The truth about diversity in advertising.

For the second year, BLACK ENTERPRISE has unveiled its list of corporate diversity leaders. There's good news and bad news.

We'll give you the good news first. After researching the largest 1,000 companies and 50 global entities with strong U.S. operations over the past several months, BE has developed its exclusive roster of The 40 Best Companies for Diversity. Even though our crackerjack team--Editor-in-Chief Alfred Edmond Jr.; Careers/Lifestyle Editor Sonia Alleyne; Vice President of Research Stacia Tackle; and Virtcom Enterprises, a strategy management firm that tracks corporate diversity trends--used more stringent requirements, more companies were able to make the cut.

Now, here comes the bad news. This year, we decided to also measure how companies spent their marketing and advertising dollars to reach the burgeoning black consumer market. Most companies failed to spend their dollars with black ad agencies and media companies or used majority firms that lack a solid commitment to diversity. In fact, the advertising industry as a whole has an abysmal track record related to the hiring, promotion, and retention of blacks and other ethnic minorities. Even though there are more than 500,000 people employed in advertising and related services, the 2000 Census reported only 6% of those are African American and 9% are Hispanic. Now, Madison Avenue is currently under investigation by the New York City Commission on Human Rights for its shoddy employment practices. The Commission found that in 1967--two years after President Lyndon B. Johnson signed Executive Order 11246, making affirmative action a presidential mandate--only 5% of the industry's workforce was black and Hispanic.

Advertising Age recently reported that Sen. John F. Kerry, the top-ranking Democrat on the U.S. Senate Committee on Small Business & Entrepreneurship, has called for the Government Accountability Office to investigate the federal government's compliance with a policy designed to increase minority advertising contracting opportunities. Kerry responded to complaints from the National Newspaper Publishers Association, a trade organization composed of black publishers, alleging that government agencies had not complied with Executive Order 13170, signed by President Bill Clinton in 2000, to ensure supplier diversity on a federal level. After the policy was instituted, many minority publishers claimed the federal government failed to substantially increase their advertising spending. Kerry proposes that GAO review the amount of federal advertising dollars spent between 2001 and 2006 that actually went to minority firms.

In our special report, we ask why Madison Avenue is so reluctant to embrace diversity efforts. "There is no one to hold them accountable," says Christopher Metzler, director of diversity, inclusion & EEO programs at Cornell University. "Unless an industry is publicly chagrinned through successful litigation, or an advocacy group were to embarrass them on the public stage, the self-motivation simply does not exist."

Rev. Al Sharpton was among those who first led the fight for parity. In 1999, he started the Madison Avenue Initiative to ensure the black press got its fair share of advertising. MAI was formed in response to an inflammatory memo from the Katz Radio Group that told clients to pursue "prospects not suspects." The document pushed Sharpton to act, galvanizing black and Latino media companies as well as revealing industry data that showed that minority firms captured only $870 million of the $160 billion in media dollars spent. He will further comment on the status of diversity in advertising at the BE symposium--Diversity on Madison Avenue: Myth, Reality, or Illusion?--in New York on June 12th.

Others have fought for ethnic inclusion in media. In 2000, then-NAACP CEO Kweisi Mfume brokered deals with top management at CBS, NBC, ABC, and Fox to actively promote diversity throughout their companies and programming. And recently, 10 black agencies formed the Association of Black-Owned Advertising Agencies Inc. to lobby government and large corporations to push for diversity initiatives and opportunities for blacks within the industry.

Civil rights organizations and trade associations will have to increase their efforts to get Madison Avenue to sit up and take notice. Corporate America's full understanding of the value proposition of diversity will require a strong message--and vigilant messengers.--The Editors