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October 19, 2021

By Isaac Mizrahi - Co-President of ALMA

Over the past months, we have been reading about how advertisers have increased their investment commitment towards minority-owned media companies. While this is a critical movement, missing from the debate is an important discussion around what kind of messages these advertisers are planning to use in these new and more diverse media plans.

Understanding the relationship between multicultural creative messages and multicultural media choices is an essential premise of modern multicultural marketing strategy. It can determine whether a brand will reap the benefits of its investments or waste them without knowing why they failed.

Studies conducted in past years help us unlock the nuances of this relationship by comparing the ROI of campaigns based on multicultural consumer insights and ideas versus campaigns based on generic insights.

These studies’ conclusions were clear, and the ROI difference was significant, yielding higher effectiveness levels when compared to campaigns that follow the one-size-fits-all approach (aka Total Market or campaigns translated into Spanish.)

However, most advertisers still either don’t invest in multicultural marketing, underinvest in it, or settle for the now-defunct “Total Market” approach, making us question – Why would a CMO consciously choose to invest in a campaign with lower ROI?

Unfortunately, because most of them still believe that investing in authentic multicultural insights, ideas, research, and specialized production is considered non-working dollars or “sunk costs.” Expenses they believe should be minimized to leave more room for investment in what they call “working dollars,” i.e., their media plans.

And that’s precisely the irony of this approach. What we call “non-working dollars” is exactly what can directly increase ROI. Pouring dollars into “working dollars” based on messages that don’t truly resonate with multicultural consumers won’t work!

As a matter of fact, we should start calling investments in multicultural experts “super-working dollars” since they can significantly influence and increase the effectiveness of campaigns.

Here’s a simple illustration to explain the above with two hypothetical brands, both with the same Hispanic marketing budget of US$ 5 Million.

Brand “A” decides to translate its general market ad into Spanish, creating the illusion of saving budget on agency fees and production.

That allows them to invest 90% of their budget on media (US$ 4.5 Million) and the remaining budget on whatever adaptation costs are necessary. Their campaign yields a 1:1 ROI rate, so their US$ 5 Million investment gets Brand “A” a return in sales of US$ 5 Million.

Brand “B” starts with the same US$ 5 Million budget but decides to invest them following a slightly different mix. Brand “B” wants to maximize their multicultural marketing ROI, so they invest in the right insights, the most culturally authentic ideas, and the suitable production craft, thus investing 80% (instead of 90%) on media and the remaining 20% (instead of 10%) on agency compensation, research, and production.

Industry studies like the one published by Nielsen estimate that the ROI for brands who understand multicultural marketing drivers could be up to 30% to 40% higher than those who translate (like our hypothetical Brand “A”).

Just to be clear, not every Brand gets a higher ROI since not all brands have the same set of parameters, not every insight is a great insight, not every agency is a great agency, not every idea is a great idea, not every production is a great production.

At a 30% ROI higher than Brand “A” translation campaign, the Brand “B” campaign yields a return of US$ 6.5 million, a whopping US$ 1.5 million difference when compared to Brand “A” while using a smaller media investment.

For most CMOs under the constant challenge to increase sales with ever-so-limited budgets, this can represent an opportunity. Unfortunately, most decisions around multicultural marketing are made by prioritizing media investments over all other choices.

However, leading brands already understand that when it comes to multicultural marketing, growth is achieved when media choices and messaging are considered equally important investments.

As marketers start their planning and budgeting processes for 2022, it will be imperative to begin treating the debate around effective multicultural marketing as a priority, after all, adapting a famous Peter Drucker phrase, “when it comes to multicultural marketing, effectiveness eats efficiencies for breakfast.”

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