In trying economic times like the ones in which we now find ourselves, knee-jerk reactions abound. The power of the mighty dollar (or better said, the might of saving dollars) makes many generally-reasonable people make unreasonable decisions. Some people purchase failing financial institutions. Some others slash marketing budgets. Yet others take money out of their bank and put it in a coffee can in their fridge. And of course, there are those that take multicultural marketing business from multicultural marketing agencies and give it to their general market shops. I don’t know which of these examples makes the least sense.

While I can speak to the marketing budget slashing issue, that’s been done to death. There is ample evidence that the marketers with the stomach to power through a downturn and maintain (or increase) their marketing investments in times like these are the ones who profit handsomely when the business environment improves.

The other issue that gets my goat is the myopic shifting of multicultural business to a general market agency. I believe that generally to be a misguided decision that will backfire.

When making such moves, the marketers generally cite the savings that they will realize by combining multicultural and general market activities in the same agency. Some openly acknowledge that the quality of the work will suffer but still opt for the short-term savings in order to relieve the pressure put on them by their finance folks. Some others have been led to believe that the quality will be the same as it was with the multicultural agency (in some cases better!) and so to the marketer it seems like a no-brainer. What folly!

For the uninitiated, this is generally what happens:

• Step One: The client finance people issue an edict requiring marketers to reduce their expenses in agency compensation (some clients do that in parallel with overall budget cuts, while others do so as a “share-of-budget” exercise, keeping budgets flat year-over-year but reducing the percentage that is dedicated to compensating agencies.)
• Step Two: Marketers contact their agencies to let them know what will be required. Some contact all agencies, others start off with their “lead” (read: general market) agencies, where the bulk of the agency fee expenditures occur.
• Step Three: General market agencies, facing the prospect of revenue reductions, opt instead for manageable margin reductions and thus offer to take on the multicultural work for the same agency fee as in the previous year (or perhaps a bit more). It goes something like “Hey, instead of cutting our fee, how about we keep it flat to last year and instead we take on the multicultural work for no additional fee (or a very small fee)? That way, you save all those fees you’re now paying the multicultural shops.”

Now the client looks at the option of streamlining his or her life by working with one agency, having one scope discussion, paying one fee, having one meeting, etc. And on top of that, they save a bunch of money! It sounds like a dream. But it is more like a nightmare. Here are a couple of thoughts for marketers contemplating such a move.

1. Ask yourself how the general agency can do the multicultural work for no incremental fee (or a very small one). The work that was being done still needs to be done. If the work can just be absorbed by the general agency, that’s a tell-tale sign that either they have been overcharging or they will put a junior person with the appropriate last name or skin color on the multicultural portion of the business and call it a day (after all, the objective is a lower price tag, not good multicultural marketing). Maybe both.
2. Ask the general agency to provide proof of the quality of the work they say they’ll deliver. Have they done multicultural work before? Are they a leader in their space? Is that their specialty? Would they know good multicultural work if they saw it? Don’t discount the importance of quality work in trying economic times. Remember that alienating a multicultural audience will cost you dearly and for the long term.
3. Don’t cut the multicultural agencies out of the conversation. Share the issues openly with all stakeholders and get everyone working together to arrive at a workable solution that achieves your cost reduction goals without gutting any one area in your marketing plan. If you have to reduce overall compensation costs by X%, see how the whole team can share the burden. (Perhaps efficiencies can be achieved by consolidations in production or by sharing resources, instead of reducing intellectual capital).

All this notwithstanding, should you choose to follow the silly notion of moving business from agency to agency, do the right thing and offer the option to everyone. That is, if you’re considering moving your multicultural work to the general market agency, also entertain the option of bringing your general market work to the multicultural shop.

It wouldn’t surprise me to see the multicultural agency, experienced in working with constrained budgets and compensation, being the best option for the overall account. They can provide the same assurances of quality on the general market work as the general agencies do on the multicultural work, and they will certainly do it for less.