Automakers cite recession as cause for cuts in ethnic marketing efforts

By Laura Clark Geist
Automotive News
(April 19, 2010) Diversity marketing, long an area of emphasis for car companies as they tried to reach new audiences in the roaring 2000s, is at a critical juncture.

A comparison of advertising spending and marketing creative trends shows diversity marketing is under the gun as budgets are cut and agency work is consolidated.

According to Nielsen Co., automaker spending on Hispanic-targeted TV, magazine and radio advertising dropped 38 percent last year to $322.2 million, and black-targeted spending dropped 18 percent to $85.8 million.

Those two categories outpaced the plunge in automotive advertising, which fell 13 percent over the same period, says Nielsen.

Those numbers do not include the Internet, newspapers or event marketing.

Ten years ago automakers poured money into diversity and hired separate agencies for black, Hispanic and Asian marketing. But as industry sales fell and marketing budgets tightened, some automakers gave these agencies smaller budgets and pushed general-market agencies to develop more inclusive general creative work.

Such cuts could hurt automakers' standing with minority shoppers, says Andrea Hoffman, a former Mercedes-Benz marketing executive and author of Black is the New Green: Marketing to Affluent African Americans.

"These brands are going to play catch-up with the competition," Hoffman said.

Volvo and General Motors Co. exemplify the changing agency strategy.

Volvo Cars of North America dropped multicultural publications from its advertising plan last year because of budget constraints, said spokesman Geno Effler. The company now seeks to reach diverse audiences through general media with its general-market agency.

Last year GM dropped two of the three agencies it had used to handle black-oriented advertising but kept both of its Hispanic agencies.

"The general-market agencies are handling African-American creative for Chevy and Cadillac during this transition period," said GM spokeswoman Ryndee Carney, who also said marketing boss Susan Docherty has yet to complete her marketing plans.

But last month Docherty told her marketing team she wants more attention paid to diversity, including more multicultural talent. They'll do most of it without an outside agency.

Asked which type of agency would create an ad for a black publication, Docherty said, "I think I can use my general-market agency and make sure that the creative is specific."

BMW President Jim O'Donnell told Automotive News in January that the brand has been using the multicultural agency Matlock for "advice and targeting" for BMW and Mini ads focused on black buyers. Bromley Communications creates ads tailored to the Hispanic community.

"We can do better on the African-American front," O'Donnell said.

BMW hopes to put "slightly more emphasis" behind African-American marketing in 2010 because "we're missing an opportunity," he said.

Randi Payton, president of the media company On Wheels, which publishes the auto magazines African Americans on Wheels and Latinos on Wheels, said ethnic minorities purchase almost one-quarter of new vehicles. He said the "limited budgets" auto companies set aside to reach this marketplace "will not make a dent."

Said Payton: "The returns can be huge. These consumers are starving for relevant content on products and services that speak to their culture."


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