The Cross-Cultural Report

The Cross-Cultural Report

Jeffrey Bowman Cross-Cultural Practice Lead Ogilvy Cross-Cultural Practice

Contents

Introduction 2

Contributors 4

The changes roiling the industry 6 Ogilvy & Mather’s new approach: Cross-Cultural rather than General Market or Multicultural 17

“How does the Cross-Cultural model increase the value of my brand?” 21

Releasing the value of a Cross-Cultural brand 30

About the author 34

References 36

Introduction

3

If you’ve paid even the slightest attention to popular culture in the last couple of years, you’re well aware of the television phenomenon Mad Men, a show about a fictional advertising agency set 50 years in the past. The story, of course, fills in the timeline of America throughout the 1960s via one set of highly creative (if also exceedingly hedonistic) ad men and the campaigns they create. There’s a rich irony to this. At precisely the time when America is besotted with its past, the future is threatening to run away from us. Over the last decade, both in the United States and globally, the advertising industry and marketplace have radically changed. Digital is the norm, social media is changing the way we reach and have conversations with consumers, and agencies are turning toward the emerging markets — Brazil, Russia, India, China — many believe will be the engines of global growth for years to come.

At Ogilvy & Mather, we too foresee a bright future for those fast-growing economies. But we’re equally excited about business right here at home. Ogilvy & Mather sees a tremendous domestic opportunity — one that doesn’t depend on uncontrollable macro-economic factors or a zero-sum game among advertising combatants. Instead, we see a whole host of demographic changes in the United States that add up to a fundamental repositioning of what we call the general market — and that present compelling new possibilities for growth. We call this new mass market “The New General Market” (TNGM).

We’ve arrived at this important moment motivated by two factors. The first, as we explain below, is that outside forces are fundamentally changing the advertising world. The way Don Draper and his Mad Men cohorts did business is surprisingly similar, in some respects, to how present-day advertising is conducted — and that model is dangerously antiquated. The good news is that we’re ideally positioned to take advantage of a tidal wave of change: Ogilvy & Mather has emerged from the global economic downturn in robust health. That leads us to the second reason for overhauling our model: We continually rethink the way we do things because we are Ogilvy & Mather. In the year of our founder’s 101st birthday, we believe it’s important to reengage with some of David Ogilvy’s most enduring ideas. Specifically, we are driven by what David called “Divine Discontent.” There is no

“good enough,” this idea says. There is always a chance to improve.

We have happened upon a major shift in the way we perceive and market to our clients’ cherished customers. In the following pages we explain this shift and the manner in which we need to respond to it. The stakes are high. It’s no exaggeration to say that this is a change-or-die moment for many players in our industry. We believe that with this blueprint we are poised to prosper rather than perish. And we believe that David, who had great respect for the consumer and a deeply held belief in constant adaptation, would have approved.

Contributors

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Ashley Mackel

Asten Morgan, Vibe Lifestyle Network

Brickson Diamond, founder, Blackhouse Foundation

Caroline Washington

CarolLyn Colon

Christine Villanueva

Deborah Balme

Dolly Turner and Felicia Walker Benson, NorthStar Group: Jones Magazine

Donna Pedro

Enrique Urquiola

Erin Goldson

Felipe Korzenny, PhD, coauthor of Hispanic Marketing: A Cultural Perspective

Jeremy Katz

John Seifert

Kathy Whitlock, Univision

Ogilvy & Mather’s Professional Networks — Administrative Professional Network, Black Diaspora, LatinRED, Ogilvy Pride, RedLotus, Women’s Leadership, Working Parents Network, Young Professional Network

Peter Francese, founder and publisher of American Demographics Magazine

Rebecca Clayton

Sacha Xavier

Sidra Smith, Gate Pass Entertainment

Willow Gross

The changes roiling the industry

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The agency model is old

If you watch Mad Men, you may be struck by one remarkable truth: Despite the outdated social mores — the rampant daytime drinking and womanizing, the blue haze of cigarette smoke drifting through the office — the fictional characters of Sterling Cooper Draper Pryce still divide up the marketplace the same way we do. A bit of history: The first ad agency catering to the general market opened in 1843. A pioneering ethnic agency came onto the scene in 1956, creating the segmented structure to this day. The advertising industry still divides itself into general market agencies (GMAs) and multicultural agencies (MCAs), and our clients generally adhere to this model.

What’s so different, and is this a problem?

We’ll put it plainly: The bedrock industry practice of marketing to either general or ethnic markets has remained unchanged since the Eisenhower administration. This model has left us seriously out of step with the starkly altered demographics of the United States in 2012. The American population has changed profoundly and will continue to evolve in the years ahead. In fact, as these demographic changes grow in magnitude, the whole notion of what constitutes a minority must surely change.

Parts of our model have, in fact, morphed to reflect America’s dramatically shifting demographics. Our business offerings now reflect the importance of Hispanics, Blacks, and Asian Americans and the Lesbian, Gay, Bisexual and Transgender (LGBT) community. However, as these segments have ballooned, the desire among clients for MCA services has grown as well, and agencies more specifically focused on those markets have often been better positioned to meet those needs.

But let there be no mistake: As the populations and spending power of minority consumers continue to grow, the model that divides business between general market and MCAs is

Note: The population was divided into five ethnic segments — White, Black, American Indian/Aleut Eskimo, Asian American or Pacific Islander, and other races — until March 1989. Beginning with the 2000 census, Hispanic status was added to census forms, in recognition of the fact that Hispanics may be of any race. Thus, while it is now possible to ascertain exact percentages of non-Hispanic minorities, pre-2000 figures do not allow this distinction.

Demographic 1980

White 83.1%Black 11.7%Asian American 1.5%Hispanic 6.4%

2010

White 68.0%Black 12.6%Asian American 4.8%Hispanic 13.9%

Point Change

White -15.1Black +0.9Asian American +3.3Hispanic +7.4

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increasingly obsolete. If you listen in on the whispered conversations in client meeting rooms and agency huddles, you’ll hear people questioning the viability of this 60-year- old structure.

And for good reason. In a recent survey, we asked chief marketing officers, executive vice presidents and directors of marketing a few questions about their level of satisfaction with both the GMAs and MCAs with which they have worked. We found they were satisfied with neither — primarily because of the agencies’ inability to deliver integrated communications across the two platforms.

Question: On a scale of 1 to 5, with 5 being the highest, how would you rate your general market advertising and/or marketing agency?

We asked the same executives about their multicultural advertising and/or marketing agency.

Moreover, clients are frustrated that they have to endure multiple and seemingly redundant meetings and billings in order to solve a single problem: how to build the brand. And that effort isn’t always translating into the proper execution. Clients have responded to the tremendous growth of the Hispanic market by shifting more of their budgets to focus on that audience; despite this trend, however, measured media spend for that population actually decreased from 2008 to 2009 by nearly 5%.

Spanish-Language Media Spend (in millions)

Q3 ’08 – Q2 ’09 Q3 ’07 – Q2 ’08 Point Change

Network and Cable TV $3,199.0 $3,265.8 -2.0%Spot TV $1,521.1 $1,753.3 -13.2%Spot Radio $569.0 $586.8 -3.0%National Magazines $146.7 $177.9 -17.5%Local Newspapers $88.6 $111.3 -20.3%

Total $5,524.5 $5,895.0 -6.3%

The most common comments were “Did not bring real breakthrough ideas,” “Too tied to the process and politics” and “Did not drive things across channels to create a holistic, surround approach or really activate the idea.” Another was “Limited creative thinking; watered-down messaging to appeal to mass audiences.”

1 Rating: 7.1%2 Rating: 21.4%3 Rating: 42.9%4 Rating: 28.6%5 Rating: 0.0%

Most respondents did not have an MCA of record and instead used one on a project-by-project basis. One comment was “Only focused on Hispanic market with same/similar messaging as general market. Not truly differentiated to meet the true needs of this target.”

1 Rating: 50.0%2 Rating: 14.3%3 Rating: 28.6%4 Rating: 0.0%5 Rating: 7.1%

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The Black community saw even more of a disparity: Media spend for that market is down by more than 7%.

This has left brands with a dearth of culturally relevant communications for various communities, and the current agency model is not flexible enough to address the problem. In theory, GMAs speak to nearly 70% of the marketplace, and MCAs cover the remaining 30%. In practice, overall media spend for the United States is tilted steeply toward the general market: The media buy for that segment chews up 93% of a $117B industry. So, not only is the system clunky and frustrating for clients, it’s also increasingly ill-suited to the task at hand. In a multihued nation, the advertising business looks alarmingly monochrome. As presently structured, everybody loses. Clients reach only part of their audience. Advertisers and marketers fall short of their benchmarks. The good news is that all of this is avoidable, if we begin targeting The New General Market.

Target markets have changed

Given the dissatisfaction with — and obvious shortcomings of — the GMA and MCA model, it’s difficult to fathom how the old ways have continued to endure. There are valid reasons for the longevity of the status quo: Many GMAs have limited experience and skill in the multicultural space, and each type of agency naturally tends to feel protective of its own position. But there is one undeniable truth we can no longer ignore: A new general market

Black Media Spend (in millions)

Q3 ’08 – Q2 ’09 Q3 ’07 – Q2 ’08 Point Change

Spot Radio $794.1 $851.4 -6.7%Cable TV $529.0 $495.7 6.7%National Magazines $452.0 $578.2 -21.8%Syndicated TV $45.2 $88.1 -48.7%Network TV $27.3 $31.5 -13.3%

Total $1,847.6 $2,044.9 -9.6%

% of World Population by Age

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0% 0-24 25-49 50-74 75-100+

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is forcing change in the advertising world, whether we’re ready for it or not. We are in the midst of one of the largest shifts in population and purchasing behavior in our nation’s history. It’s time to adapt.

OgilvyCULTURE introduced The New General Market in 2010 to create a distinction between the old general market and multicultural advertising model and the new cross-cultural model we built. The New General Market recognizes the altered global demographics created by burgeoning populations of youths, of members of religions outside the Judeo-Christian tradition, and of women. Within the United States, as we’ve mentioned, the changes in demographics are just as compelling. According to 2010 census data, we have a population that looks remarkably different than it did 30 years ago. Here in the United States, The New General Market includes the Hispanic, Black, Asian American and LGBT audiences, which make up a combined purchasing demographic superpower that now constitutes more than 40% of the population.

It is important to understand not only the demographic changes but also where those changes have taken place. Below is a look at how the demographics have changed in the United States since the 1980 census was completed.

US Race & Ethnicity

Population (in millions) Percentage of Total Population

65%

16%

12%

4%

1%

White

Hispanic

Black

Asian American

Multiracial

Other

200.2

50.0

37.6

13.6

4.8

2.8

0 50 100 150 200

2%

White Hispanic Black Asian American Multiracial Other

1980 Census, Hispanics 2010 Census, Hispanics

52%

21%

8%

19%

42%

36%

8%

14%

West South Midwest Northeast

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Starting with that census, Hispanics began to post record population gains. Growth in the Black community has been less dramatic, but that market has shifted in terms of geographic density.

When we analyzed the numbers state by state to compare the changes, the facts were arresting. More than 50% of the people now living in California and Texas are firmly in The New General Market. These are our two largest states in terms of population, and their impact on elections, retail and education, as well as on media and advertising spend, should not be underestimated.

We were also struck by The New General Market’s prevalence in America’s top 10 most populous cities. In each of the 10, the combined populations of Hispanics, Blacks and Asian Americans account for at least 50% of the city’s total population. The New General Market accounts for more than 60% of the population in five of these cities, and in three — Houston, San Antonio and Dallas — it comprises 70% or more of the residents.

2010 Census, Top 10 States

Rank State % Hispanic % Black % Asian American % TNGM 1 CA 38 6 13 56 2 TX 38 12 4 53 3 NY 18 14 7 39 4 FL 23 15 2 40 5 IL 16 14 5 35 6 PA 6 11 9 19 7 OH 3 12 2 17 8 MI 4 14 2 21 9 GA 9 30 9 42 10 NC 8 21 2 32

1980 Census, Blacks 2010 Census, Blacks

West South Midwest Northeast

9%

17%

18%

56%

12%

23%

21%

44%

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We’re not necessarily surprised by these massive demographic changes — but we are somewhat taken aback by the speed with which they have occurred, given that most predictions estimated they wouldn’t happen until 2050.

These shifts should fundamentally alter our approach to the marketplace. As an agency, we can no longer afford to be put into a traditional general market box if we want to be able to deliver relevant and effective communications and meet all of our clients’ needs. In order to serve The New General Market in the United States, the marketing communications industry must change its service model, starting with the hiring of a workforce that mirrors The New General Market.

What do these changes mean to advertising?

In order to effectively speak in a relevant way to The New General Market, we need to understand more than just the raw numbers. We must also fully grasp the changing purchasing behavior of The New General Market. After all, the combined spending power of Hispanics, Blacks, Asian Americans and multiracial American communities is larger than the GDP of many global markets like Brazil, India, Spain, Russia, Australia and Argentina.

2010 Census, Top US Cities

Rank City State % Hispanic % Black % Asian American % TNGM 1 New York NY 29 23 13 64 2 Los Angeles CA 49 9 11 69 3 Chicago IL 29 32 5 67 4 Houston TX 44 23 6 73 5 Philadelphia PA 12 42 6 61 6 Phoenix AZ 41 6 3 50 7 San Antonio TX 63 6 2 72 8 San Diego CA 29 6 16 51 9 Dallas TX 42 25 3 70 10 San Jose CA 33 3 32 68

1990 2000 2010 Projected

Multicultural Buying Power 1990–2015 (in billions of dollars)

1,600

1,400

1,200

1,000

800

600

400

200

0

Hispanic Black Asian American Multiracial

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Looking closer, we are faced with an even more surprising realization. On a per-household basis, The New General Market outspent what’s considered to be the general market today in most categories. While this makes sense once you think about it — all of the so-called minorities combined now add up to a majority — the sheer size of the market is sobering.

Clients are grasping the significance of this, particularly in the retail/shopper space, where customer experience is a fast-growing area of interest. Unlike with traditional marketing communications via television, radio and print, advertisers can improvise a retail display-and-search model and test its relevance in real time. Today’s retailers see firsthand the effects of shopper marketing and can gauge whether their stores and customer experiences are speaking to the audiences they serve.

Through the use of heat maps, some retailers and marketers are taking a precise approach to The New General Market. The maps below illustrate where the most dynamic changes are occurring across the United States.

US Average Annual Expenditure Spending: White vs. Hispanic, Black and Asian American (in dollars)

Categories White TNGM Difference

Transportation 8,172 21,242 13,070Food 5,488 18,183 12,695Insurance & Pensions 4,247 14,897 10,650Apparel 1,642 5,907 4,265Healthcare 2,588 5,829 3,241Entertainment 2,220 5,338 3,118Education 791 3,625 2,834Personal Care Products 536 1,625 1,089Furniture 427 906 479Alcohol 425 818 393Laundry & Cleaning Supplies 133 448 315

Hispanic Population Density 2010 Black Population Density 2010

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Media and The New General Market

America’s sweeping demographic shifts will have an effect far beyond just the shopper experience. For our purposes, the coming transformations in media and content hold the most intense interest.

To understand the impact of demographic shifts, we must first understand spending patterns past and present and use that knowledge to project how media will change.

In addition to analyzing demographics in the nation’s largest cities, we analyzed the designated market areas (DMAs) that most media buying agencies use for targeting. The results were even more compelling. In nine of the 10 largest DMAs, The New General Market already comprises more than 50% of the population. The remaining DMA — Boston — is at 49%. It’s no wonder brands are scrambling to target their messages to The New General Market.

To amplify this data, OgilvyCULTURE met with the industry’s top media and content partners and formed an alliance aimed at examining best practices and emerging offerings for The New General Market. One factor stood out above all else — the impact of these new demographics on technology, particularly on mobile and social media.

Asian American Population Density 2010

2010 DMA City % TNGM

1 New York New York 64 2 Los Angeles Los Angeles 69 3 Chicago Chicago 67 4 Philadelphia Philadelphia 61 5 Dallas-Fort Worth Dallas-Fort Worth 70 6 San Francisco- San Francisco- 56 Oakland-San Jose Oakland-San Jose 54/69 7 Boston Boston 49 8 Atlanta Atlanta 62 9 Washington DC Washington DC 63 10 Houston Houston 73

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Advertisers and clients rightly look to digital as a way to create targeted and effective communication. As the technology space formed in the 1990s, a digital divide emerged between the general market and several minority groups. People in the general market tended to have better connections to the Internet and greater access to email, and therefore spent significantly more time online.

This disparity persists in traditional Internet use, but has been erased in the realms of mobile and social media. The New General Market not only has caught up, but is in fact now the driver of change in technology — one of the forces now shaping our culture. A study con- ducted by eMarketer found that nearly half of Black and Hispanic consumers reported having used a mobile device in 2009, versus 28% of Whites. A study by Pew Research also shows that high mobile usage among minorities is not limited to online content. Black and Hispanic users were more likely than Whites to participate in every mobile activity, from sending and receiving text messages to taking pictures to playing games and accessing email.

Mobile and smartphones are now in the vanguard of the new advertising frontier. Advertisers and marketers are looking to develop relevant content for The New General Market, paying special attention to foreign-language sports, entertainment and lifestyle content for Hispanic users.

US Internet Use by Ethnicity

Ethnicity 2009 2010 2011White (non-Hispanic) 71.5% 70.7% 70.9%Black 11.5% 11.8% 11.8%Hispanic 10.9% 11.2% 11.6%Asian American 6.1% 6.3% 6.5%Other 1.3% 1.3% 1.3%

Mobile Content Used by US Mobile Device Owners by Ethnicity, March–April 2009 (% of Respondents in Each Group)

Response White Black HispanicSend/Receive Text 40% 47% 59%Take a Photo 15% 22% 41%Play a Game 7% 12% 16%Send/Receive Email 13% 16% 21%Access Internet 12% 21% 23%Record a Video 2% 7% 8%Play Music 6% 23% 14%Send/Receive IM 6% 22% 14%Get Map/Directions 3% 4% 5%Watch Videos 2% 3% 5%Did One of These 50% 58% 70%

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But television remains the king of all media, whether it’s in the form of traditional digital black box viewing or online via Hulu®, YouTube® or one of the other streaming services now available. One audience in particular leads all ethnic groups when it comes to television viewing: According to Nielsen, Blacks between the ages of 18 and 49 clock in at a whopping 7 hours and 12 minutes a day. That’s more than 2 hours per day above the national rate of 5 hours and 11 minutes and nearly 4 hours more than Asian Americans watch (3 hours and 14 minutes). In other words, The New General Market can be reached online, but not through a traditional PC. The best way to connect with them is via the most traditional channel, the television.

Ogilvy & Mather’s new approach: Cross-Cultural rather than General Market or Multicultural

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The segment shifts we saw in conjunction with our aging agency model led us to reevaluate whether Ogilvy & Mather is increasingly trying to fit a square peg into a round hole. And this led us to consider how to position the agency for the next 50 years. We realized the question of GMA versus MCA is moot. The answer today is neither.

If we examine why we believe the agency model is broken, we can see that it’s partly because of the way agencies and clients began to cheat at gathering insights.

A bit more background: Prior to the 1980 census, the industry was comprised of GMAs and Black agencies — both of which were knowledgeable about their segments and thus successful. Once the 1980 census correctly predicted the ascendancy of the Hispanic population, the marketing budgets began to follow.

This fully took hold after the 1990 census. The 1990s, of course, saw the introduction of digital, which cut even deeper into most US brands’ already shrinking budgets for the Black segment. By the end of the decade, the line item for Black marketing had fully vanished into the general market box. This begs the question as to whether brands and agencies are properly structured and planning correctly for The New General Market.

GENERAL MARKET

CONSUMER INSIGHT

HISPANICS

CONSUMER INSIGHT

GENERAL MARKET

CONSUMER INSIGHT

HISPANICS

CONSUMER INSIGHT

BLACKS

CONSUMER INSIGHT

19

When it comes to budgeting, most brands today consider only two audiences: General Market and Hispanics. We believe this approach fails to deliver insights that are culturally relevant across all segments (White, Black, Hispanic, Asian American and LGBT).

The new approach that Ogilvy & Mather is pursuing is cross-cultural. This new way of doing business enables us to mine both the general and various multicultural markets for insights, wants and needs.

Better targeting and service delivery

In today’s advertising world, clients can face a dizzying array of ideas and input. Suppose they aspire to build their brand with five audience segments. To handle this work, they might have five different agencies creating research projects and creative briefs and executing five distinct marketing plans — all for a single brand problem.

GENERAL MARKET

CONSUMER INSIGHT

LGBTs

CONSUMER INSIGHT

ASIAN AMERICANS

CONSUMER INSIGHT

HISPANICS

CONSUMER INSIGHT

BLACKS

CONSUMER INSIGHT

General Market and Multicultural Marketing

Ethnic-based planning budget

Multiple creative strategies

Siloed measurement

Cross-Cultural Marketing

Total market budget

Comprehensive creative strategy

Integrated measurement

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By contrast, our new cross-cultural marketing positioning enables an examination of the “old” general market and newly relevant Hispanic, Black, Asian American and LGBT audiences. This model will serve as a bridge between all marketplaces, leading not only to a more streamlined business but also to better targeting and product/service positioning.

More relevant and effective advertising and communications

Knowing that The New General Market will only continue to grow, we will be ideally poised to incorporate cross-cultural components when serving our clients. By incorporat-ing broader research and findings, we can generate creative briefs that are more informed and that firmly move Ogilvy & Mather out of the general market box and into one labeled

“total market.” Then we can measure our impact across all stages of the customer journey as well as across all consumer segments. Clients can focus on a comprehensive strategy that feels much more integrated and holistic.

Establishing the cross-cultural strategy requires significant investment and structural change for both clients and the agency. The responsibility for adapting this approach does not reside only within planning, creative, account and senior leadership; rather, it requires internal embedding and talent acquisition, development and retention as well as retooled day-to-day practices. Today we can deploy the cross-cultural strategy because of our talent, value proposition and partners. The payback for making this commitment promises to be profound: Moving forward, we will be able to offer clients the opportunity to understand the cross-cultural value of their brand and the methodologies for maximizing that value.

BLACKS ASIAN AMERICANS

GENERAL MARKET

COMMUNICATIONS PLATFORM

THE BUSINESS & CULTURAL INSIGHTS

HISPANICS LGBTs

CROSS-CULTURAL STRATEGY

“How does the Cross-Cultural model increase the value of my brand?”

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Taking a page out of David A. Aaker’s book published in 1991, Managing Brand Equity, we’ve developed strategic territories for how brands increase their brand value with The New General Market (See page 25). We asked ourselves two questions: What defines brand equity? How can brands increase their value?

The question we pose to clients and brands today is: If the demographic landscape has changed or the customers who have traditionally purchased products have changed or are changing as we have demonstrated in previous chapters, what is the new way of building brand equity and increasing a brand’s value?

Over the last year we’ve been refining what we believe to be the future of building a brand and a consumer relationship, and measuring the relevancy of The New General Market.

OgilvyCULTURE’s five key strategic territories

In order to develop our cross-cultural offering, we interviewed key clients and stakeholders in both the current general market and multicultural spaces and augmented those findings with desk research on the different ways brands are now targeting multicultural audiences. We found our research complicated by the shifting boundaries between the general and the multicultural markets. The clients we interviewed found it difficult to pinpoint a transition point between their efforts to serve the two audiences.

We analyzed the ways in which more than 100 brands were marketed to Hispanic, Black, Asian American and LGBT audiences separately. We eventually identified certain patterns that we refined into five key strategies:

Cultural Community™Cultural Currency™Cultural Authenticity™Cultural Confluence™The Cultural Loop™

While we sought to avoid oversimplifying more than 40 years of multicultural and general market executions, we needed a structured way of looking at how brands increase relevancy and equity measures over time. These five elements create that framework. Faced with today’s rapidly morphing landscape, in which brands are learning to engage socially and through new and emerging channels, we’re still working out how to deploy these tactics as part of a broad-based cross-cultural strategy funneled through various channels and touch points along the customer journey.

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The Cross-Cultural Strategic Territory Framework for Building Brand Relevancy and Equity

The New General Market Strategic Territories for Building Brand Equity

Cultural Authenticity

• Medium to high brand investment

• Usually unique and authentic value proposition

• Brand with high relevancy and low equity or vice versa

• Requires deep levels of consumer commitment from heavy users of the brand

• Usually results in attracting new users and loyal repeat purchasers

Provides Value to Firm by Enhancing:

• Efficiency and Effectiveness of Marketing Investment

• Brand Affinity

• Prices/Margins

• Brand Association

• Trade Leverage

• Competitive Advantage

The Cultural Loop

• Medium to high brand investment

• Purpose-driven brand building for The New General Market specific to the Hispanic, Black, Asian American and LGBT segments

• Builds high brand relevancy and equity measures

• Establishes a deep relationship with the segments and usually delivers brand loyalty

Cultural Currency

• Low to medium brand investment

• Brand with low relevancy and equity measures

• Borrowing equity from an established brand/talent that has a relationship or trust with the segments

• Brands receive immediate awareness and consideration but do not establish high barriers to entry from the competition

Provides Value to Customer by Enhancing Customer’s:

• Relationship/Processing of Benefits

• Confidence in the Purchase Decision

• Product/Brand Satisfaction

Cultural Confluence

• Heavy investment to build the brand across all segments

• Usually the brand has high equity and relevancy measures within one key segment

• The brand has a unique and ownable value proposition

• Results in significant trial and usage, usually creating a larger loyal base of consumers

Cultural Community

• Heavy brand investment

• Brands with low relevancy and equity measures within the segments

• Long-term commitment and no “in and out” investments with the product or event

• Once the brand is established, provides high barriers to entry from the competition

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cultural community™

Participating in long-standing community-based cultural events and programs

Within many ethnic segments, people often strongly identify with community-based events that celebrate a shared identity and carry cultural value down from generation to generation. Take, for example, Calle Ocho, a street party staged by Miami’s sizable Cuban American population; or the ESSENCE Music Festival, held annually in New Orleans and widely attended by Blacks.

These “for the community, by the community” events have traditionally served to strengthen the fabric of cultural communities, bringing extended families and friends together around a common celebration to reinforce identity. For some brands, this is an opportunity to introduce the brand to the community. For others, it’s a means of reinforcing their long-standing support. Either way, the barriers to entry are usually low, opening the door to the longer process of embedding the brand in community culture.

Caters well to :

Brands with low relevancy and low equity measures.

Risk/reward:

Depending on a brand’s levels of engagement — from, say, a sponsorship on the one hand, to dedication of human resources and other forms of more tangible participation on the other — it runs an expected risk of low initial payoff. Buying sponsorship rights will not likely translate into deep affinity for the brand, at least in the short term.

When brands invest time and resources, the benefits are often rewarding. The Cultural Community approach requires a long-term commitment; it’s the equivalent of the residents of a tight-knit ethnic segment inviting the brands into their homes and offering them the chance to prove they want a relationship.

For those brands that invest in the Cultural Community approach over time, the rewards can be substantial. Demonstrating a commitment to a community’s shared culture signals that the brand cares and is here to stay. The community’s younger members grow up with the brand and see it as an ally — a friendly entity that’s investing in them personally. Long-term brand loyalty often emerges as older generations endorse the products and services they introduce to their progeny.

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Calle OchoCalle Ocho started in 1978 as a way to showcase Cuban culture in Miami. Today over one million people come from all over the world to attend this street party, which is covered by press and major networks and sponsored by many top brands. Calle Ocho is renowned for its music, with top Hispanic acts performing during the weekend festival.

ESSENCE Music FestivalFor three days hundreds of thousands gather for concerts and community-based events in New Orleans. The 2012 ESSENCE Music Festival, presented by Coca-Cola, drove more than 422,000 guests to the city. According to Michelle Ebanks, President of Essence Communications Inc., “The ESSENCE Music Festival is the ultimate destination for entertainment and inspiration as we gather together to celebrate culture and connect to our com-munity with some of the hottest names in music and entertainment.” Now in its 18th year, The ESSENCE Music Festival is the nation’s definitive African-American live music and cultural experience.

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cultural currency™

A partnership with talent or a prominent figure within the community

Sometimes, affinity by association helps. Prominent figures act not only as cultural icons, but also as cultural gatekeepers. Brands that build associations/partnerships with talent who’s built up cultural cachet and influence with a segment are borrowing cultural equity to better reach and connect with that segment of consumers.

The most frequently used model is that of brands that engage talent (entertainment) that “identifies with” a particular segment and has special authority to speak on its behalf. Segments look to such brands for signals on what to trust (and brands to avoid) — a quasi – litmus test of trust.

Caters well to:

Brands with low relevancy and low/medium equity measures.

Risk/reward:

As with Cultural Community, the Cultural Currency approach can serve as a needed introduction between a brand and a community — a point of entry to establish an audience. Instead of a community-based event, the channel for a relationship is through brand asso- ciation via talent. Additionally, by borrowing cultural equity, brands may reap a particular seal of approval — the equivalent of a reference from a well-trusted source.

But “quick entry” should not be conflated with “low risk.” Partnering through brand association always carries inherit risk. Through association, the brand’s equity relies, at least partially, on the equity of the talent. Should the talent lose his or her standing in the community, so too might the brand.

Cîroc VodkaAfter Diageo partnered with Sean

“Diddy” Combs, the brand grew 552% from 2007 to 2010, replacing Belvedere as the second-ranked vodka in the

“ultra-premium” category.

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cultural authenticity™

Connecting with The New General Market based on insights driven inward (multicultural) to outward (general market), or vice versa

Most often, brands are practiced at connecting to a “general market” audience — one with which they’re familiar — but face the challenge of building relevance with a specific multicultural audience. As opposed to making an introduction (say, through an event sponsorship), the Cultural Authenticity approach is a process of “getting to know you.” Brands develop authentic relationships through the process of uncovering and utilizing relevant cultural insights.

The best examples come from brands that use an insight most relevant to a particular community. Distilling cultural insights requires heavy lifting by research, influencing everything from product/service development to communications. Ultimately, the approach calls for a high degree of insight and a dedication to reflecting that insight in the marketplace.

Caters well to:

Brands with high relevancy and low equity measures, or vice versa.

Risk/reward:

Using Cultural Authenticity requires deep levels of understanding and commitment. The best examples come from brands that, in their own way, create an organic bond with the community. This requires a heavy investment in research or innovation during the product development cycle, with the particular audience in mind. Sometimes brands simply get it right from the beginning due to a deep cultural understanding of the total market. But in general, Cultural Authenticity is not an easy tactic to execute because it requires a powerful cultural insight rolled out in a holistic manner. The brands, in effect, become natural extensions of the community. Brands that are successful at executing this strategy often enjoy a long and profitable tenure with high barriers to category entry.

Honey Bunches of Oats80% of Hispanics, regardless of fluency, want bilingual packaging. The Honey Bunches of Oats “Think Positive” campaign marks the first time the company has implemented a bilingual pack promotion.

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cultural confluence™

Turning a segment’s cultural values into attributes relevant to what’s considered the general market

When we reference Cultural Confluence, people sometimes think we’re suggesting meshing or “watering down” the brand, thereby costing the brand its authenticity. This is far from the truth. This cross-cultural approach is more accurately defined as taking a holistic approach to the total marketplace.

Caters well to:

Brands with medium to high relevancy and/or medium to high equity measures.

Usually brands that are successful at this tactic have a high degree of initial trial and usage measures and get a high degree of repeat usage.

Risk/reward:

This tactic helps brands increase loyalty among a larger base of consumers and establish higher barriers to entry for competitors. We believe that as we continue to explore the impact of The New General Market, we will begin to see more Cultural Confluence.

Red Rooster After a celebrated run as executive chef at Aquavit Restaurant, the Ethiopia-born Marcus Samuelsson has built Red Rooster, critically heralded and reflective of Harlem’s many cultures. The restaurant was named after the legendary Harlem speakeasy that was located at 138th Street and 7th Avenue, where neighborhood folk, jazz greats, authors, politicians and some of the most noteworthy figures of the 20th century — such as Adam Clayton Powell Jr., Nat King Cole and James Baldwin — would converge to enjoy drinks and music in an inviting atmosphere.

Since opening, it has attracted a world of patrons. Red Rooster has hosted everyone from the president of the United States to Halle Berry. Red Rooster has embraced today’s Harlem with that same spirit of inclusiveness and community from its past and present.

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the cultural loop™

Linking a brand with a social cause or purpose

Purpose-driven brands — those brands that put their capabilities to use in service of a pressing social problem — are sometimes neglected within the context of multicultural marketing. And yet research definitively points toward the conclusion that multi- cultural segments respond to and support those brands that address relevant social issues — often more so than the general market.

“Social issues” is a broad umbrella, from sustainability to health to education, and much in between. The Cultural Loop poses the question: What issues are most important to the community, and how can brands go beyond business as usual to address them? This approach, broadly speaking, is about responding to what matters by playing a con- structive role in cultural communities.

Caters well to:

Brands with high relevancy and equity measures.

Risk/reward:

Research suggests that affinity and loyalty increase for those brands that effectively go beyond business as usual. For cultural communities in particular, The Cultural Loop can work toward building trust, demonstrating the brand’s commitment to “what matters” and conviction to do what’s best for the audience it serves.

However, good intentions are not enough. Social issues must be relevant both to the community and to a brand’s own capabilities. Putting resources behind a certain social issue that the brand has little license to address will likely hit a note of dissonance and risk inauthenticity.

Black Girls Rock!Black Girls Rock! Inc. is a nonprofit youth empower- ment and mentoring organization established to promote the arts for young women of color, as well as to encourage dialogue and analysis of the ways women of color are portrayed in the media. Black Girls Rock! offers unique programs that range from DJ academies to cuisine tasting. The organization has also established an awards show on BET, which was extremely successful in its inaugural year.

b condomsb condoms focuses on bettering sexual health practices among four main target audiences: Blacks, Hispanics, 50 and over, and gay and bisexual males. b condoms reinvests a portion of its profits in organizations across the country that support sexually transmitted disease education and prevention in the most affected areas.

Releasing the value of a Cross-Cultural brand

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The term “cross-cultural marketing” dates back to the 1930s, but circumstances did not converge in a way that allowed the advertising industry to fully embrace the concept until now. Because of global and domestic demographic shifts, a cross-cultural approach is suddenly essential in terms of analyzing the changing consumer and gaining deeper insights into The New General Market. With current technology allowing us to better target within this evolving audience, we will be poised to meet the demand for effective advertising and produce a greater ROI.

Below is a case study that demonstrates how we solved a client’s total market communica-tions and business opportunity.

Case study: A total market strategy using the cross-cultural approach

In 2008, a global retail brand that had matured in the United States encountered a down-turn when the economy went into a nosedive. The number of store visitors was declining, and growth through expansion was not an option.

The challenges presented to OgilvyCULTURE were as follows: First, increase the number of visits by 2015. Second, demonstrate what OgilvyCULTURE means by a “total market” approach — and explain the benefits of such a strategy. And third, inform the regional and local markets.

An investigation into the retailer’s current approach revealed some interesting facts. The first insight was that the retailer, seeking to find new customers, had only gone after Hispanics — but that segment comprised less than half (48%) of the total population of potential new customers. Another revelation was that something was being lost in transla- tion: The retailer’s positioning did not address each of the segments in a meaningful way. Further, we discovered that there was no consistent strategy that linked the national market to regional and local markets.

Given the opportunity, OgilvyCULTURE responded with a four-pronged approach. Initially, we sized and segmented the opportunity. Then we performed a qualitative assess- ment and a quantitative assessment designed to show that we were correct in our hypothesis about where the retailer’s efforts were falling short. Once our theory was validated, we developed a cross-cultural strategy and followed that up by designing a cross-cultural experience plan.

The outcome? The retailer was able to understand the total market opportunity and the need to prioritize all segments. Rather than create a one-size-fits-all multicultural strategy that was in fact geared only toward Hispanics, it executed a communications strategy that included Blacks, Asian Americans and the LGBT community in addition to the general market and Hispanics. The retailer also launched an integrated experience strategy that was consistent across the national and regional/local markets. Finally, we put in place a measure- ment and effectiveness plan to track results.

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The Ogilvy & Mather Cross-Cultural Matrix

Is there an enormous untapped value in this approach? We are just beginning to tap the surface. Usually the last question we get from clients after discussing the strategic territories is “Where is my brand with regard to the relevancy or equity measures within The New General Market?”

Our view is we must understand where the brand is with regard to cross-cultural equity measures. Over the past year, we’ve measured relevancy through qualitative and quantitative tools, stakeholder interviews and client sources. After assessing the brand, we plot where it falls within the Ogilvy & Mather Cross-Cultural Matrix (see below).

By plotting the brand’s current position within the Cross-Cultural Matrix, we are able to understand how the brand is positioned within The New General Market and begin to formulate a hypothesis as to how to increase the brand’s value with The New General Market.

We develop a strategy to build the brand’s relevancy and equity measures with The New General Market, based on the brand’s position within the Cross-Cultural Matrix.

Growing Cross-Cultural

Equity

(Small, Strong Brands)

Little Cross-Cultural

Equity

(Small, Weak or New Brands)

StrongCross-Cultural

Equity

(Large, Strong Brands)

DecliningCross-Cultural

Equity

(Large, Weak Brands)

Relevancy

Cat

egor

y In

dex

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As presented earlier in this report, these are our proprietary strategic territories. Using this methodology and approach helps us understand what a brand needs to work on to strengthen its positioning and how to increase the value of the brand over time with The New General Market. The insights we gain allow us to evaluate various tactics based on the brand’s cross-cultural assessment.

What’s next?

In the fall of 2012, through a joint WPP partnership using BrandZ™, Ogilvy & Mather, Millward Brown and Firefly Millward Brown will release the marketing and advertising industry’s first Cross-Cultural Index. It is a proprietary approach we’ve developed to measure how cross-cultural a brand is based on an assessment. This approach will allow us to reassess a brand’s market value and other brand metrics for the “Total Market” within BrandZ™. The beta version of the Cross-Cultural Index will rank and score a brand’s equity within The New General Market. It is our belief that once this tool is released and refined, we truly will have a “Total Market” view of a brand’s value in the marketplace. Companies will have a better understanding of how to elevate their brand’s value using our cross-cultural strategies and how to invest their assets in The New General Market. In the end we will have a way to measure the Total Market for effective and inspiring communications for all.

The marketplace continues to evolve. With this report, we have established a framework for addressing The New General Market needs for current and future brands that engage with our services in this fast-changing world. We believe there is a need to change our current methodology in order to produce deeper consumer insights, better targeting and more effective communications. If you have any questions or comments, please do not hesitate to contact Jeffrey Bowman at jeffrey.bowman@ogilvy.com.

The Ogilvy & Mather Cross-Cultural Matrix

Cultural Currency

Cultural Community

Cultural Confluence

Cultural Authenticity

Relevancy

Cat

egor

y In

dex

The Cultural

Loop

About the author

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Jeffrey leads the North American Cross-Cultural Practice at Ogilvy & Mather, one of the largest advertising and communications agencies in the world. Ogilvy & Mather’s cross-cultural approach is viewed as an industry breakthrough because of the Inside-Outside strategy, “The New General Market” approach, partnerships and client service model.

Since its launch in 2011, the Cross-Cultural Practice has nabbed eight global brands looking to target The New General Market. Jeffrey has partnered with John Seifert, Chairman and CEO of Ogilvy & Mather North America, and Donna Pedro, Chief Diversity Officer of Ogilvy & Mather North America, to create a new communications model that serves as a bridge between the general market and multicultural marketing communications models: a “Total Market” communications model. This model has been celebrated in The New York Times, Advertising Age, The Economist and other industry publications as well as at conferences.

Ogilvy & Mather’s depth and diversity of talent allowed Jeffrey to bring his experience to a space thirsty for innovation. Jeffrey has more than 15 years of experience in marketing strategy, brand management, experience planning, digital strategy, channel strategy and marketing effectiveness with global brands within the beverage, consumer packaged goods, retail and technology industries. Still in its infancy, OgilvyCULTURE is recognized as a very promising practice for the agency.

When Jeffrey is not working, he enjoys spending time with his wife and two daughters in New York City. Jeffrey holds an MBA in Marketing from Clark Atlanta University and a BS in Marketing from South Carolina State University.

Contact us: contact.ogilvyculture@ogilvy.com Follow us: @ogilvycultureLearn more: ogilvyculture.com Facebook: facebook.com/ogilvyculture

Jeffrey BowmanCross-Cultural Practice Lead

References

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Chart/Visual Page Source

1980 vs. 2010 Population Growth Rates 8 1990 via World Databank, 2010 via CIA World Factbook

Survey Data 9 OgilvyCULTURE & LinkedIn Survey

Multicultural Spending and Shift to 9 The Nielsen Company Emphasize Hispanic Advertising

Black Media Spend 10 Nielsen Report Media Spend 2009

Global Population by Age 10 US Census Bureau International Database

Race and Ethnicity Chart 11 Ad Age, “2010 America: What the 2010 Census Means for Marketing and Advertising,” by Peter Francese

TNGM by Region, 1980 – 2010 12 US Census Bureau

TNGM by State, Top 10 Populated, 12 US Census Bureau 1980 – 2010

TNGM by City, Top 25 Populated, 13 US Census Bureau 1980 – 2010

Multicultural Buying Power 13 Selig Center for Economic Growth, Terry College of Business, University of Georgia, US Average Annual Expenditure

Household Expenditure Spending: 14 US Department of Labor, Bureau of Labor Hispanic, Black and Asian American Statistics, Consumer Expenditure Survey

2010 Census Tract Heat Map, 14 Data from US Census Bureau, Map via % Hispanic SocialExplorer

2010 Census Tract Heat Map, 14 Data from US Census Bureau, Map via % Non-Hispanic, Black SocialExplorer

2010 Census Tract Heat Map, 15 Data from US Census Bureau, Map via % Non-Hispanic, Asian American SocialExplorer

Top 10 DMAs and % TNGM in City 15 The Nielsen Company Local Television Market Estimates; US Census Bureau

Technology Usage 16 Mintel, Pew Research Center, eMarketer, IDC, US Census: Aside from Total Market, email assumptions are based on Census data and technology adoption rate

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© Ogilvy & Mather, 2012