Tapping Into Asian Buying Power
Asian Americans are superlative consumers, spending a total of up to $150 billion a year, according to various industry estimates.
They have the highest per capita household income, the highest education levels, the highest rate of entrepreneurial activity and the fastest population growth rate--everything marketers love.
So why do advertisers of cars, household goods, food and drug products treat Asian Americans as if they barely exist?
“A lot of stereotypical myths about recent immigrants and minorities” are to blame, said Elliott Kang, founder, president and chief executive of Kang & Lee, a New York-based minority ad agency that Young & Rubicam Inc. acquired in November 1998.
“Sometimes I go into big corporations--their understanding of Asians is so shallow, it’s typical--and someone would say, ‘Don’t most Asians speak Chinese? Isn’t it the same language [as Korean]?’ ” said Kang, 38, who immigrated to the United States from South Korea when he was 11.
Some companies, such as AT&T; Corp., MCI WorldCom Inc., Bank of America Corp. and Sears, Roebuck & Co., have started to target Asian Americans with the help of minority-owned ad agencies that know the culture and languages of the different subgroups in this audience.
Major ad agencies have started to buy up these specialized firms--starting with Young & Rubicam’s purchase of Kang & Lee--as they recognize the significant purchasing power of Asian Americans.
“If they don’t have this talent in-house, they need to acquire it,” said Marjorie Valin, vice president of the American Advertising Assn., which represents advertisers. “When you get the big agencies on board, it’s going to drive growth in these areas. I’ve seen a lot of change in the past year.”
The real problem is a lack of education, Valin said. “Education is not a fast process, particularly when you’re talking about advertising, because you have to be able to prove, based on extensive research, what the most effective media plan is,” she said.
The African American market and Latino markets had the same complaints for many years, Valin noted. “It’s been a very long process to make advertisers aware of the buying power of these markets, and just this year we’ve seen a turning point in these two markets.”
To speed up the process, the Assn. of Asian American Advertising Agencies, or Five A’s, was formed in February as a hub for research and education in the sector. Efforts include helping Asian-language media standardize practices--such as how they report circulation figures--so that major clients will be more comfortable with the ethnic market.
“We are seeing double-digit growth for the next three years,” said Kang, whose company has billings of $65 million. “There are a lot of ‘dot-com’ companies coming to us, because there are a lot of Asians online.”
The last census showed that Asian American households earned an average income of $46,695, versus $40,646 for whites, $30,301 for Latinos and $25,872 for African Americans. About 38% of Asian Americans hold bachelor’s degrees or higher, versus 22% for whites, 11% for blacks and 10% for Latinos.
The Asian American population (10.8 million in 1993) is highly urbanized, with half in California, New York and Hawaii. It is growing at an annual rate of 5.2%, far above the 3% for Latinos, 1.6% for blacks and 0.6% for whites. Asians own 600,000 businesses in the United States, with a growth rate of 61% from 1987 to 1992, versus 21% for the general population.
