6498: Multicultural Media Monster.

From AdAge.com, another example of maneuvers that will ultimately cripple minority-owned advertising agencies by stripping them of media responsibilities.

SMG Multicultural Breaks $1B, Continues to Dominate

Publicis Groupe Unit That Houses Tapestry a Leader in Hispanic-Marketing Innovation

By Laurel Wentz

NEW YORK -- In 2007, Publicis Groupe split its multicultural media-buying behemoth, Tapestry, into two separate units. The idea was that Starcom clients would be served by Tapestry, while MediaVest clients would be handled by 42 Degrees, all under the oversight of SMG Multicultural. It took the agency group only a year to show that the whole could be greater than its parts.

SMG Multicultural broke $1 billion in billings in 2008, thanks to 25% growth at Tapestry and more than 20% growth at 42 Degrees. Even separated, Chicago-based Tapestry and New York-based 42 Degrees are the two biggest multicultural media buyers, dwarfing other ethnic spinoffs, such as OMD Latino and Mindshare Multicultural, as well as Hispanic agencies’ own media departments. (Tapestry was the original multicultural unit started five years ago to service Starcom and MediaVest. When Tapestry split into two units, the name 42 Degrees was chosen as a whimsical reference to the angle at which the sun hits drops of rain to create a rainbow.)

Beyond its size and fast growth, SMG Multicultural is a leader in innovation and an expert in exploding myths about Hispanics not being big consumers of digital media.

“We dabbled a lot in 2008 with different forms of digital, testing mobile, Spanish-language search and social media,” said Monica Gadsby, CEO of SMG Multicultural. “To be in partnership with clients and learn at the same time as our general-market counterparts and bring to the forefront that multicultural consumers are in the lead or at parity [with the general market] was a great accomplishment.”

“We did an aggressive Spanish-language search campaign for Allstate, and even tried out search in Spanglish, with terms such as ‘website de Allstate’ and ‘seguro de auto,’” said Marla Skiko, senior VP-director of digital innovation at SMG Multicultural.

Innovation and insights
Mobile was a big component of a campaign for Procter & Gamble brands Cover Girl, Herbal Essence, Always and Pantene, she said. In a text-in mobile sweepstakes, girls could win a $5,000 contribution toward their quinceañera, a fifteenth birthday party that is an important coming-of-age celebration for many Hispanic girls. P&G was also a major sponsor of Misquince magazine’s website, where Always sponsored content such as a blog by Isabella, who bills herself as the “Fairy Godmother of Quinceañera,” while Cover Girl provided content such as a makeup quiz to determine what users’ Quinceañera makeup style should be.

Another client, Walgreens, found that Hispanics lagged behind general-market consumers in signing up for the drug store chain’s digital-photo site. The solution, Ms. Skiko said, was to use Walgreens’ sponsorship of “Objetivo Fama,” an “American Idol”-like singing competition that airs on Univision, to offer related content and ringtones to give Hispanic consumers an incentive to register for digital photos. In 2008, Hispanic registrations at the digital photo site more than doubled, revenue increased by 77% and cost-per-registration fell by almost 50%.

42 Degrees showed how with a little insight, even a small budget and a traditional medium like radio can combine Hispanic and U.S. customs to sell Oreo cookies. Hispanics love cookies but didn’t grow up with the heritage of “Twist, lick, dunk” for eating Oreos. So 42 Degrees sponsored a weekly radio program that included narration of a classic Latin American fable, bookended by instructions on how to sit by the radio with the family, milk and Oreos. It wasn’t possible to measure how many extra Oreos were sold (and dunked), but there were 25,243 downloads of the Oreo storytime podcast from iTunes, and 1,222 downloads of the stories in PDF form.

In one 2008 new-business coup, Tapestry partnered with a Hispanic agency to pitch for Burger King’s $30 million Hispanic account. When the agency was knocked out, Tapestry persuaded Burger King to allow the media shop to pitch by itself, and ended up clinching the Hispanic media assignment even though the creative account went to Omnicom Group’s LatinWorks.

New business
Ms. Gadsby said about half the growth in 2008 was from new business and half from existing clients. Bank of America was Tapestry’s biggest win of the year, and the agency’s first major client assignment covering Hispanic, African-American and Asian-American segments. (At 42 Degrees, Walmart, won in 2007, also covers all three of those ethnic groups). One source of new business in the Hispanic market is advertisers who have never marketed to Hispanics before, and two very different Starcom clients—BlackBerry and Applebee’s—took their first Hispanic steps with Tapestry last year.

Although SMG Multicultural is still heavily Hispanic, Ms. Gadsby said the Bank of America win helped change the ratio slightly, to about 75% Hispanic billings in 2008 from closer to 80% the year before. And 42 Degrees’ Black History Month-related efforts on behalf of Walmart were credible enough to earn the retailer the accolade of No. 1 corporate Black History Month supporter by website BlackPR.com.

In other efforts, SMG Multicultural partnered with a black futurist in a study called Beyond Demographics that defined different African-American archetypes, then linked with MRI and Nielsen data to plan and buy against those consumer groups on behalf of clients like Walmart, Walt Disney & Co, Dell and General Motors.

“We knew supply [of African-American content] would fall short, and we’re working in partnership with different producers,” Ms. Gadsby said. “We’re doing a forum with producers in March to present some of the ideas to our clients.”

Multicultural media specialists on the rise
In the U.S. Hispanic market, full-service agencies such as Vidal Partnership, Dieste, Zubi Advertising and Lopez Negrete Communications still control much of the media planning and buying through their own media departments. But media specialists have made inroads by setting up their own multicultural units.

In February 2009, Interpublic Group of Cos.’ Mediabrands hired Hispanic-marketing veteran Rick Marroquin to create a Hispanic business within the media-holding company. Mr. Marroquin was chief marketing officer of internet radio group Batanga for the last two years, following five years as director of marketing-U.S. Hispanic for McDonald’s.

Nick Brien, CEO of Mediabrands, said there are about $300 million to $400 million in U.S. Hispanic billings now at Initiative, which does Hispanic work for clients including Home Depot and Hyundai and Kia, and at Universal McCann, working with Sony, Johnson & Johnson and Microsoft Corp. Interpublic also has three U.S. Hispanic agencies.

There are few media-only pitches yet in the Hispanic market, with most business moving either with the creative account, or as a multicultural component of a general-market media account.

In the past few years, Omnicom Group has set up OMD Latino, and Aegis Group started Carat Multicultural. At WPP, Mindshare opened Mindshare Multicultural, and Mediaedge:cia partnered with the media department of WPP’s Hispanic agency, Bravo Group, to form MEC Bravo and transferred Gonzalo Del Fa, the head of Mediaedge:cia’s successful Argentine operation, to New York from Buenos Aires to set up MEC Bravo.