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June 21, 2024

Carl Stokes, the first Black mayor of Cleveland, Ohio was born in 1927.

Blacks are Trillion Dollar Market

POSTED: October 01, 2014, 10:30 am

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A new report recently released by media research firm Nielsen and Essence Communications, publisher of Essence Magazine, reveals the growth and strength of the African-American consumer market. The report looks at a number of indices that point to the often underestimated economic power yielded by Black consumers in the United States.

The report notes the relative youth of the African-American population, representing 14.2 percent of the nation’s population with 53% of Blacks under the age of 35. Several decades of advances in academic achievement has resulted in 44 percent of Black households earning $50,000 or more; a 13% increase. Also, 23 percent of Black households earn in excess of $75,000. The total purchasing power of African-American consumers is expected to top $1.3 trillion in a few years.

It is not only on the consumer side that there has been progress for African-Americans. According to the data compiled by Nielsen and Essence, Black businesses increased by 61 percent between 2002 and 2007, and that growth was higher than general market growth. The growth in receipts of Black businesses also outpaced the general market, 55 percent to 28 percent.

The report also confirms the importance of cultural identity to African-American consumers. A majority of those surveyed for the report – 87 percent – suggested ethnic identification is important compared to 59 percent of the general population. Likewise, 73 percent of respondents 18-54 years old expressed the importance of cultural/ethnic heritage to their cultural identity. Religion also continues to play a vital role in the lives of African-Americans with 56 percent indicating they attend church regularly.

Purchasing decisions by African-American consumers are conditioned by culturally relevant advertising. The Nielsen/Essence report finds that Blacks are 30 percent more likely to believe diversity in advertising is important and just under 40 percent (38%) are more likely to make a purchase when advertisements feature African-Americans. Similarly, 44 percent of African-Americans expressed that they were more likely to purchase or support products that are owned or supported by Blacks or other diverse groups and 43 percent are more likely to patronize a business if it is ‘minority’ owned. Loyalty is a key quality among African-American consumers as compared to non-African-Americans. The report detailed that 55 percent of Blacks with household incomes of $55,000 or more would purchase or support a product if it was sold or supported by a person of color or ‘minority’ owned firm. Only 20 percent of nonwhite consumers in the same bracket felt that way.

With the advent of new communications technology, the television is taking a back seat as the device of choice to receive advertising content for African-American consumers. The report reveals that 62 percent of Blacks are more likely to desire content accessed by mobile phones and other devices. Still, 53 percent indicated that TV ads were still useful in providing advertisements; with 47% indicating a preference for newspapers, 46% for magazines, 39% for radio and 38% for the Internet. Respondents also agreed that advertisers in Black newspapers know how to reach the African-American audience. Despite this interest in receiving advertising content, the ‘spend’ on advertising targeting Black consumers is dicey. In 2013 a total of $6 billion was spent by advertisers on media focused on African-Americans, a 7 percent increase over 2012. Overall the total spend on Black media is paltry when considering is represents only 2.6 percent of $69.3 billion companies spent advertising across media platforms in 2013.

The top advertisers targeting Black consumers in 2012-2013 were in the beauty, movie and consumer product sectors. Among the companies that were the biggest spenders trying to reach African-American consumers were Proctor & Gamble, Hershey Company, Unilever, Walmart, PepsiCo and McDonald’s Corporation.

Digital media is playing a much larger role in the lives of African-American consumers. Smartphone penetration is 78% among Blacks and mobile video viewing has increased 24 percent over last year. This gravitation to digital media has now influenced how Blacks identify with products, as 81 percent of African-Americans surveyed indicating they are more likely to show support for a favorite company if it uses social media. Blacks are also 76 percent more likely than the general population to share opinions by posting reviews and ratings online. Even with the gravitation toward digital media, Blacks watch 14 more hours of television on a weekly basis than any other group and 92 percent indicate they listen to radio for more than 12 hours each week.

The report also reveals that changes in habits for African-American consumers are not restricted to media or advertising preferences, but health and fitness too. Blacks are becoming more health care conscious and have increased their involvement in fitness and outdoor activities. Over the last year Blacks have increased their activity in running (40%), swimming (34%) and biking (30%). The largest increases for African-Americans in health and wellness activities have been in yoga/Pilates, jogging, tennis, soccer and camping. Blacks are also taking steps to discard bad habits, such as the consumption of fatty foods and alcohol, and smoking cigarettes. The top health concerns among African-Americans are weight loss and lowering stress.

One area that the report suggests African-Americans appear lagging is financial management. The data shows that while 34 percent of those surveyed take pride in the amount of money they have set aside, only 7 percent are aggressively investing.

The Nielsen/Essence report confirms trends that have been evident for at least a decade. Black buying power is now at $1 trillion and cultural and ethnic identity is a key determinant of purchasing decisions for African-American consumers. Blacks are also early adopters of new technology and have embraced the transition to digital media. The youth of the African-American consumer market suggests Blacks will have significant influence in the economy if higher educational achievement can be sustained and result in continued growth in household incomes.

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