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Depot's selection of ethnic ad agencies draws criticism and concerns
Target Market News
(April 12, 2010) When Home Depot, the world's largest retailer
specializing in home improvement, announced recently the results of its
Hispanic ad agency review, there was an outcry from many about the
choice it had made. The international retailer decided to replace the
six-year incumbent Hispanic shop, Vidal Partnership, with Richards/Lerma.
The winning agency did not have much of a track record, but more
surprising was its affiliation with the Richards Group, Home Depot's
general market ad shop.
As the youngest of four agencies invited to participate in the review,
Richards/Lerma's selection had some industry watchers crying foul. They
cite Home Depot's vetting process as the latest example of how some
clients ignore the credentials and ownership of established ethnic ad
agencies in favor of existing relationships with general market shops.
"While we support the great work and six-year relationship The Vidal
Partnership had with The Home Depot, we understand the company's desire
to review other partner options," said Gisela Girard, AHAA chairman and
president/COO of Creative Civilization in a statement. "In this
business, you win some and you lose some. That's just the competitive
nature of our industry and no one argues when the review and selection
process is transparent. The trend to undercut Hispanic-specialized
advertising is building and AHAA is taking proactive steps to prevent
this from happening in the future. We are not willing to stand by and
let corporations profit from our market while killing our businesses."
This selection process is the first of what Home Depot executives called
a Periodic Line Review. "It's designed to insure that we're maintaining
best-in-class agencies and partner relationships," said Stephen Holmes,
Senior Manager of Corporate Communications. "It involves all of our
marketing partners going forward and it's a regular cycle of reviews.
It's aimed at understanding our existing partners and understand the
on-going changes in the marketplace."
The weariness and concern about Home Depot's actions has grown as the
process of selecting an African-American ad agency has begun. Critics
wondered if another Richards affiliate would be among the candidates. In
1998, Stan Richards and Terence Reynolds (a creative exec at the
Richards agency) formed the subsidiary Shift Advertising.
Home Depot spokesperson Holmes denied that there was anything
controversial or unusual about the choice of Richards/Lerma, and he said
that the process for finding an African-American agency of record will
be fair and follow strict guidelines. He also said that the
Richards-backed Shift Advertising is not among the agencies being
considered because certification as minority-owned was a requirement in
the request for proposals.
"In the African-American review, they're all African-American owned,"
said Holmes. "So Richards is obviously not in the African-American
review because they're not African-American owned."
Minority certification was also a preference in the Hispanic agency
review, but the Richards-backed firm was the winner. Asked about the
difference, Holmes said "in terms of the Hispanic review, [minority
ownership] was a strong criterion but not a requirement."
Certification of minority-ownership of businesses is performed by
regional councils of the National Minority Supplier Development Council,
of which Home Depot has been a member for seven years. Michelle Johnson,
Senior Vice President of Supplier Diversity, is a member of the NMSDC
UniWorld Group, which has handled the client's African-American
advertising for the past seven years, is one of five agencies vying for
the business. Holmes declined to name the other participating agencies
and said the selection process is expected to be completed by
There were other significant criteria that Holmes said were given to
Select Resources International, the screening company, for
consideration. "One of the things that's important for us and clients
our size is [the agencies'] ability to handle an account of this size
and complexity." By complexity Holmes said he meant things like
integrating an ethnic message with the overall marketing strategy.
Home Depot is one of the nation's biggest national retailer when it
comes to advertising expenditures. In 2009, according to Nielsen
research, the company spent $464.3 million on U.S. media, and $10.9
million in African-American targeted media.
Published reports have estimated the value of Home Depot's Hispanic
advertising billings at $37 million. Spokesperson Holmes did not dispute
the estimates and said that the difference between the black and
Hispanic expenditures is "all anchored in our marketing strategy."
According to Target Market News' "Buying Power of Black America" report,
African-American households spent $3.3 billion dollars in 2008 on home
maintenance, repair equipment and materials and related services. That
total is a 16% increase over the previous year.
Rev. Jesse Jackson's Rainbow PUSH Coalition has voiced its concern with
how the ethnic advertising agencies are being chosen. "We have been
monitoring this situation and would hope that Home Depot will conduct
this process in a fair, equitable and transparent manner," said Janice
Mathis, Vice President and Executive Director.
Home Depot has stores in all 50 states, the District of Columbia, Puerto
Rico, U.S. Virgin Islands, 10 Canadian provinces, Mexico and China.
Annual Edition 'Buying Power of Black America' report
breaks down billions in expenditures (January
19, 2010) Black consumers are responding to tighter economic
condition by focusing more of their spending on items and services
that improve their homes and lifestyle. That's one of the trends
revealed in the 15th annual report, "The Buying Power of Black
America," published by Target Market News. The report analyzes
spending for black households in 2008 and finds that