Black-Owned Businesses Get Just 10% of Advertising Spending

The tumultuous events of the past year inspired a lot of deep soul-searching in C-suites across the country. 

In response to racial injustice and police brutality on Black communities, brands have instituted programs that aim to build Black and Brown representation at all levels in their companies. They have also begun to more closely scrutinize relationships with their partners and vendors, including the ones with the agencies and marketing service providers they work with.

Have brands gained any traction in this area? Examining the Association of National Advertisers’ (ANA) latest report offers insight into this area. The report, "The Growth of Supplier Diversity," provides a look into supplier diversity in marketing and advertising, covering areas such as benefits, challenges, spending, goals, and measurement.

A supplier diversity program is defined as a proactive business program that encourages the use of women-owned, ethnic/minority-owned, veteran-owned, LGBTQ-owned, disability-owned, and small businesses as suppliers.

Spending At Black-Owned Businesses Has Not Significantly Increased

According to the ANA’s report, Black-owned businesses are at the bottom of the list when it comes to advertising and marketing spending, representing just 10% of the suppliers receiving the most spending. This put Black-owned businesses behind women-owned businesses (62% of diversity supplier spending), Hispanic-owned businesses (11%) and small businesses (11%). 

^{Source: “The Growth of Supplier Diversity,” ANA, May 2021}

This is despite the growing importance placed on finding diverse suppliers in the past year. Eighty-nine percent of respondents said it has become more important that their companies work with diverse suppliers, citing the height of the racial justice movement of the past year as a major reason. “Social unrest due to [the unjust killing of] George Floyd sparked a sea change in awareness and approach,” one respondent noted.

^{Source: “The Growth of Supplier Diversity,” ANA, May 2021}

Currently, agencies spend the most on their diversity supplier programs for marketing and advertising (50%), followed by media (15%) and production (13%) companies.

Spending on Black Businesses Projected to Grow Next Year

However, there are bright spots on the horizon. Though marketing and advertising spending on Black-owned businesses lag behind others, the ANA survey also projects that they may see that spending grow over the next year, as 83% of businesses plan to spend more with Black owners.

^{Source: “The Growth of Supplier Diversity,” ANA, May 2021}

There are many benefits to doing business with diverse suppliers as today’s consumers are increasingly diverse. Black people and Latinos are expected to compose a majority of the U.S. population by 2044 — a statistic that suggests diversity needs to be in the strategy of most businesses.  As the ANA notes, “a strong supplier diversity program helps ensure that a company’s suppliers reflect the communities it serves.”

To promote more equity in our industry, the ANA suggests that marketers need to be open to doing business more inclusively when working with some diverse suppliers. “For example, they may need to add new people to their teams, invest more time in supplier relationships, relax payment terms, and look beyond conventional metrics. For the latter, be open to conversations with diverse suppliers on ways to evaluate a partnership. Marketers are encouraged to think beyond scale (and reach) for their supplier diversity programs and instead consider the importance of audience engagement and relevance,” the report said.

To help you find the right partner, the ANA has curated a list of Certified Diverse Suppliers for marketing and advertising, which they keep updated on a regular basis.

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