"BLACK AGENCIES NEED TO EXPLORE new and different business models to better compete," says Donald Coleman, chairman and CEO of GlobalHue (No. 1 on the BE ADVERTISING AGENCIES list with $550 million in billings), "Consolidation and acquisition, among other things, should be considered."
This statement from an executive at the largest black-owned advertising agency underscores the state of the industry--and particularly the ever-diminishing role of African American entrepreneurs within it. While billings for the agencies increased 7%, these firms were forced to continue draconian cost-control measures while trying to grow business with existing clients and in some cases taking on less profitable assignments. Emphasizing the grimness of the situation, BLACK ENTERPRISE has for the second consecutive year elected to not name an advertising agency of the year.
While The Nielsen Co. reported that advertising spending for 2006 rose 4.6%, several factors, including competitive pressure from larger white-owned agencies, a certain degree of racism, and a shift of spending toward the Hispanic market, have left many black agencies in critical condition. The loss of African American executives in the ranks of mainstream marketing organizations who would normally champion the case for valuing the black segment, such as Jerri DeVard, the former senior vice president of brand management and marketing for Verizon Communications, compounded the problem.
Among the firms that have grown is IMAGES USA (No. 9 on the BE ADVERTISING AGENCIES list with $62.5 million in billings). The firm grew business with five of its existing customers--Amtrak, Wachovia Corp., the Georgia Lottery, National Black Arts Festival, and myClosingSPACE.com, while creating African American and Hispanic marketing campaigns for six new clients--Papa John's …