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African American Direct Marketing Presented by: Verdia E. Johnson President, Footsteps February 2005 African American Direct Marketing Presented by: Verdia E. Johnson President, Footsteps February 2005

Overall African American Market Highlights Overall African American Market Highlights

African American Buying Power Over the past 14 years, buying power has increased 127% African American Buying Power Over the past 14 years, buying power has increased 127% and is projected to increase 203% by 2009 *Source: Selig Center for Economic Growth, Terry College for Business, The University of Georgia, May 2004

African American Buying Power *Source: Selig Center for Economic Growth, Terry College for Business, African American Buying Power *Source: Selig Center for Economic Growth, Terry College for Business, The University of Georgia, May 2004

African American Population The population continues to grow and outpace Non-Hispanic Whites *Source: Selig African American Population The population continues to grow and outpace Non-Hispanic Whites *Source: Selig Center for Economic Growth, Terry College for Business, The University of Georgia, May 2004

African American Population by Region African American Population by Region

African American Population by Age € 48 % Male *Source: U. S. Census Bureau, African American Population by Age € 48 % Male *Source: U. S. Census Bureau, Census 2000 Summary File 1 52 % Female

Household Size Women are more prominent in AA households vs. general market households 48. Household Size Women are more prominent in AA households vs. general market households 48. 2% of AA households are headed by women vs. 27. 6% of non-Hispanic White households AA women bring in almost half (48. 9%) of total income in AA pop. vs. 1/3 of the total income for other racial/ethnic groups Source: 2004 MRI DOUBLEBASE, Packaged Facts, Marketing to Women, 2004

African American Education Attainment Source: Scarborough USA+ Release 1, 2003, 12 month data, 2004 African American Education Attainment Source: Scarborough USA+ Release 1, 2003, 12 month data, 2004 Arbitron, Inc.

African American Residential Status Source: 2004 MRI DOUBLEBASE STUDY African American Residential Status Source: 2004 MRI DOUBLEBASE STUDY

African Youth Market Demographic/Psychographic Profile African Youth Market Demographic/Psychographic Profile

Target Population Profile Demographics: § Age 16 -21 § Population - Roughly 5. 5 Target Population Profile Demographics: § Age 16 -21 § Population - Roughly 5. 5 million people § Geographic location - South - 58. 7 Midwest -16. 9 Northeast - 14. 3 West - 10. 1 § Majority live at home § Education - 70. 2 % graduated from high school - 32. 7% attend(ed) college Source: 2004 MRI DOUBLEBASE STUDY

Target Population Profile Psychographics: They appreciate… § Speed: Live for the moment – they Target Population Profile Psychographics: They appreciate… § Speed: Live for the moment – they acquire information and move on, always multitasking § Individuality: It is essential that they retain individuality within a group environment and have the freedom to express themselves and their uniqueness (hip-hop) § Trendsetting: Recognizing the power of being first, they constantly seek the opportunity for newness § Technology: Using technology, to multitask, retain speed and, gather information; is an integral part of their lives § Entertainment: Part of the absorption mentality - in order to get their attention, it has to be engaging

Target Population Profile Psychographics: African Americans are… § § Source: MRI Twelveplus 2004 Fashion Target Population Profile Psychographics: African Americans are… § § Source: MRI Twelveplus 2004 Fashion Forward - Spend significantly on clothes and shoes Hip & Savvy – Internet Activity in last 30 days - Visited chat room - 339 Index - Sports/News & Current Events - Index - Played games online - 207 Index Financially Independent - Employed - 63. 4% - Acquired Savings Account in own name - 157 Index Vigorous – Sports Played in Last 12 Months - Football - 237 Index - Basketball - 215 Index - Volleyball - 186 Index - Baseball - 174 Index - Softball - 157 Index - Soccer - 150 Index

Hip-Hop is the lifestyle… Rap is the music… Urban is the mindset. Hip-Hop is the lifestyle… Rap is the music… Urban is the mindset.

The Hip-Hop Universe Hip-Hop. . . is a lifestyle of youth that originates from The Hip-Hop Universe Hip-Hop. . . is a lifestyle of youth that originates from the African American culture . . . has inspired an entire youth group to embrace its language, fashion and lifestyle. . . cuts across a rich cultural spectrum encompassing AAs, Whites, Hispanics and Asian §Hence, today’s clothing, sneakers, electronics and entertainment have all been heavily influenced by Hip-Hop music and its artists §According to a study by Edison Media Research, 12 -24 year olds prefer Hip-Hop and Rap to any other style of music by an overwhelming margin Source: “Is Hi-Hop The Future of Rock? ” Radio and Records, May 25, 2001

The Hip-Hop Universe Listener Profile: Based on USA Today’s radio airplay chart, more than The Hip-Hop Universe Listener Profile: Based on USA Today’s radio airplay chart, more than a quarter of the most-heard songs of 2003 were by Hip-Hop artists… 50% between 1224 years Source: Hip-Hop station in Top 10 Markets, Cume Composition, Scarborough Surveys, Release 1 2003

The Hip-Hop Universe Listener Profile: Ethnic Composition Gender Source: Hip-Hop station in Top 10 The Hip-Hop Universe Listener Profile: Ethnic Composition Gender Source: Hip-Hop station in Top 10 Markets, Cume Composition, Scarborough Surveys, Release 1 2003

The Hip-Hop Universe § Television, movies, magazines, and even video games have all attempted The Hip-Hop Universe § Television, movies, magazines, and even video games have all attempted to capture the Hip-Hop magic § Television networks like BET, UPN and MTV actively target the Hip-Hop audience § In movie theatres, films starring rappers and Hip-Hop stars have begun to cause major bounces in box office receipts § New book genres like Street Life have shown tremendous growth and are introducing a brand new audience to book publishing § Urban magazines like The Source, Vibe, Blaze, XXL and Rides are some of the fastest growing titles in the industry § Even video games are using Hip-Hop music and stars both on soundtrack and as major characters in storylines

The Hip-Hop Universe Community Involvement: § Hip-Hop stars, DJs and radio stations play very The Hip-Hop Universe Community Involvement: § Hip-Hop stars, DJs and radio stations play very active roles in their communities § Some of the charities and community programs these personalities are associated with are: - African American Leadership Council – Doug Banks (ABC Radio Personality - The Ludacris Foundation – benefiting children - SHINE – P. Diddy/Russell Simmons – empowering young people to promote diversity and end youth violence - Jes Us 4 Jackie – Nelly – benefits leukemia research - Save A Life Foundation – Snoop Dogg - C. A. U. S. E. – Eminem – helping underprivileged children and families - The Hip-Hop Summit Action Network – education and societal advocacy for at-risk youth

The Hip-Hop Universe § Hip-Hop fans are extremely loyal individuals § Hip-Hop carries with The Hip-Hop Universe § Hip-Hop fans are extremely loyal individuals § Hip-Hop carries with it a street credibility that young consumers are highly tuned to § Music plays a key part in their lives and they connect to the total lifestyle § That is what makes Hip-Hop music and Hip-Hop stars very effective as advertising vehicles § Fans buy almost anything the Hip-Hop lifestyle endorses § Therefore, strong Hip-Hop marketing can earn sincere brand loyalty from a notoriously fickle consumer group

The Hip-Hop Universe Today’s role models have changed from athletes to Hip-Hop stars and The Hip-Hop Universe Today’s role models have changed from athletes to Hip-Hop stars and they promote many products. The Gap – LLCool J, Missy Elliot Right Guard – Method Man, Redman Heineken – Jay-Z Coors Light – Dr. Dre Reebok – Jay-Z, Fifty Cent Cadillac – Snoop Dogg Coca Cola – Common Sense, Mya Twix – Usher Verizon – Tweet Lugz – Funkmaster Flex Cover Girl – Queen Latifah Got Milk? – Nelly Pepsi – Beyonce Knowles Dr. Pepper – LL Cool J, B 2 K

Success Stories § S. Carter Collection (Jay-Z) sold out in a few hours the Success Stories § S. Carter Collection (Jay-Z) sold out in a few hours the first weekend it was in stores, making it the fastest selling shoe in Reebok’s history § When Western Union started using the urban format to promote money transfers, transactions increased 100% § Gillette saw a 14% increase in market share after advertising on Hip-Hop radio in Memphis § After Sprite launched an ad campaign with Hip-Hop stars, Time magazine reported that people who said Sprite was their favorite soda quadrupled Source: The Mercury News, March 2003

African Americans and Direct Marketing African Americans and Direct Marketing

Direct Marketing Overview § It is estimated that only 30. 5% of African Americans Direct Marketing Overview § It is estimated that only 30. 5% of African Americans are exposed to direct mail § However, more than 75% of this segment read the direct mail received § Historically, the distribution of relevant direct mail has been hindered by a lack of lists that are accurate and reliable § However, today’s technologies allow the extraction of knowledge from general data bases and rented lists in order to identify people by race and ethnicity as well as provide other attributes § There is also a growing number of opt-in lists available § Based on the limitations of direct mail, the most successful direct marketing campaigns in the African American market and among this young target audience are integrated and focused on… - their interests - the media that they consume most often Source: Targetonline. com, Target Marketing Tipline, September 2003, Geospace International

Relevant Communications Vehicles § Television: - § Good vehicle for broad reach and complete Relevant Communications Vehicles § Television: - § Good vehicle for broad reach and complete brand communication Sight, sound and motion provides high visibility and excitement and accommodates direct response mechanism Cable, network and syndicated TV provide a range of programming for the youth target audience Ability to extend message with promo announcement at the end of specific programs Limitations include limited interaction and short format Spot Radio: - Strong frequency medium that is good for message reinforcement Deep penetration into communities via local area promotions, sometimes in conjunction with high profile organizations Best medium in a local area forming an allegiance with the potential customer; DJs have celebrity status and can hype a product campaign Delivers local market ratings similar to general market television activity in most markets

Relevant Communications Vehicles § National Magazines: - Visual message allows for clear registration of Relevant Communications Vehicles § National Magazines: - Visual message allows for clear registration of products, services and call to action - Format can accommodate complex message - Efficient in delivering the target - Good selection of titles for youth market - Work with publications to distribute information to their subscribers - Limitations - not very accomplished in delivering regional market needs § Internet: - Sight, sound and motion makes message impactful Interactive (Chat room, etc. ) Can accommodate long format message Can cross promote with publishing and broadcast vehicles Can track results daily

Relevant Communications Vehicles § Events: - One-on-one conversation with consumers that blend fun and Relevant Communications Vehicles § Events: - One-on-one conversation with consumers that blend fun and exciting activities - Interactive - Collect data base

BET’s “Rap It Up” Campaign § BET partnered with the Kaiser Family Foundation to BET’s “Rap It Up” Campaign § BET partnered with the Kaiser Family Foundation to develop a public education and awareness campaign about HIV/AIDS § The objective of the campaign was to get information into the hands of young people § The campaign included television and online components that included AIDS related programming, public service announcements with a toll free hotline and website with AIDS-related information § The campaign also had grassroots components which included: - Teen forums hosted by BET talent - Partners from the local public health departments for on-site testing - “Classroom Connection” curriculum based on the BET documentary series – The Naked Truth

BET’s “Rap It Up” Campaign (cont. ) § Results were good; as of May BET’s “Rap It Up” Campaign (cont. ) § Results were good; as of May 2004: - More than 85% of AAs in the 16 -24 age group were aware of the program - 900, 000 people called the hot line - 300, 000 people received sexual health information - 11, 000 participated in on-site tests and forums

Direct Response Programs XXL magazine ads featuring urban-todirect video movies generated $170 K in Direct Response Programs XXL magazine ads featuring urban-todirect video movies generated $170 K in sales for every $100 K of ads A client’s response rate in Vibe was 10% on an insert card AOL CD insert in Complex magazine generated a 15% response

Other Relevant Communications Vehicles § Short film in movie theatre § Internet videos § Other Relevant Communications Vehicles § Short film in movie theatre § Internet videos § CDs inserted in print media § Message on DVDs

Recruiting Insights Recruiting Insights

Environment Change Peace Life War Death Environment Change Peace Life War Death

Recruiting Issues § Majority of African Americans are against the war in Iraq and Recruiting Issues § Majority of African Americans are against the war in Iraq and have been against the war from the beginning - Some AAs feel that they (in addition to Hispanics and poor whites) are bearing most of the burden for fighting and dying in the war § Also, politically, a majority of AAs feel that the current administration is oblivious to its concerns, and the war in Iraq has reinforced this perception § From a youth perspective, perceptions are no different § Hip-Hop artists continue to organize and speak out against the war in Iraq Source: Washingtonpost. com, “Bush, Blacks, and Iraq”, May 20, 2004

Recruiting Issues § Some of these artists (role models) are: R. Kelly Out. Kast Recruiting Issues § Some of these artists (role models) are: R. Kelly Out. Kast XZIBIT Mos Def Jay-Z Fat Joe Missy Elliott P. Diddy Tweet Busta Rhymes Nas Eminem § Some of these artists have lyrics and comedy routines expressing views against the war (i. e. XZIBIT, R. Kelly and Eminem), while others formed a United Against The War Coalition Source: Washingtonpost. com, “Bush, Blacks, and Iraq”, May 20, 2004

Recruiting Issues The most vocal rapper recently is Eminem with lyrics and a video Recruiting Issues The most vocal rapper recently is Eminem with lyrics and a video about his views from his song called “Mosh”

Historical Recruiting Continuum Prospect … Becomes Aware Becomes Intrigued Seeks Info Seeks out Dialogue Historical Recruiting Continuum Prospect … Becomes Aware Becomes Intrigued Seeks Info Seeks out Dialogue Wants to Join Affirms Decision TV Print Radio Online Media Direct Mail DRTV - respond Events - get brochures Website Call 800 Number Recruiter Materials Recruiter Support

New Paradigm With a different environment and recruitment issues, prospects will critically evaluate the New Paradigm With a different environment and recruitment issues, prospects will critically evaluate the message and the medium, therefore, the following should be examined: § Message impact in the context of the new environment § Message delivery based on the barriers that exist § Immediately engaging vs. informing/intriguing a prospect § Market segmentation based on profile and geography

Strategic Approach § Focus on Influencers - Parents, coaches, teachers, clergy, directors of recreation Strategic Approach § Focus on Influencers - Parents, coaches, teachers, clergy, directors of recreation centers, trade schools, GED classes, etc. § Explore long message formats - Facilitates a more complex message

New Recruiting Paradigm More human support at all stages … Influencers Become Aware Influencers New Recruiting Paradigm More human support at all stages … Influencers Become Aware Influencers Seek Info Influencers Engage Prospects Seek Info & Dialogue Prospects Decide to Join Prospects Affirm Decision Print Direct Mail Online Media Community Outreach Online Media Radio Website 800 Number Recruiter Materials Recruiter Support

Conclusion § The majority of the target audience (16 -21 year old AAs) participates Conclusion § The majority of the target audience (16 -21 year old AAs) participates in or is influenced by the Hip-Hop lifestyle § Because of this influence, the Hip-Hop community’s negative views about the war in Iraq are also influencing their thinking on this subject § As a result, there is a need for the military to enlist other influencers and employ the best direct marketing vehicles to engage prospects and help counteract this view

Thanks! Any Questions? Thanks! Any Questions?