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Implementing diversity strategies

The challenges facing minority focused advertising agencies
Vinita P. Ambwani, Louise Heslop and Lorraine S. Dyke
Sprott School of Business, Carleton University, Ottawa, Canada
Abstract
Purpose The purpose of this paper is to identify and explain barriers to differentiation for minority focused advertising agencies and propose modication to the existing framework of agency selection process. Design/methodology/approach Multiple semi-structured, in-depth interviews were conducted with key industry personnel. The data from these were augmented with proprietary research conducted by the relevant organizations and extensive review of the literature. Findings Few advertising agencies differentiate themselves by specializing in campaigns targeting minority populations. Several barriers to differentiation exist which can be explained using Institutional Theory and Economic Detour Theory. Rational Goal model and the Learning and Effectiveness Paradigm of diversity are used to suggest modication to current approaches. Research limitations/implications Future studies should test the validity of the proposed framework. Practical implications The proposed framework for agency selection will lead to differentiation opportunities for advertising agencies and potential business for clients. Originality/value The paper identies the theoretical drivers of the barriers that exist for minority focused advertising agencies. The modied framework proposed uses theoretical rationale to addresses these barriers. Keywords Canada, Advertising agencies, Target markets, Ethnic minorities Paper type Research paper

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Equality Diversity and Inclusion: An International Journal Vol. 30 No. 4, 2011 pp. 332-349 q Emerald Group Publishing Limited 2040-7149 DOI 10.1108/02610151111135778

Advertising agencies have been around for a long time and in spite of a proliferation of agencies (Davis, 2002), there is very little differentiation in the scope or focus of services offered by agencies in this industry in North America. This paper suggests that there is an opportunity for advertising agencies to differentiate themselves based on their ability to develop campaigns specically targeted to ethnic and racial minority populations. The possible barriers to such differentiation are identied and explained using Institutional Theory (DiMaggio and Powell, 1983) and Economic Detour Theory (Stuart, 1940). Using the tenets of the Rational Goal Model (Price, 1972) in conjunction with the Learning and Effectiveness Paradigm for managing diversity (Thomas and Ely, 1996), modications to current approaches are suggested for both advertising agencies and their clients in order to overcome these barriers to differentiation. Possible benets include greater market coverage for advertisers, new business opportunities for agencies, and better employment opportunities for members of minority communities.
This article won the Best Paper Award at the EDI Conference, July 2010, Vienna, Austria. This is a revised version, based on the comments of the best paper selection committee.

Background Canada and the USA are two of the worlds top three[1] receiving countries for legal immigrants. Almost 20 per cent of the Canadian population was born outside of Canada and 12.5 per cent of the US population was born outside the USA (Statistics Canada, 2010) On average, 70 per cent of new immigrants to Canada belong to racial and ethnic minority groups, and minority populations are expected to show a signicant increasing trend (Figure 1). Minorities in the USA form over a third of the population and spend $1.3 trillion every year (Lee, 2003). There is signicant overlap between the immigrant and minority populations in different countries. For example, three out of four new immigrants in the USA belong to a racial or ethnic minority group (United States Census Bureau, 2000), and with immigration forecasted to continue, the increasing trend of minorities in the USA population is also expected to continue. Assimilationist perspective of immigrant and minority group acculturation (Glaser, 1958; Phinney, 1990; Rogler et al., 1991) suggests that the process involving the interaction of people from diverse cultural backgrounds with majority populations, eventually results in ethnic minorities becoming more similar to the main-stream population. Others, however, dismiss this view and suggest that ethnic groups retain their distinctiveness (Rossman, 1994; Berman, 1997; Kim and Kang, 2001). In 1970, Canada ofcially declared itself to be a multicultural mosaic where minority members are encouraged to maintain their uniqueness (Abu-Rabia, 1996). The diversity of ethnic groups represented in Canada and the expected growth is portrayed in Figure 1. The idea that different resources and skills are required in advertising agencies targeting culturally diverse consumers has received signicant attention in the
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Visible minority group Source: Statistics Canada (2010)

Figure 1. Visible minorities in Canada and projection scenario

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international business literature (Hanni et al., 1995) The pros and cons of using global, multi-domestic or local agencies when organizations expand to global markets have been extensively debated (Mueller, 1991; Okazaki and Mueller, 2008). Global agencies have branches across the globe; international or multi-domestic agencies on the other hand operate in a limited number of countries or regions (Cateora and Graham, 2005; Roling, 2010) and typically operate in some form of partnership with local agencies. Local agencies are owned and operated by the host country personnel. The opponents of globalized strategies for companies (Wind, 1986; Onkvisit and Shaw, 1987; Walters et al., 2008) suggest that with the exception of a very few culture free products such as some industrial and consumer durables, global positioning is not a viable option. The rationale for a multi-target approach is that product benets are culturally determined; different cultural values lead to an appreciation of different kind of communications, social interactions, habits, norms of behaviours all of which are depicted in advertisements, especially those depicting slice-of-life appeals. The reasoning that supports the choice of multi-domestic or local agencies for global marketers can be extended to the selection of agencies within nations where the target audience comprises multi-ethnic populations. Marketers may better reach multi-ethnic national populations with a multi-target approach, leading to potential opportunities for specialized agencies to ll this niche. Past studies support the position that ethnic minorities respond more favourably to ethnic endorsers, like models in ads, and ethnic media such as specialized television programming and magazines provided in different languages (Lee et al., 2002; Butt and de Run, 2010; Noriega and Blair, 2008; Emslie et al., 2007). This point of view combined with the growing populations of ethnic minorities in countries like the USA and Canada would suggest that there should be a proliferation of marketing organizations specializing in the ability to target minorities. However, in spite of the growth of ethnic minorities in North American populations, most advertising has failed to reect this reality in their content (Dunn, 1992; Marshall, 1997). Further, the pattern of evolution of advertising agencies in North America indicates that the industry has not responded to this dynamic either (Davis, 2002). In 2000, 136 ad agencies in the US market were listed in the Special Markets section of the Standard Directory of Advertising, with 32, 30, and 74 categorized as specializing in the African American, Asian and Hispanic market segments, respectively, and with very few represented in multiple categories (Davis, 2002). A majority of these agencies are owned by minorities (Davis, 2002). In Canada, an agency search through the Institute of Communications and Advertising Directory with relevant key words identied only two agencies that specically describe themselves as specialists in advertising to ethnic target markets. This study examines the barriers to agency differentiation according to ethnic-based target markets, theories which may explain why the barriers exist, and identies some changes which agencies and advertisers need to make in order to support such differentiation. The growing population of minorities in many advanced market economies creates opportunities for proactive advertisers to increase market share. Differentiation on the part of agencies would lead to better market coverage for advertisers in these economies (Kinra, 1997; Butt and de Run, 2010). We begin by briey reviewing some relevant theoretical perspectives.

Theoretical perspectives This research identies barriers to the differentiation of advertising agencies as specialists in targeting ethnic or racial minorities. These barriers can be explained using Institutional theory (DiMaggio and Powell, 1983) and Economic Detour Theory (Stuart, 1940). To overcome these barriers changes in the currently used frameworks are proposed which are based on the tenets of the Rational Goal Model (Price, 1972; De Lancer Julnes and Holzer, 2001), used in conjunction with the Learning and Effectiveness Paradigm of diversity management (Thomas and Ely, 1996). In this section, the relevant theories are briey described. Then, following a description of the studys methodology, these theoretical perspectives are examined in light of the existing evidence. Institutional theory proposes that organizations sharing the same environment employ similar practices which are deeply embedded in their day-to-day functioning and which are difcult to change (DiMaggio and Powell, 1983). The processes that advertisers use in selecting an ad agency and media outlets subject these agencies to comparable environmental forces which then encourage the development of similar structures and practices within these agencies. Economic detour theory (Stuart, 1940) describes the discriminatory business environment experienced by minority businesses which leads to their segregation in niche markets. This results in minority focused businesses having a harder time competing for majority focused business. In other words, the result is a form of segmentation heavily inuenced by discriminatory attitudes. The Rational Goal Model is based on the assumption that organizational practices can be modied to achieve better performance by applying the results of planning and analysis (De Lancer Julnes and Holzer, 2001). The central tenet of this model is that an organization exists to accomplish specic objectives. If a new process can be shown to facilitate the accomplishment of these objectives, then organizations will change to adopt this process. Shareholder protability and employee satisfaction are among the most commonly stated organizational objectives or goals (Thompson and Strickland, 2003). Thomas and Ely (1996) state that an emerging paradigm in diversity management linking organizations to their clients is that of Learning and Effectiveness. This paradigm suggests that pluralism can lead to more effective and presumably more protable organizations. The prot goals qualify as criteria of better performance under rational goal model (De Lancer Julnes and Holzer, 2001), and can conceivably motivate modication in embedded practices. The proposition that prot goals can motivate change forms the basis of the modications to the agency selection process we suggest in our study. These perspectives thus have the potential to enhance ad agency effectiveness which we explore below. Methodology In the fall of 2007, multiple semi-structured in-depth interviews were conducted with key industry personnel in Canada. To cover a wide range of vantage points, representatives from both the client (advertisers) and advertising agency sides of the relationship were included. Given the exploratory nature of the current study, this approach was deemed appropriate. Representatives from both the client (advertisers) and advertising agency sides of the relationship were included. The personnel interviewed were the Vice President, Policy and Research, Association of Canadian Advertisers; President, Institute of Communications and Advertising; President of Omni Television, a leading multicultural television network; and President of Era Integrated, a successful advertising agency

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in Toronto specializing in developing campaigns for multicultural markets. The mix of organizational afliations represented by the respondents ensured a wide range of perspectives and included all important parties of interest relevant to our research. To protect the privacy of interviewees, their comments have not been attributed to them individually but have been attributed simply to interviewee numbers (e.g. Interviewee 1 etc). The small number of respondents is somewhat mitigated by the fact that the respondents occupied extremely important positions in the organizations relevant to this research. In addition, they provided access to proprietary research data based on large sample sizes of respondents which backed their opinions. In two cases, other personnel from their respective organizations also provided answers to the same questions, in each case corroborating the opinions of the primary respondent from the same organization. Interviewees were asked to share their opinions regarding the nature of the industry, the viability of specialized agencies, barriers to specialization, and the actions required to overcome these barriers. Proprietary research data was supplied by the key informants to back several of their assertions, and other personnel belonging to senior management from these organizations also answered the same questions. The data from the interviews was augmented with an extensive review of the literature and the authors industry experience in order to identify the barriers to differentiation and to develop recommendations for overcoming these barriers. Barriers to the evolution of differentiated agencies Infrastructure barriers The embeddedness of organizations in their environments suggests that organizational practices are often a reaction to the rules and structures found in their environments. These are the taken-for-granted aspects of the organizations which are difcult to change and can be explained using Institutionalization Theory as proposed by DiMaggio and Powell (1983). The common process used by advertising agencies to select media vehicles represents one such deeply embedded process (Interviewee 3; Interviewee 4) which may stand in the way of change. This process of selection of media vehicles is described in further detail in the following paragraph. Once agencies or advertisers decide on the medium for their campaign (e.g. print or television), a request-for-proposal (RFP) is sent out to the various contenders. In selecting these contenders, the agencies or clients often depend on research from third party vendors who evaluate media reach (Interviewee 1). This research provides detailed information on audience prole from which media outlets can calculate their cost-per-thousand for reaching the target audience (e.g. women aged 25-34, etc.). Since ethnic media, particularly in Canada, tend to be small (Interviewee 3, Interviewee 4), they are not monitored by the large market research companies and in the absence of this data on target audience reach, it is hard for ad agencies or client personnel to justify the use of specic media. Prohibitive costs and regulatory issues make it very difcult for specialized media or ad agencies to commission these numbers on their own (Interviewee 3). Thus, established organizational practices of using data from the syndicated research companies, act as barriers to the prospects of specializing in ethnic targeting. Blocked mainstream markets The Economic Detour Theory of enterprise development was proposed in 1940, based on Stuarts (1940) reections on the business environments experienced

by black entrepreneurs. The essence of his argument was that social (and, at the time, legal) practices of racial segregation drove black entrepreneurs to cater exclusively (frequently against their will) to black consumers. Davis (2002) suggests that the progress of minority owned ad agencies indicates that their role is still dened by the key tenets of Economic Detour Theory. Their role is frequently relegated to developing a small portion of only black or minority targeted campaigns. One can argue that such is the nature of niche marketers. However, to become protable, the niche must reach a critical size. Minority audiences are not targeted or portrayed in advertisements to the extent they are in the population (Dunn, 1992; Marshall, 1997). This segment is under-represented and under-targeted and therefore the work relevant to these tasks for advertising agencies remains smaller than would be suggested by the proportion of minorities in the population. In the face of less than proportional use of minority targeted campaigns, particularly in Canada (Interviewee 2), this situation may be a signicant deterrent to the development of agencies that differentiate themselves on the basis of their ability to target minorities. Resources taken as a cue for quality As with many other niche businesses, the agencies that do attempt to specialize in targeting ethnic markets tend to be smaller in size (Davis, 2002). Similar to consumer markets where product prices are often taken as a cue for quality, the size and resources of the company in a business-to-business market are often taken to signal success and hence, quality (Cateora and Graham, 2005; Faisal and Khan, 2008). As a result, small agencies capabilities in terms of quality are often assumed to be lower than those of large agencies (Muse, 2006). As one of our interviewees pointed out, however, this conclusion is not always correct. To make this point, Interviewee 3 drew parallels between the processes of targeting minorities by large agencies and that of the war in Iraq involving the US forces: Just because the US has more resources and technologies, does not automatically mean they will win the war. They will need to know how to ght in Iraq. According to this interviewee, the importance of access to minority networks, formal and informal, outweighs resources in effectively targeting minorities. The idea that the rules of targeting multi-cultural populations are different is not new. It has been alluded to in several streams of literature. For example, several authors have indicated that when organizations go to new international markets, the most targeted and culturally congruent campaigns are likely to be developed by the local domestic agencies rather than global or multi-domestic agencies (Cateora and Graham, 2005; Johansson, 2006). While these authors typically identify potential trade-offs in using local agencies, such as reduced quality of interaction and compatibility between the company and agency personnel, the research suggests that on balance, domestic agencies add signicant value. Pre-existing relationships with mainstream agencies Even in the cases where specialized agencies may be suited for an account, the clients may prefer to use the agencies with which they have existing relationships (Ennew and Hartley, 1996; Davies and Prince, 2010). Agency switching costs are high (Interviewee 2; Davies and Prince, 2010; van Rensburg et al., 2009), and managing multiple agencies for a varied portfolio of accounts is also very expensive (Sark and Reynolds, 2005; van Rensburg et al., 2009). If an advertiser decides to hire a specialized agency, they run the risk of undermining relationships with their current agencies that, in many cases,

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handle their mainstream business and may offer services, directly or indirectly, for minority target markets. Since mainstream agencies are also frequently involved in developing their clients marketing plans, this further reduces the likelihood of employing specialized minority agencies or outlets (Na and Marshall, 2001). When the plans include minority targets, mainstream agencies often contract out the work, which costs mainstream agencies more and often means reduced prot margins (Interviewee 3). As a result, promoting minority targeted advertisement often involves few incentives for mainstream agencies. Inertia Diversity in the populations in North America is a growing phenomenon. Many clients who recognize the need to address this change through strategy may resist it simply due to inertia (Ennew and Hartley, 1996). Selection of an agency is described by Cagley and Roberts (1984) as a time consuming, expensive and possibly traumatic task. Agency switching costs are high (Interviewee 2; Sark and Reynolds, 2005) in terms of both time and money. Even when clients feel the need to reach minorities, their existing agencies may be their most likely choices simply because this involves the least amount of potential change (Interviewee 3). Barriers resulting from the agency selection process A signicant amount of research has focused on the agency-client relationship (Marshall and Na, 1994; Henke, 1995; Michell and Sanders, 1995) and the criteria used in the selection of an advertising agency (Cagley and Roberts, 1984; Harvey and Rupert, 1988; Fam and Waller, 1999; Na and Marshall, 2001; Na et al., 2003; Faisal and Khan, 2008). These criteria have been studied both from the clients perspective (Cagley and Roberts, 1984; Na et al., 2003; Palihawadana and Barnes, 2005; Faisal and Khan, 2008) and the agencys perspective (Fam and Waller, 1999; Palihawadana and Barnes, 2005). In spite of the geographical diversity of the setting of the studies which ranges from the USA (Cagley and Roberts, 1984), through New Zealand (Fam and Waller, 1999), Korea (Na and Marshall, 2001; Na et al., 2003) and Poland (Palihawadana and Barnes, 2005), there is remarkable agreement on the criteria used in selecting an ad agency. The only cross-cultural variation noted in the process is slight differences in the relative importance of the different criteria in different countries (e.g. Cagley and Roberts, 1984, Palihawadana and Barnes, 2005). Table I below summarizes the six most important criteria for agency selection, listed in order of importance, as identied in different studies. Aside from some subtle variations in the importance ratings of the evaluative criteria, the research generally establishes that relational characteristics, such as compatibility, interaction quality between the agency and client personnel, and chemistry or perceived synergy are key evaluative criteria. In addition, agreement about the goals and objectives, reputation of the agency, range of services offered, resources of the agency, and quality of the personnel, especially account personnel, are other important factors in the agency selection process. Thus, interpersonal characteristics are critical to the success of an agency. The importance accorded to criteria such as compatibility of the agency and client personnel, as well as the quality of the initial interaction between the client and the agency may represent potential barriers to agencies targeting minorities. Since most agencies that specialize in targeting minorities are owned by minorities (Davis, 2002; Interviewee 4), it is frequently the case that the agency/client interaction involves an ethnically heterogeneous

Research Study (perspectives) Agreement on goals/ objectives Personnel qualication Quality of people on the account Market analysis and consultation Prot and technological skills Quality of service

Cagley and Roberts (1984) (client)

Fam and Waller (1999) (agency)

Na et al. (2003) Na et al. (2003) (client- (client-non-market oriented) market oriented)

Palihawadana and Barnes, 2005 (client)

Palihawadana and Barnes, 2005 (agency)

Most important criterion

2nd most important criterion

Quality of people on Compatibility of the account agency and client personnel Agreement on goals/ Degree of chemistry/ objectives synergy

Initial interaction between client/ agency Prot and technological skills Level of creativity Reputation Quality of client care Initial interaction between client/ agency Reputation Level of creativity Prior record Quality of client care

3rd most important criterion 4th most important criterion Strategic direction Interaction quality and l/t business plan client/agency Agency Resources Tailoring of cooperative plans to t client needs

Need for agency to Reputation learn client business Reputation for Quality of account integrity team

Market analysis and consultation Creativity of the agency media plans

5th most important criterion

Quality of interaction

Agreement on goals/objectives Willingness to object or recommend Range of services Personnel qualication

6th most important criterion

Compatibility of agency and client personnel

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Table I. Relative importance of the evaluative criteria found in different studies

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group where such agencies are concerned. Extensive research on diversity in work teams and its effect on team dynamics highlights some of the challenges this may pose (e.g. Hannum et al., 2010). For example, Pelled et al. (2000) found customer oriented pro-social behaviour to be negatively associated with the ethnic diversity of the interacting groups. Riordan and Shore (1997) also found that work-related attitudes and behaviour are affected by the degree to which an individuals demographic characteristics (e.g., ethnicity, age, and gender) are similar to those of other work group members. In general, the research establishes that demographically homogeneous groups or dyads are more compatible. Given that several studies have identied compatibility or chemistry (Cagley and Roberts, 1984; Na et al., 2003; Faisal and Khan, 2008) as important selection criteria for advertising agencies, agencies owned by minorities or those with a preponderance of minority staff may be less likely to be considered viable partners if the clients staff is dominated by majority group members. Most studies on the topic of agency selection identify the quality of account personnel as an important evaluation criteria (e.g. Cagley and Roberts, 1984; Na et al., 2003); however, quality can be dened in different ways. An important question that is not addressed is whether experience with the potential target audience is considered in the evaluation of personnel quality. The studies that examine personnel quality suggest that an important measure of personnel quality is whether the account team includes the senior management of the agency (Na et al., 2003). Any qualications with regards to the target audience are conspicuous in their absence. If an agency trades off more general advertising experience for target-specic experience in hiring personnel, based on the prevalent evaluative criteria, it would be ranked lower in personnel quality than those agencies recruiting for more general advertising experience even if their personnel had little or no target-specic experience. Therefore, the criteria used by advertisers to select agencies may build in bias against specialist agencies that target minorities and may serve as a deterrent to agencies developing specialized niches. Recommendations for overcoming barriers to differentiation The Rational Goal Model (Price, 1972; De Lancer Julnes and Holzer, 2001) suggests that deeply embedded organizational practices can be changed once the benets of such changes in accomplishing organizational goals are clear to those involved in the process of change. Delivering effective advertising messages is an obvious indicator of a successful promotion strategy (Thomas, 1998). Of all of the elements of the marketing mix, advertising decisions are the ones most likely to be affected by cultural differences (Cateora and Graham, 2005). Consumers respond to advertising on the basis of feelings, belief systems, attitudes and perceptions, all of which are greatly inuenced by their cultural backgrounds (Cateora and Graham, 2005). Most mistakes in international communications occur because marketers fail to understand foreign cultures and adapt accordingly (Kanso, 1992; Li and Shooshtari, 2006). Just as advertisers can benet from developing culturally differentiated campaigns in international markets, they can benet from developing culturally differentiated campaigns to reach the multi-ethnic populations of North America. As more and more advertisers become familiar with the business case for targeting minorities and gain more experience with minority targeting, they will be more likely to adopt the changes necessary to overcome the barriers which have developed. The changes required by agencies and clients in order to accommodate minority focused advertising are described below.

Required changes in the agencys approach In order to overcome some of the barriers to successfully targeting minorities, advertising agencies, both big and small, need to make a number of changes in their practices. These changes include providing a fuller range of culturally differentiated services, using cultural expertise as a hiring criterion and more effectively integrating cultural minorities into their rms. Each of these recommendations is discussed further in the following sections.. One of the primary functions of an advertising agency is to develop the creative strategy for a product or service (Na et al., 2003; Faisal and Khan, 2008). When the target consumers are from different cultures, a common approach is to translate the ads proven successful with some cultural groups in the past into the languages specic to the new targets (Kanso, 1992; Burgos, 2008). This may not be the best approach, however, because the communication elements that make up the whole message include far more than the literal message that travels to the target through the language. Elements such as the appeal of an ad (e.g. fear, humour, guilt, etc.), tone (e.g. argumentative versus narrative; competitive versus non-competitive, etc.) and format (e.g. slice of life, testimonials by experts, etc.) have culture specic resonance and contribute to the whole experience of being exposed to an advertisement (Lee and Carter, 2005). For example, humour as an appeal is particularly difcult to translate due to its embeddedness in the language and culture (Lee and Carter, 2005). Unfortunately, the only service that many mainstream American and Canadian agencies offer to clients targeting minorities is translation (Interviewee 3; Interviewee 4). Limiting their services for minority targets to translation prevents some agencies clients from realizing the full benets of minority targeted advertising. Many large companies like Merrill Lynch & Co., Fleet Boston, and Quick & Reilly have programs in place to recruit minorities on the premise that this will help the rms to better target minority markets (Ackermann, 2003). Advertising agencies, on the other hand, have done a poor job of recruiting and retaining people from diverse backgrounds (Thompson, 2000). Several experts have argued, however, that this is not necessary. For example, Lee (2003) argues that many members of minority cultural groups may prefer to work with a salesperson from outside their own culture. Rotfeld (2003) argues that understanding is essential where a diverse target audience is concerned; however, understanding does not require membership in these cultures or subcultures. To make his point, Rotfeld (2003) states that well-paid executives design campaigns targeting poor consumers and men design campaigns for women. If neither of these approaches is problematic, then why raise the issue with minority targets? Along the same lines, Muse (2006) says that hiring someone to do the job just because they are the right colour may be one of the biggest mistakes that marketers and advertisers make. Second generation immigrants may, in some cases, provide the right colour but may be acculturated to the majority culture to the extent that these individuals may not even speak the minority language or have any cultural expertise (Muse, 2006). Muse argues that there is no substitute for creativity and the right marketing experience. Other experts argue, however, that cultural experience is more important than advertising experience (Sasser and Koslow, 2008). For instance, representatives from specialty media outlets and specialty agencies suggest that if staff members have the requisite exposure to the targeted minority culture, a lack of general experience may be overlooked. Experience with the culture of the target audience is important because it often means access to and knowledge about important minority networks (Interviewee 3).

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While it may be true that highly paid executives design campaigns for poor consumers and men for women, some of these highly paid executives may have traversed the path of economic disadvantage before acquiring nancial success, and people interact with the opposite gender all of their lives, which helps them to understand the attitudes and beliefs characterizing these other groups. In contrast, expecting an empathetic attitude toward minorities to make up for specic cultural knowledge may be a big leap of faith. Advertisers and agencies that target minority groups need to access culture specic knowledge. This expertise should be assessed not on skin colour or just knowledge of the language but on the extent of exposure to the culture and access to and involvement in cultural networks (Burgos, 2008). In addition, culturally diverse experience will likely allow for a richer pool of creative ideas which will add to the creativity in both mainstream and minority related work settings. Culture specic expertise will be found most often, but not exclusively, in minority staff. Thus, in addition to recruiting for diverse cultural expertise, advertising agencies also need to successfully deal with the challenge of managing a diverse workforce. In a landmark article on diversity paradigms, Thomas and Ely (1996), suggest that in the past, managers have approached the question of managing diversity by focusing on avoiding discrimination. A new approach is emerging, however, in which differences are not ignored but rather valued as a source of learning the Learning and Effectiveness Paradigm of diversity management (Thomas and Ely, 1996). Many successful managers are beginning to realize that a more diverse workforce can increase organizational effectiveness by bringing greater access to new segments of the marketplace and by providing opportunities for mutual learning (Thomas and Ely, 1996, p. 79). Agencies that hire minority employees without embracing this value-in-diversity learning paradigm will be unable to benet fully from their employees cultural expertise. Thomas and Ely (1996) identify a number of practices which can facilitate this paradigm shift. Agencies (and other organizations) that wish to realize the benets of employing minority staff need to pursue the following practices: . Widespread acceptance of different perspectives. . Open and explicit discussion regarding the implications of diverse backgrounds. . A realistic recognition of the challenges as well as the learning opportunities that a diverse workforce brings. . A deep commitment to learning from diversity on the part of the entire organization and especially its leaders. Just hiring minority staff is not sufcient to guarantee success. The organizations (advertisers and agencies) that have successfully developed advertisements for minority targets have frequently gone beyond simply acquiring language skills and hiring a culturally diverse workforce (Interviewee 4). Their strategies frequently include ongoing involvement with the communities and target markets through focus groups, participation in cultural events, and other long-term relationship building activities (Interviewee 4). These activities suggest that these successful organizations recognize the importance of learning from diverse groups. Required changes in the clients approach Changes in advertising agencies approaches need to be matched by corresponding changes in the clients approach. The key issues here relate to the process that

advertisers use in selecting an ad agency. The criteria used for agency selection are listed in the order of importance in Table I. Several frameworks for integrating these criteria for selecting an advertising agency have been suggested in the past (Sark and Reynolds, 2005; Harvey and Rupert, 1988). Figure 2, adapted from Sark and Reynolds (2005), includes the general steps recommended in different frameworks. The evaluative criteria above are applied by the advertisers at different stages when choosing an ad agency, as shown below. The rst step, dening the requirements, includes elaborating the needs, time frames, budget and geographical constraints. The short-listing of agencies, step two, is frequently based on past experience and current relationships (Ennew and Hartley, 1996). Where new agencies are considered, resources and reputation may factor heavily into the decision (Sark and Reynolds, 2005). The third step involves assessing the client/agency t in terms of resources, past experience, range of services and reputation. The fourth step is to assess the capabilities of the agency on such criteria as creative skills, research capabilities, efciency in media buying and personnel quality. The fth step involves evaluating the interaction quality to assess the chemistry between the agency and the client. Then nally a choice of agency is made. The choice of agency becomes more complex when the advertiser is targeting minority consumers. Extant research (e.g. Lee et al., 2002; Burgos, 2008; Noriega and Blair, 2008; Butt and de Run, 2010) suggests that minority populations respond more favourably to endorsers, media and messages that are culturally congruent. To facilitate such messaging, agencies need culturally specic skills. For advertisers targeting minority consumers, cultural competency should be a key criterion in agency selection. The need to include target specic experiences in the evaluation criteria for selecting ad agencies was strongly supported by some of the experts interviewed in the current research (Interviewee 3, Interviewee 4). Thus, when the target population includes minorities, the Sark and Reynoldss framework for choosing an agency needs to be modied to include an extra step focused on assessing the agency/target t and include additional evaluation criteria at each step that relate to the specicity of the target population. A modied model is shown in Figure 3. The modied model adds an extra step (step 4) which explicitly addresses the agency/target t in the agency selection process. The t may be assessed based on an agencys experience with the target population, cultural knowledge, and access to cultural networks. Another important criterion is the ability to acquire or conduct research on target populations (Interviewee 4). Since the reach of many minority media outlets is not assessed by the syndicated research companies (Interviewee 3; Interviewee 4), the abilities to evaluate these outlets and conduct small scale primary
1 Defining the requirements 2 Short listing agencies 3 Assessing client/agency fit Resources Experiences Reputation Range of services 4 Assessing capabilities Creative skills Research Media buying Experience Personnel quality 5 Assessing chemistry 6 Final decision

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Needs Time lines Budgets Geography

Past experience Current relationships

Interaction quality

Choose an agency

Source: Adapted from Sark and Reynolds (2005)

Figure 2. The agency selection process

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research are important assets for advertising agencies who target minorities. The modied framework also adds new criteria for several steps (see steps 1, 2, 3, 5 and 6) including evaluating the target-specic needs of the client, agency proximity to the market, and the target-specic experience of personnel. In some cases, some resources and potential services may be less important than target-specic expertise. Discussion and conclusions Census data show that the proportion of minorities in the Canadian and American populations will continue to increase. For marketers, minority segments can represent tremendous buying power, especially in Canada where much of the population growth is fuelled by immigration in the skilled worker category (Statistics Canada, 2010). The lack of representation of minorities in advertising represents an unexploited opportunity for business organizations, especially since research shows that minorities prefer to be spoken to through messages that are culturally congruent (Lee et al., 2002; Burgos, 2008; Noriega and Blair, 2008; Butt and de Run, 2010). In highly competitive markets, a strategy which directs some of the companies resources to directly targeting these minorities with culturally congruent approaches can result in market share and prot margin increases. Advertising agencies have a critical impact on the kind of advertising reaching the marketplace. Given the scope of the opportunity presented by the growth of minorities and their spending power, it is surprising that so few advertising agencies position themselves as specialists in reaching these segments. Institutional theory (DiMaggio and Powell, 1983) and Economic Detour Theory (Stuart, 1940) provide explanations for the slow pace of change thus far in marketers attempts to reect the demographic landscape. Several barriers exist for advertising agencies that do attempt to differentiate themselves, ranging from structural barriers and discriminatory barriers to more process-oriented barriers embedded in the selection mechanisms employed by advertisers choosing an ad agency. The Rational Goal Model (Price, 1972; De Lancer Julnes and Holzer, 2001) suggests that these barriers can be overcome and change can be effected if the outcome of the change is shown to contribute to organizational objectives. The idea that diversity can contribute to organizational objectives has been demonstrated by Thomas and Ely (1996) who note that matching employee and customer demographics can bring added value to the rm and that further benets can accrue when diversity is viewed as an opportunity for organizational learning. The emerging pluralist paradigm can
1 2 3 4 5 6 7

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Defining the requirements

Short listing agencies

Assessing client/agency fit

Assessing agency/ target fit

Assessing capabilities

Assessing chemistry

Final decision

Figure 3. Proposed modication of the agency selection process

Targetspecific needs, time lines, budgets, geography

Past experience, Resources, current relationships, target specific target-specific expertise, focus, reputation, proximity to market range of services

Language, cultural experience, involvement with the target group, access to the target research

Creative skills, research skills, media buying experience, personnel experience with target market, and cultural competencies

Interaction quality with culturally diverse client teams

Assessment of trade-offs, final choice of the agency

contribute to effectiveness (Thomas and Ely, 1996) and therefore represents a rational goal for organizations pursuing market success. To effectively incorporate diversity, however, a paradigm shift needs to occur in advertising agencies and their client organizations. Further, the processes employed to select agencies need to be modied to include criteria specic to minority targets. The research used to develop this modied framework is limited by the small number of informants. Nevertheless, these informants hold key positions in the industry, and each of them supplied data from their organizations proprietary research to support their assertions. The revised agency selection process framework proposed, although grounded in the past research and current study, is essentially preliminary and requires validation by exploring with a selection of industry leaders. Other promising avenues for future research include case studies of specialized advertising agencies and more research on minority consumers responses to mainstream and targeted advertising. The growing population of minorities in many advanced market economies creates opportunities for proactive advertisers to increase market share. At the same time, it creates new business opportunities for advertising agencies that specialize in minority markets. Since these advertising agencies are often staffed by minority group members and often employ minority group members as spokespersons and in other visible roles, advertising that targets minority consumers should enhance minority employment opportunities. Further, given the reach and cultural inuence of advertising, advertising which better reects the diversity of the population may help to support the integration of minorities into the multicultural matrix.
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About the authors Vinita P. Ambwani is a PhD candidate in Management at the Sprott School of Business, Carleton University, Ottawa, Canada. Ms Ambwani has several years of teaching and industry experience. She holds an MBA from Baruch College, CUNY, NY, USA and an MS in Physics from Bhopal University, India. Her current research interests focus on minority and immigrant populations as workers and consumers in host countries. Vinita P. Ambwani is the corresponding author and can be contacted at: vpambwan@connect.carleton.ca

Louise Heslop is Professor of Marketing in the Sprott School of Business, Carleton University. She has published over 100 refereed papers on a variety of topics, including consumer information processing, branding, and advertising and received numerous best paper awards. Lorraine S. Dyke is an Associate Professor of Management and Strategy in the Sprott School of Business at Carleton University. She is also the founder and current Director of the Centre for Research and Education on Women and Work and the Management Development Program for Women at Carleton. Professor Dyke holds an MBA and PhD in Management from Queens University. Her research focuses on careers, the changing workplace, gender and workforce diversity.

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