Framing the Opportunity

Whether you are talking to clients or trying to build internal consensus for a multicultural marketing campaign, it's important to frame the opportunity in a crystal clear way. I believe the mixing of diversity objectives with measurable ROI metrics is less than clear, and may sometimes act as an unnecessary crutch in marketing efforts.

Let me back up a bit and note that I also believe diversity is good for business. If we want to compete effectively as a nation, we need to tap into the diversity of our communities, suppliers, and employee base. But, let's not confuse the merits of diversity with the topic of framing opportunities in multicultural marketing.

One example of a cloudy picture is something I call the Diversity Budget Paradox. When marketers tap into the diversity budget, they sometimes limit the pool of funds available for a business objective. Those diversity funds can be tempting, as many organizations have this budgeted on an annual basis. However, the funds available may not come anywhere close to what is necessary to fully exploit an opportunity. Could Procter & Gamble set goals for number one or two market share across hundreds of products if it relied on a pool of funds that were no more than a couple percent of the company's total budget?

In my other life, I work with institutional private equity investors who are searching for investments in the "underserved markets." These funds are professionally managed and get allocations of capital from banks, insurance companies, and pension funds. A handful of the funds, Fulcrum Capital, Nogales Investors, Palladium Equity, and RC Fontis comprise over $1 billion in capital raised. While fund managers will often discuss the social good of investing in underserved markets, the bottom line is that they have to report on performance in an industry standard manner, known as internal rate of return or IRR. Their investors simply won't give them the benefit of a social crutch and wisely see the IRR potential as attractive in a large and growing market.

I'd like to see more multicultural marketing specialists follow that example. In fact, clients in the mainstream ad market are demanding more and more metrics, and agencies are responding in droves. I'm hearing more about this in multicultural marketing, too. Ultimately, this will serve to weed out the marginal players and will improve the art and science of marketing.

Watch this trend. As you prepare for your next big meeting, see if you can stand confidently without the diversity crutch. I'd be willing to bet that you will find at least one opportunity to run, rather than walk with crutches in the next year.

What's in those Numbers?

You've seen them. They are cited by journalists on a deadline and get quoted by pundits who memorize them or jot them on Post-it Notes. Yes, we even use them in marketing material for the MultiCultural Media Expo. They are the minority group buying power numbers.

Perhaps out of lazyness, perhaps due to an inability to get more granular data, we have succumbed to utilizing a set of numbers that really doesn't tell us much, but looks meaningful on the surface.

What exactly is an advertiser supposed to do with the knowledge that African-Americans will command $1.1 trillion in buying power (Selig Center for Economic Growth, Third Quarter 2006) by 2011? The Selig Center suggests that the estimates may "... help to judge business opportunities for start-ups or expansions; gauge a business's annual sales growth against potential market increases; indicate the market potential of new and existing products; and help to guide targeted advertising campaigns."

Fine. Try this. Do a Google search on "Hispanic Buying Power" and see how many different ways people use the Selig Center's results. One pundit noted that the reason Target and Wal-Mart are conducting more multicultural advertising is because they've awaken to the buying power survey results. Sorry, but I'd hazard a guess that Wal-Mart has been the nation's largest retailer to the multicultural client for a long time. When good data is misused it becomes bad information.

Don't get me wrong, I like the Selig Center's stuff. Use it wisely. Use it as the Selig Center suggests. I simply say we ought to strive to use tools that will fit our specific needs rather than fitting one set of data to all circumstances. There are some outstanding firms and trade groups producing multicultural economic research these days. I'll use this space to discuss some of that research in the future, and encourage you to share your thoughts and experiences, too.

Marketer Worth Emulating

We were fortunate to host Shawn Hunter, President of AEG Sports and Chief Marketing Officer of AEG, as a keynote speaker at the MultiCultural Media Expo 2007. One of the nicest guys you will ever meet, Hunter is also a savvy executive who understands Multicultural America - and has the deep pockets of billionaire recluse Phil Anschutz to act on an amazing business plan. We will talk more about that business plan in another session. This post will introduce you to one element of AEG's plan and is intended to highlight a multicultural marketing success story worth emulating.

One example of AEG's multicultural success is the much-discussed acquisition of David Beckham to the company's Los Angles Galaxy soccer team. After pouring in over $400 million into Major League Soccer, AEG is finally reaping rewards. AEG is said to have already broken even on a five-year sponsorship deal with Herbalife signed months before Becks set his golden foot at the Home Depot Center in Carson, CA. Since then, Galaxy have enjoyed a sell-out, star studded debut game for Beckham, and the sale of more than 250,000 Beckham jersey's in the first weekend of his arrival. The deal that had some scratching their heads is beginning to look like it might some day be viewed as one of the all-time great transactions in pro sports.

Hunter is a master of risk management. He can invest, not just because he has Anschutz's balance sheet, but because the unique opportunities he presents to clients generates significant measurable ROI.

Next time you're looking for that magical ROI in a proposal, emulate Hunter. Consider creating something unique and maybe even exclusive with a multi-year opportunity. Although we are living in a time when ROI is often measured in just days or clicks, your gold footed transaction will likely have a few more ingredients.