make these multicultural groups the majority by mid-century. California, Hawaii, New Mexico, and Texas – as well as the District of Columbia already have so-called minority populations that have exceeded 50%.

While assimilation had once been the ideal of emerging cultures, minorities now seek integration without surrendering their ethnic identities. Society is being reshaped – from a melting pot to a cultural mosaic. Consumer tastes are changing. Food, TV shows, and even the language is adapting to the new society, yet advertising has not.

While some progress has been made without more diversity in general-market agencies, the notion that these agencies can have a relevant insight into various ethnic and cultural groups and engage diverse audiences had not proved itself. General-market agencies lack the insight and the ability to discern nuanced cultural influences.
Yet, these agencies are not treated fairly and they are not allowed to compete on an even playing field. While in a few categories you can see a multicultural agency landing an Agency Of Record, or lead agency, assignments, it is extremely rare for a multi-cultural shop to be retained as an AOR for general-market assignment.

Worse yet, multicultural agencies are often asked to simply translate irrelevant general-market campaigns for ethnic audiences, as if they were a foreign market, and call the process “adaptation.” This kind of generalization and irrelevancy of ideas is not respectful of the target audience and invariably leads to cheapening the brand equity and fray its relationships with these ethnic consumers.

General-market agencies are not diversified, but the industry is, to some extent. There are hundreds of specialized multicultural shops, and many new ones have opened in the last 5 years. This is a reaction to the inability of general-market agencies to connect with ethnic audiences effectively, and recognition by corporate America that these specialized agencies are filling a void. Until there is more diversity in general-market advertising agencies, there will continue to be a need for African-American, Hispanic and Asian multicultural shops.

Yet, these agencies are not treated fairly and they are not allowed to compete on an even playing field. While in a few categories you can see a multicultural agency landing an Agency Of Record, or lead agency, assignments, it is extremely rare for a multi-cultural shop to be retained as an AOR for general-market assignment. Marketers are seemingly willing to accept the failure of their relationship with a general-market shop every 3 years on average, but are not willing enough to retain an ethnic shop for general-market assignment, even though work created by multicultural agencies targeting ethnic audiences often resonates equally well with general market consumers.

The robust growth rate of so called minority groups shows how brands and agencies can lose relevancy over the next few years if they don’t align themselves with demographic trends better. It is not just the right thing to do. It’s also the smart thing.
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