Business

Blackonomics: Turning spending weakness into $630B economic power

The news keeps coming out every week. Black folks’ so-called “spending power” is on the rise, and corporate marketers are devising more ways to take advantage of this “new-found” treasure. The latest news comes from an article in Black Enterprise… The news keeps coming out every week. Black folks’ so-called “spending power” is on the rise, and corporate marketers are devising more ways to take advantage of this “new-found” treasure. The latest news comes from an article in Black Enterprise (BE) magazine, “Black Spending Power Tops $630 Billion—Advertisers respond to the steadily increasing economic clout of the African American consumer,” by Tamara E. Holmes. I call it “Black spending weakness,” but let’s take an in-depth look at our so-called “spending power.”

Way back in 1986, I worked for a Black-owned marketing firm in Chicago, and I remember doing a sales presentation to executives of a certain company that would, if approved, give our firm a contract to promote that company’s products. Of course, we specialized in marketing to the Black consumer. I will never forget the attitude of one of that company’s VPs. He was just passing time listening to us, probably just waiting to get back to his desk and file a report that said he had spoken to a Black company, thus, having done his affirmative action thing for the year.

I will also never forget one of the questions he asked, as well as the implication of his question. He came with the preconceived notion that his company had no reason to advertise or spend dollars on a Black consumer marketing campaign, despite the consumption index of his products by Black people being three times the average amount. Why? Well, his question will enlighten you. He asked, no he suggested through his question, that Black people don’t read anyway, so why should he do more advertising and marketing. He also implied that since Black people already spend large sums of their money on his products and continue to be the loyal consumers they are, it would make no sense for him to spend money for something he is already getting free.
And you know what? He was absolutely right. I was mad, but he was right. I got no contract, and he continued to get millions of dollars in sales from Black consumers.

According the article in BE, “Black people’s spending represents the margin of profitability for a number of consumer products. African Americans have the capacity to use their spending power to influence corporate decisions on employment, investment, and purchasing practices that would benefit the Black community, including Black businesses.” Oh really? Then why aren’t we using that power?

The article goes on to say, “‘More than $1.5 billion is being spent on advertising targeting African Americans by national advertisers,’” says Ken Smikle, president of Chicago-based research and information company Target Market News. ‘Marketers are getting more and more intelligent every day.’” Did it take them 20 years to gain such knowledge about their Black consumers? And, when you compare a measly $1.5 billion to Blacks’ $630 billion (and even more by some reports) you have to like the return on their investment.

Another interesting point made by Smikle is, “One of the indicators of how well we’re doing and how important that growth is to African Americans can be seen in the increase of dollars contributed to political organizations, political parties, and political candidates.” My question: “What about the lack of dollars going into Black business development, entrepreneurship, and other economic empowering activities?”

Smikle also points to Russell Simmons’ threatened PepsiCo Inc. boycott as proof of how seriously companies take the importance of Black spending power and political and economic clout. The boycott was averted after PepsiCo agreed to donate millions to youth organizations around the United States. Questions: How many millions? Donations to what organizations? Has anyone followed up to see if those donations have been made yet?

My final question: What are Black people getting for our $600-$700 billion in “spending power?”

September 22, 2003
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