I heard one of those marketing claims the other day that sends the MarketingTeaParty-O-Meter into the red. Tweeting from a WOMMA conference, @chimoose related the following stat from a DePaul professor:
“Hispanics, African Americans and Asians represent 30% of the population and get about 2% of the marketing spend”
Two questions immediately came to mind: 1) How did the professor calculate that 2% of the “marketing spend” is directed at those ethnic groups? and 2) Why is she making this point in the first place?
The answer to the second question is potentially touchy, because there are times when someone makes a point like the one above with the intention of implying some kind of bias or discriminatory behavior.
I’m pretty sure that’s not the case here — I think the professor is simply implying that marketers aren’t focusing on the right opportunities, or allocating their resources appropriately.
There’s a problem with that conclusion, though. Any categorical difference that you can define — whether it’s ethnic group, gender, age, income level, geography — is only a valid segmentation dimension if it is a strong (and better) predictor of needs and behaviors than other characteristics (which may include not just demographic factors, but attitudinal dimensions and other behaviors).
Is there any proof that ethnicity is a better predictor than other dimensions across a range of products (or even a single product category)? Don’t think so.
But I actually wouldn’t argue that some marketing targeted directly at specific ethnic groups is wrong. The more important question is: How much of the marketing budget should be allocated to ethnic-specific advertising or marketing? Should it be proportional to the ethnic group’s representation within the overall population?
I don’t see how you could create an argument to support a “yes” answer to the latter question. While the professor might not argue for that either, I don’t see how you can support an argument that any percentage of the total marketing spend is the right percentage.
But there’s a whole other issue we haven’t discussed here, and it relates to the first question I posed above: How does this professor know that 2% of marketing spending is directed towards the three ethnic groups listed?
Exactly what constitutes marketing or advertising directly to an ethnic group? Does an ad or commercial have to be in Spanish to be targeted to Hispanics? If a commercial includes a person of a particular ethnic background, is it — by definition — targeted at that ethnic group? If a commercial has a mix of ethnicities represented in the ad does that count in the 2% that the professor alludes to, or not?
Bottom line: Claiming that only 2% of the “marketing spend” is directed at Hispanics, African-Americans, and Asians is simply not a valid, provable statement. Even worse, implying that the number should be higher — without any guidance as to how much higher — is simply bad advice.
Ron Shevlin's Marketing Whims 
Beats me if you can measure the 2% but that appears to be 2% of total marketing spend. I wonder what share it is of ethnically targeted marketing spend (assuming one could estimate such)? I think there is a scope of data mis-match here.
Suppose there wasn’t a mis-match. The Hispanic number shouldn’t HAVE to be 30% or spot-on the Hispanics’ share to make people who are concerned comfortable that businesses are actually trying to sell to, in this case, Hispanics. Just something besides a relatively trivial 2%.
I don’t think there’s great harm in trying to understand these things unless some people take the numbers out of context and try and use them to run their agendas and we know that THAT would never happen….
The real danger is someone will use data of this sort to lobby to increase the marketing to Amherst graduates, and we all know what reprobates THEY are….
Great criticism of a random statistic, Master Shevlin.
Another problem with that professor’s 2% number is that it assumes ethnic groups won’t connect with the other 98% of the marketing spend. Is the professor saying that ethnic minorities are so disconnected from the mainstream that they “just don’t get it”? Sorry, professor, it sounds like you’re insulting the very people you’re trying to support.
Even though I’m a member of two ethnic minorities and live in a wonderfully diverse neighborhood in L.A., I discourage most demographics-centric marketing since it relies on stereotypes and is usually not relevant to the product. I’ve written about my problems with demographics-based marketing here: http://atomictango.com/2008/12/09/segmentation/ In short, demographics-based marketing runs the risk of offending more people than it appeals to.
The only time it makes complete sense is when another language is required. Otherwise, it’s better to spend that 2% on more outreach, not more hazard-prone pandering.
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Dr. Nager: Hold on a second here. Because not only are you right about the wrong assumption that “ethnic groups won’t connect w/ the other 98%”, the opposite is also true (or false — I’ve just argued myself into a corner).
Specifically: If a McDonald’s ad features Asians, will that mean that I — a non-Asian — won’t be impacted?
But here’s another scenario: It’s actually conceivable that an ad targeted at a certain ethnic group could have a negative impact on other people. E.g.: “Oh that product/company is for African-Americans, not me.”
The bottom line is that marketers really need to think through the implications of ethnic-targeted marketing.
To take your random statistics thing even further, what is “marketing spend”? For example, if I place an expensive ATM with a cool surround in a specific neighborhood, is that “marketing spend” (and if so, does it count towards the 2% if it is in a heavily Hispanic neighborhood)?
Most banks don’t consider it to be marketing spend, but my wife chose her first bank because she saw a cool looking ATM every day while riding the bus through that particular neighborhood.