• by Jose Villa , Columnist, May 1, 2014

At the Association of Hispanic Advertising Agencies’ (AHAA) annual “Think Under the Influence” conference, brands, agencies, media companies, and others involved in the U.S. Hispanic market spent three days hearing presentations and panel discussions continually referencing the Total Market Approach (TMA).

I had the opportunity to participate in a working group led by AHAA, and partnered with the Association of National Advertisers (ANA), working on definitions and models for TMA that both agencies and brands could agree on. I also participated in a panel discussion presenting the ad agency perspective on TMA and three models for implementation.

Our agency working group representing Hispanic, African-American, Asian and general market ad agencies presented three models for TMA:

• Model #1 – Client leads / includes all agencies simultaneously

• Model #2 – A selected agency leads multi-agency team

• Model #3 – One agency responsible for “general market” work and segment work

After debating with my agency peers on the pros and cons of each model, and listening to numerous brand presentations from companies like Chrysler, Wells Fargo, and Nickelodeon, I realized brands were much further along in adjusting to the realities of the new multicultural mainstream than were agencies. I

continue to believe that there is no “right” model for every brand or situation today and that Model #3 is most aligned with the future. That’s the model I’ve built my agency around. However, the discussion the last three days led me to realize the three TMA models were devised to help the current dominant agency models fit into the new client TMA reality. Essentially, ad agencies are trying to fit their square pegs into a new client round hole.

It wasn’t until I was on stage with my colleagues from Hispanic, Asian, and general market agencies, debating the three models that the conversation went to a new place – questioning our agency models. We realized we failed to rethink our business models – how we’re structured; what our strategic, creative, media capabilities are; and how we need to be staffed and structured to meet the needs of a new TMA world.

This brings up the digital agency lesson, which I think provides a powerful analogy for the challenge facing agencies as it relates to the new multicultural majority. Look back at the role of digital and how it disrupted the ad agency business starting the late ’90s and early 2000s. At that time, most traditional agencies were slow to adapt to digital. This led to the creation of specialty digital agencies. Many were acquired and integrated into larger traditional agencies.

Some traditional agencies went on digital talent hiring sprees. However, as digital marketing was fully embraced by large corporations over the last few years, many have brought digital in-house. This was due to the continued inability of agencies to integrate digital into their core service offering and service clients at the breakneck speed necessary as they shifted to social media, search and content marketing. As a recent ANA study noted, 60% of Fortune 500 companies are currently considering moving towards in-sourcing digital marketing.

I believe ad agencies are facing a similar disruption when it comes to multicultural marketing. Agencies need to rethink their business model as it relates to culture, ethnic and language capabilities. I’d always felt the question was about trying to make a bet on the future. However, the speed and sophistication with which clients and media companies are embracing TMA makes me believe the future is now.

This cross-cultural model was on full display at AHAA this week: including Marketer of Year winner McDonald’s, which has led with ethnic insights for years; as well as innovative new cross-cultural content networks like El Rey built around Hispanic consumers. I’ve placed my bet on a cross-cultural model – combining Hispanic, Asian, African American and “general market” capabilities in one agency to provide a truly integrated cultural solution.

I think this new agency business model is the round peg that fits into the round hole clients have embraced as the Total Market Approach.