When Elcid Choi moved to Los Angeles, Calif., in 1998 to start Innovasia, an Asian-American ad agency, the Census 2000 was still on the horizon and corporate interest in minority markets was just beginning to stir.
Meanwhile, at the corporate headquarters of General Motors (GM), in Detroit, Mich., plans were underway to create a Center for Expertise on Diversity (CED), which would bring the company's various campaigns with minority markets under one department. The announcement of the new department finally came last year as waves of information were being released from the Census 2000.
The establishment of the department proves Choi's prescience and uncanny sense of timing. As an outgrowth of the Center for Expertise on Diversity, GM significantly expanded its budding relationship with the ad agency, and recently named Innovasia its agency of record, making it the first Asian-American ad agency to represent all GM brands on a national level.
"We'd had diversity for many years across the company, but this is an unprecedented level of coordination that has never happened before," said Judy Hu, director of CED. "We're really working together to create great power in the marketplace."
In 2000, the automaker hired Innovasia for an advertising campaign aimed at the Chinese and Korean markets in San Francisco. "The response was tremendous," Hu said.
That positive response validates the philosophy of Innovasia ?that niche marketing, particularly to Asian Americans, is a greatly profitable but untapped resource.
Niche Marketing in a Downturn
Innovasia has doubled its revenue every year since its inception three years ago, and now estimates its total billings at approximately $10 million. Surprisingly, Choi said the recession has not made a dent in the company's revenue.
"The current economic conditions demand that marketers take a serious look at niche marketing," Choi said. "It's smart since it allows companies to target specific segments of the population with tailored messaging, which really maximizes the efficiency of marketing dollars."
Hu corroborates Choi's views and points out that Asian Americans are relatively easy to target through specific geographic areas; according to the Census Bureau, 93 percent of Asian Americans live in metropolitan areas.
"You can reach a significant portion of the segment just by going to specific markets," Hu said.
All signs indicate that the downturn may in fact provide just the right climate for niche marketing to flower; for example, spending in Hispanic advertising is on the rise, despite a decline in general market budgets.
Last year, 20 of the top 25 advertisers to Hispanics increased their ad spending, according to Advertising Age. By contrast, 53 of the top 100 advertisers in the general market cut ad spending during the first nine months of 2001, and spending has continued to atrophy since.
GM is receiving an increasing number of requests from its field offices for 'diversity support', because of the dramatic demographic swings throughout the country in the past decade. "People are no longer listening to mainstream advertising," Hu said.
The Next Census Stars?
Corporate America's interest in the Asian-American market is still budding, however. "I think diversity spending is still focused on African Americans and Hispanics," Choi said.
That may be because the stars of the Census stage last year were Hispanics, a group which ballooned to nearly 13 percent of the U.S. population, rivaling the number of African Americans as the largest U.S. minority. Meanwhile, the Asian-American segment is still less than four percent, but is expanding at a faster clip than any other racial group in the United States.
In 2000, ad spending on Asian Americans was estimated at $363 million. In comparison, ad spending on African Americans and Hispanics was $1.5 billion and $2.1 billion, respectively, according Ad Age.
By making a preemptive foray, Choi said companies can "achieve a lot of brand equity" in the largely uncharted Asian-American demographic.
"There's currently a limited number of players in the market," Choi said. "Once it gets going, it's going to be tougher to have a voice or make an impact, because there will be more players."
The entre of the auto industry in Asian-American markets didn't quite open the floodgates of corporate budgets, but Choi said he is beginning to see more interest from across a wider range of industries, including the retail, pharmaceutical and packaged goods sectors.