African American Direct Marketing Presented by Verdia E

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

Overall African American Market Highlights

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, The University of Georgia, May 2004

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 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. 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 Arbitron, Inc.

African American Residential Status Source: 2004 MRI DOUBLEBASE STUDY

African Youth Market Demographic/Psychographic Profile

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 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 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.

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 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 Markets, Cume Composition, Scarborough Surveys, Release 1 2003

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 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 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 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 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

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 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 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 exciting activities - Interactive - Collect data base

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 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 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 § CDs inserted in print media § Message on DVDs

Recruiting Insights

Environment Change Peace Life War Death

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 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 about his views from his song called “Mosh”

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 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 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 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 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?