It's a Mass Market No More

By THOMAS McCARROLL

Spicy Mexican foods normally stimulate the taste buds, seldom controversy. But a television advertisement for Taco Bell's saucy new Wild Burrito caused more excitement in the African-American community than the company intended. The spot featured dark-skinned island "natives" with painted faces, dancing in loincloths, flames belching from their mouths. African Americans immediately attacked Taco Bell's attempt at multicultural advertising. Oakland city council official Fred Ferguson described it as "plain and simple racist." The ad was withdrawn.

That kind of faux pas was unacknowledged in the days of Ozzie and Harriet and flesh-colored Band-Aids, when one advertising message fit all customers. But like the homogenized, '50s-style households for which they were created, the tools of mass marketing are headed for the Trashmaster of history. Waves of immigrants from Asia, Latin America and Africa, added to an already growing minority population, are radically reshaping the face and buying habits of the "typical" American consumer.

Ethnic-minority shoppers, predominantly African Americans, Hispanics and Asians, spent $600 billion on everything from toothpaste to shoes to cars last year, up 18% since 1990. By the year 2000, minorities may account for 30% of the economy. Major corporations like Pepsico, K Mart and J.C. Penney are going all out to win over free-spending ethnic consumers, recruiting minority marketing experts who speak each group's language and know their customs. "This is the era of ethnic marketing," says Gary Berman, president of Market Segment Research, a consumer specialist in Coral Gables, Florida. "Mass marketing worked when America was a cultural melting pot. But now you need a different message to suit the taste of each group."

Corporate America is catching up with the times and in some ways is getting ahead of the multicultural debate that still rages in some corners of society. Almost half of all Fortune 1000 companies have some type of ethnic-marketing campaign. That contrasts with only a handful in 1980. Last year companies spent $500 million on ads and promotions to reach minority consumers, including bilingual billboards, sweepstakes and parades. Expenditures on advertising and promotional campaigns aimed at ethnic groups, which amounted to only $250 million five years ago, are expected to top $900 million by 2000.

Procter & Gamble, which spends an estimated 5% of its total advertising budget of $2 billion on ethnic-oriented ads, reaches Spanish speakers through shows like Hablando, a popular half-hour morning program. AT&T, which sponsors Chinese Dragon Boat Festival races and Cuban folk festivals, runs broadcast and print ads in the U.S. alone that reach 30 different cultures in 20 different languages, including Korean, Tagalog and the West African dialect + Twi. Says Jacqueline Morey, director of multicultural marketing at AT&T: "Marketing today is part anthropology."

Ethnic marketing has been around for a while. Companies like Coca-Cola and McDonald's have advertised to Hispanics in Spanish since the 1960s. But the value of ethnic targeting was not fully appreciated until the 1970s, when corporations discovered that African Americans were spending upwards of $250 million a year on consumer goods. Big marketers like Philip Morris and Quaker Oats learned how to penetrate this market, gradually winning praise and customers with ads depicting blacks in positive and nonstereotypical roles. Says Ken Smikle, publisher of Target Market News, a newsletter that specializes in African-American marketing: "Corporate America went to ethnic- marketing school on black consumers."

The smarter and savvier companies are now targeting other ethnic minorities. Chinese, Vietnamese and Koreans, among the fastest-growing and most prosperous newcomers, are prized immigrant markets. More than 32% of Asian-American households earn an income of $50,000 or more, contrasted with 29% of Caucasian families. Last year those Asian households spent $120 billion on goods and services. Hispanics, who spend $180 billion, are also eagerly pursued. Since 1983, spending on Hispanic media, such as the TV station Telemundo and the newspaper La Opinion, has more than tripled, to $224 million. Immigrants fly back and call home often, so they are heavy users of airlines and long- distance telephone services. Asians make three times as many overseas calls as the average U.S. consumer. Chinese Americans drink nearly twice as much Cognac per person as the general population. Koreans eat more Spam than any other ethnic group.

The better consumer-goods managers are using these facts to advantage. Distillers Remy Martin and Courvoisier regularly run Mandarin- and Cantonese- dialect Cognac ads in Chinese newspapers and magazines. And meat packer Hormel & Co. designed some of Spam's in-store promotional displays in Korean. Others have stumbled. A New York Life Insurance Co. ad designed to appeal to Koreans failed miserably because it used a Chinese model. Citibank had to drop a New Year's holiday TV ad targeted at Chinese consumers after viewers complained about the sexual innuendo of corks popping out of champagne bottles. The bank replaced the spot with one featuring a dragon. Marketers acknowledge that it's worth the time and trouble to get it right. Asian Americans, for example, register better-than-average responses to advertising. The returns on ad dollars spent on Asian media run 60% higher than those in the general print and broadcasting vehicles.

Both to cash in and to avoid mistakes, more and more companies are recruiting ad agencies that specialize in ethnic marketing. San Francisco's Time Advertising, which is owned by Chinese Americans, did spots for AT&T. Chicago-based Burrell Communications, a black shop, handles McDonald's and Coca-Cola, among other accounts. Many of the big Madison Avenue firms have either acquired or started up ethnic-oriented divisions. Young & Rubicam owns the Bravo Group, a Hispanic-market specialist. Foote Cone & Belding, Leo Burnett and Grey Advertising also have in-house Hispanic departments.

Collaboration has apparently paid off for mainstream advertisers. With two- thirds of Hispanics and three-quarters of Asian immigrants preferring to communicate in their native language, the minority agencies have helped advertisers avoid tripping over their tongue. But the minority firms do more than simply translate. Says Eliot Kang, founder and president of AMKO, a Korean-owned agency: "We make sure companies like Budweiser don't use props like Spuds Mackenzie to sell beer to Koreans and Chinese."

In their pursuit of ethnic consumers, advertisers have been relying less on traditional forms of mass marketing, such as network television and general- circulation magazines, and more on specialized media, like cable TV and ethnic- or subject-oriented magazines. Newspaper advertising is down 5% since 1990, for instance, while ad spending at ABC, CBS and NBC increased barely 1%. The transition has forced mass-marketing firms to learn new tricks, such as ZIP-code targeting and more sophisticated uses of direct mail.

"None of this would be happening," observes Market Segment's Gary Berman, "if corporate America wasn't making money." There may be some truth to that. Many of the same companies that are successful as ethnic marketers are having trouble resolving those nagging problems posed by multiculturalism in their own workplace. Most corporations are adopting some form of diversity training to ease worker tensions brought about by the greater ethnic mix, while others are insisting that their employees be at least conversant in English. It's a good bet that such tensions on the job will get solved when it has been clearly demonstrated that ethnic harmony contributes to the bottom line.