Advertising agencies: a sluggish economy, reduced margins, and institutional racism are delivering severe blows to black ad agencies. Industry insiders say a major shake-up is coming.LET'S GET STRAIGHT TO THE POINT: BLACK ENTERPRISE has decided not to name an Advertising Agency of the Year. There are few companies on the BE ADVERTISING AGENCIES list that have displayed consistent growth over the past few years and, other than agencies bestowed the honor in previous years, none have offered significant or recognizable national commercials or print campaigns. Despite a collective 10% growth in billings--from $1.781 billion in 2004 to $1.963 billion in 2005--a large number of BE ADVERTISING AGENCIES have experienced a reduction in accounts as well as declining cash flow and profitability. In fact, former mainstay Spike DDB DDB - device independent bitmap fell off this year's roster altogether. Black ad agencies have to contend with a shifting industry as well as competitive pressures from larger, general-market agencies that work harder for--and now acquire--dollars that used to go to minority firms. Moreover, ethnic dollars, once earmarked for campaigns to reach African American African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. consumers, have been shifted to the growing Latino segment. Also, changes in compensation have significantly diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. capital and margins. To remain in the fight, many BE agencies were forced to partner with larger firms or beef up low-margin public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most and consulting operations to service diversity efforts. Some predict a major shakeout Shakeout A situation in which many investors exit their positions, often at a loss, because of uncertainty or recent bad news circulating around a particular security or industry. Notes: During the dotcom boom and bust, numerous shakeouts occurred. akin to that of black insurers a few years ago. "With the exception of a couple of regional and niche players, [only] the top four or five black agencies will most likely survive the changing dynamics," forecasts Chuck Morrison, executive vice president and general manager of UniWorld Group Inc. (No. 3 on the BE ADVERTISING AGENCIES list with $200 million in billings). Advertising spending increased by 4.6% in 2005 to $276 billion, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Insider's Report from Universal McCann, a division of the global ad agency Interpublic Group. But many black ad agencies didn't realize any tangible benefits. War, wild weather, and widespread layoffs caused an economy still struggling to rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective to lose more momentum. That translated into few business opportunities for black firms. "The country was faced with Hurricane Katrina  Editing of this page by unregistered or newly registered users is currently disabled due to vandalism. , extremely
high gas prices, and a lot of people lost jobs, so there was a climate
of conservation," says Greg Head, president of Atlanta-based
HEADFIRST head·first also head·fore·mostadv. 1. With the head leading; headlong: went headfirst down the stairs. 2. Impetuously; brashly. Market Research Inc. "Companies just weren't sure of where the economy was going. So while there was an increase in ad spending in general, there seemed to be almost a finite finite - compact amount of business for African American agencies." There's also the race issue. Charges of institutional racism  An editor has expressed concern that this article or section is .Please help improve the article by adding information and sources on neglected viewpoints, or by summarizing and within the advertising industry took the spotlight as the New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. Commission on Human Rights and the New York City Council's Civil Rights Committee launched a series of investigations on minority hiring practices at Madison Avenue's large, general-market agencies, according to Advertising Age. The trade publication says 17 agencies, some with more than 1,000 employees, have been named in the formal inquiry. Convincing clients that there is value in the African American segment has been a struggle for black ad agencies since day one. But the growth in recent years of the Hispanic and Asian markets has made the sales pitch even more difficult as mainstream has become multicultural mul·ti·cul·tur·al adj. 1. Of, relating to, or including several cultures. 2. Of or relating to a social or educational theory that encourages interest in many cultures within a society rather than in only a mainstream culture. , with companies rushing to cater to consumers, cultural trends, and attitudes that are not just "black." "A lot of clients are looking at multicultural spending, but the fact that they are spending against multicultural audiences doesn't mean that they are spending against the African American segment," says Eugene Morris, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of E. Morris Communications (No. 9 on the BE ADVERTISING AGENCIES list with $54.7 million in billings). "In fact, the Hispanic agencies are getting the lion's share of a lot of the multicultural dollars." List leader GlobalHue (No. I on the BE ADVERTISING AGENCIES list with $470 million in billings) attributes its 17.5% billings growth to its Latino division. "Clients are shifting dollars out of blacks and putting them [into] Hispanic campaigns," CEO Don Coleman Don Coleman (born May 4, 1928) was an American football player. He was elected to the College Football Hall of Fame in 1975. concedes, noting 52% of GlobalHue's business comes from the Latino consumer market. For the most part, Coleman and others assert, clients have shunned campaigns targeted to different segments within the black community. General-market agencies have sold unsophisticated advertisers on the notion that black consumers are monolithic Single object. Self contained. One unit. or that hip-hop is synonymous with synonymous with adjective equivalent to, the same as, identical to, similar to, identified with, equal to, tantamount to, interchangeable with, one and the same as the total black experience. "Over the past few years, a number of naive [advertisers] believe they can reach blacks through general-market campaigns," says Coleman. "They think it can be done through casting, dropping a black actor into a general-market commercial, instead of developing a campaign that has relevancy to the black consumer." To educate clients about the value of the black consumer market, BE ad agencies will have to develop more quantitative measurements related to black consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. and consult with clients on the best overall strategy to reach them. Robert McNeil, president and CEO of Images USA (No. 11 on the BE ADVERTISING AGENCIES list with $51 million in billings), recently added strategic planning Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people. and development to his shop's portfolio of services. In fact, the firm conducted strategic planning for Procter & Gamble's Pampers Pampers is a brand of disposable diaper (or nappy) marketed by Procter & Gamble worldwide. Product information Diapers Pampers Diapers come in sizes going all the way up to Size 7. brand and collaborated on a major study with AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. to dispel myths about online usage among African Americans. Morrison, however, believes the key to gaining and keeping business will come from "blue-chip companies Blue-chip company Used in the context of general equities. Large and creditworthy company. Company renowned for the quality and wide acceptance of its products or services, and for its ability to make money and pay dividends. Gilt-edged security. with CEOs committed to diversity and savvy enough to know the advantages of marketing to black consumers." --Additional reporting by Derek T. Dingle & Wendy Harris Advertising Agency 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 Creative Services are a subsector of the creative industries, a part of the economy that creates wealth by offering creativity for hire to other businesses. Examples include:
service - work done by one person or group that benefits another; "budget separately for goods and services" , create or produce advertising, or do media placements do not qualify as full-service agencies. (We canvassed the Standard Directory of Advertising Agencies, combed comb n. 1. a. A thin toothed strip, as of plastic, used to smooth, arrange, or fasten the hair. b. An implement, such as a card for dressing and cleansing wool or other fiber, that resembles a hair comb in shape or 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 ad·ver·tise v. ad·ver·tised, ad·ver·tis·ing, ad·ver·tis·es v.tr. 1. To make public announcement of, especially to proclaim the qualities or advantages of (a product or business) so as to increase to its agency to buy time on television and/or radio, or space in publications. These media outlets then pay a commission 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 adjunct (aj´ungkt), n a drug or other substance that serves a supplemental purpose in therapy. 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 ac·tu·al·ize v. ac·tu·al·ized, ac·tu·al·iz·ing, ac·tu·al·iz·es v.tr. 1. To realize in action or make real: "More flexible life patterns could . . . billings, in addition to capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. billings (commissions that haven't been paid but the media buys were completed), and other agency fees. [GRAPHIC OMITTED] Number of years without a BE ADVERTISING AGENCIES list: 24 (From the inaugural list in 1973 to its reinstatement Reinstatement The restoration of an insurance policy after it has lapsed for nonpayment of premiums. in 1998) Billings of No. 1 firm on the first contemporary list in 1998: $168,000,000 Burrell Communication Group Inc. 4-Year Average Billings of BE Ad Agencies $1,662,398,250 BY THE NUMBERS Number of firms among the 15 leading agencies on our 1998 list that do not appear on our 2006 ranking: 7 The Chisholm-Mingo Group Inc. Sykes Communications The Wimbley Group Inc. Spike DDB Caroline Jones Inc. Circulation Experti Ltd. Vince Cullers Advertising HISTORICAL FACT Only 2 companies have been named Advertising Agency of the Year more than once: Don Coleman Advertising, renamed GlobalHue, in 1998 and 2003 and Carol H. Williams Advertising in 1999 and 2004 Year oldest firm on the list--UniWorld Group--was started started 1969 Year youngest firm on the list-- FUSE--was started 1997
TOP 15 BILLINGS & EMPLOYEES
Black-
Owned Ad
Agencies 2005 2004 % Change
Number of 1,049 984 6.61
Employees
Billings * $1,963.21 $1,780.59 10.26
* IN MILLIONS OF DOLLARS, TO THE NEAREST THOUSAND.
AS OF DEC.31.2005. PREPARED BY B.E. RESEARCH REVIEWED
BY THE CERTIFIED PUBLIC ACCOUNTING FIRM EDWARDS & CO.
FIGHTING TO WIN
B.E.
ADVERTISING
AGENCIES
This Last
Year Year Company Location
1 1 GlobalHue Southfield, MI
2 2 Carol H. Williams Oakland, CA
Advertising
3 3 UniWorld Group Inc. New York, NY
4 4 Burrell Communications Chicago, IL
Group
4 5 Compas Inc. Pennsauken, NJ
6 6 Muse Communications Inc. Los Angeles, CA
7 9 Matlock Advertising Atlanta, GA
& Public Relations
8 14 Sanders Wingo EI Paso, TX
Advertising Inc.
9 13 E. Morris Chicago, IL
Communications Inc.
10 7 FUSE St. Louis, MO
11 12 Images USA Atlanta, GA
12 -- Prime Access Inc. New York, NY
13 11 Anderson Atlanta, GA
Communications
14 8 Equals Three Bethesda, MD
Communications Inc.
15 15 R. J. Dale Advertising Chicago, IL
& Public Relations
This Last Chief
Year Year Company Executive
1 1 GlobalHue Donald A. Coleman
2 2 Carol H. Williams Carol H. Williams
Advertising
3 3 UniWorld Group Inc. Byron E. Lewis
4 4 Burrell Communications Fay Ferguson/
Group McGhee Williams Osse
4 5 Compas Inc. Stanley R. Woodland
6 6 Muse Communications Inc. Jo Muse
7 9 Matlock Advertising Kent Matlock
& Public Relations
8 14 Sanders Wingo Robert V. Wingo
Advertising Inc.
9 13 E. Morris Eugene Morris
Communications Inc.
10 7 FUSE Clifford Franklin
11 12 Images USA Robert L. McNeil Jr.
12 -- Prime Access Inc. Howard Buford
13 11 Anderson AI Anderson
Communications
14 8 Equals Three Eugene M. Faison Jr.
Communications Inc.
15 15 R. J. Dale Advertising Robert Dale
& Public Relations
This Last Year
Year Year Company Started Staff
1 1 GlobalHue 1988 205
2 2 Carol H. Williams 1986 173
Advertising
3 3 UniWorld Group Inc. 1969 130
4 4 Burrell Communications 1971 135
Group
4 5 Compas Inc. 1991 53
6 6 Muse Communications Inc. 1985 45
7 9 Matlock Advertising 1986 38
& Public Relations
8 14 Sanders Wingo 1983 42
Advertising Inc.
9 13 E. Morris 1987 43
Communications Inc.
10 7 FUSE 1997 24
11 12 Images USA 1989 40
12 -- Prime Access Inc. 1990 44
13 11 Anderson 1971 17
Communications
14 8 Equals Three 1984 35
Communications Inc.
15 15 R. J. Dale Advertising 1979 25
& Public Relations
This Last
Year Year Company Billings *
1 1 GlobalHue 470.000
2 2 Carol H. Williams 367.500
Advertising
3 3 UniWorld Group Inc. 200.207
4 4 Burrell Communications 200.000
Group
4 5 Compas Inc. 200.000
6 6 Muse Communications Inc. 75.000
7 9 Matlock Advertising 63.100
& Public Relations
8 14 Sanders Wingo 56.500
Advertising Inc.
9 13 E. Morris 54.700
Communications Inc.
10 7 FUSE 52.000
11 12 Images USA 51.000
12 -- Prime Access Inc. 46.300
13 11 Anderson 43.900
Communications
14 8 Equals Three 42.000
Communications Inc.
15 15 R. J. Dale Advertising 41.000
& Public Relations
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