The road to diverse representation among marketing suppliers may be paved with good intentions, but the reality is it’s still a bumpy ride.
In a recent study, the Association of National Advertisers found that 56% of marketing executives are interested in supporting diverse suppliers. Yet, only 38% of those suppliers report having received increased investment from the marketing or advertising communities in 2022, and 46% believe that investment will increase in 2023.
“The top takeaway is that investment is increasing, but there is still a bit of a gap between investment and interest,” said Bill Duggan, group executive vice president at the ANA. “We look at this as a glass half full.”
For purposes of the study, a diverse supplier is one that is women-, ethnic/minority-, veteran-, LGBTQ+- or disability-owned. Typically, 10% of ad spending is allocated for production, 10% for agency fees and 70% for media spend, Duggan reported. Therefore it’s important for there to be investment with diverse media companies.
The hiring of diverse talent and companies on the production side has been ahead of the curve, per Duggan. However, the largest component — media — is severely lacking. Only 1.85% of all current ad spending goes to diverse-owned media and only 1.2% of current spending goes to diverse-owned and -targeted media, according to the ANA’s Alliance for Inclusive and Multicultural Marketing (AIMM), in partnership with Media Framework and Standard Media Index. AIMM recommends that by 2025, 6.5% of all spending should go to diverse-owned media and 4.6% to diverse-owned and -targeted media.
That’s a large gap to fill in just two years, particularly when the new report suggests many advertisers are “sitting on the sidelines” because, while they are interested in doing something, they don’t know where to begin. This is especially true among those companies that rank just below the giants.
“There are big companies that have made notable investments in supplier diversity,” Duggan said, pointing to initiatives from P&G and General Motors. “But there are other companies that are punching below their weight and could be doing more.”
That sentiment is especially true when it comes to media suppliers. The general message from marketers is that there’s not enough inventory — or not enough quality inventory — to justify the investments in diverse media. As a remedy, Duggan suggested marketers lean in a bit more to create programs that are mutually beneficial.
“It might not just be a media buy; it could include a content partnership or other activation,” he said. “It’s important for advertisers to build direct relationships with these media companies.”
Getting to work
On the other side of the equation, suppliers should develop more evidence that the investment in their businesses will produce the requisite returns.
“I think it would help if there were more case studies that diverse suppliers would show to demonstrate the successes of these programs,” Duggan said.
It’s important to keep in mind that success may not take the same form as what marketers are used to.
“Marketers are used to certain metrics with traditional media — like CPM and reach — and these may not be the best metrics for diverse media measurement,” Duggan said.
Among the suppliers surveyed, the challenges they cited included getting their foot in the door with the national advertisers and agencies, negotiating the extended payment terms required by some advertisers and agencies (which many diverse suppliers can’t afford) as well as a lack of feedback when they don’t get the business.
Still, the onus for improvement is on the marketers, who have the money, the control and the clout to do something, Duggan insisted.
“The industry has work to do,” he said.
Making a commitment
Perhaps the biggest challenge is demonstrating a commitment to diversity. Among the suppliers surveyed, 76% cited a lack of leadership support for working with diverse suppliers as a barrier. Similar numbers noted that many advertisers and agencies have identified opportunities to bring diverse suppliers into their marketing/advertising supply chain (76%), as well as an overall lack of understanding of the value of using diverse suppliers (74%).
To address those latter two points, Duggan noted the ANA has developed several surveys, studies and white papers analyzing diversity in the supplier network, including the recently concluded “Diverse Media GrowthFronts,” a certified list of diverse suppliers and instructional guidelines designed to help marketers partner with diverse media suppliers.
Without a doubt, the most important impetus for change is the need for it to become a publicly avowed company priority, per Duggan.
“When you declare your intention to work with diverse suppliers publicly, you’re declaring it to your employees and other important constituents,” he said. “You also need an internal champion [for diversity] to make it work.”
Ultimately, Duggan insists the intention to improve is there, as is the data underscoring that diversity is the way of the future, and those who don’t get on board will be left behind.
“Companies can see where the population demographics are going, and they want to have supply chains and suppliers that mirror and reflect their customer base and the country,” Duggan said.
Correction: This article has been updated to reflect how ad spend is generally allocated. A previous version incorrectly assigned the breakdown to diverse suppliers.