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The Challenge of Success

4/10/2005 8:00 PM Eastern

In 1979, when Black Entertainment Television founder and CEO Robert Johnson first proposed creating an ad-supported network for African-Americans, the idea was a novel one. At the time, there was virtually no national television directly targeting African-Americans. “We had to go out and convince people to carve out new budgets,” recalls Johnson.

While Johnson says that BET’s ad sales have climbed by at least 15% a year during the last decade, BET parent Viacom Inc. no longer breaks out the network’s ad revenues. But Brian Wieser, vice president and director of industry analysis at the media-buying firm MAGNA Global USA, estimates that the network’s ad revenues hit about $250 million in 2004, up from $200 million in 2003. “They’ve clearly been able to grow the business,” he says.

Even so, BET’s ad-sales efforts face a number of challenges over the next few years. The network’s very success has attracted new competition, both from fledgling cable networks like TV One, which are targeting African-Americans, and from broadcasters like UPN, which are putting more emphasis on urban viewers.

At the same time, there has been an increase in ad spending to reach Hispanics and Asians, and that has “tended to cut into African-American budgets,” notes Pepper Miller, president of the Hunter-Miller Group, which advises major companies on marketing to African-Americans.

Miller adds that African-American purchasing power is already $723 billion, and it will top $1 trillion in a few years. Yet, Target Marketing magazine notes that advertisers spent only $1.8 billion against African-Americans last year, a tiny portion of the $263.7 billion ad agency McCann Erickson estimates was spent on advertising in the U.S. in 2004.

Looking forward, some analysts worry that lack of high-quality programming for African-Americans will continue to limit ratings and ad spending. “Networks that target African-Americans have to come up with some industrial-strength programming if they want to attract the ad dollars they deserve,” says Howard Horowitz, president of Horowitz Associates.

“The key is still education, education and education,” says Louis Carr, BET’s president of broadcast media sales, who believes advertisers are still paying far too little attention to the African-American market. “A lot of categories and marketers really don’t understand what the difference African-American consumers can make to their bottom line.”

BET president and chief operating officer Debra Lee, adds that “packaged goods, the soft-drink and fast-food markets have long understood the value of African-American consumers. The Coca-Cola Co. and PepsiCo have been advertisers on BET since day one, as has [The Procter & Gamble Co.].”

Carr believes further growth will come as they roll out their greatly expanded original programming slate and by targeting industry sectors like video games, travel, pharmaceutical, health and beauty aids, financial services and technology.

The key to “our strategy has been to really engage marketers with these consumers and to give them opportunities where their message can be personally involved with the programming and the audience,” Carr says.

One example of that effort has been tours through college campuses and African-American communities — grassroots marketing efforts that have been sponsored by advertisers like General Motors and P&G.

For its 25th anniversary, BET is planning a tour through the network’s top 25 markets “that will bring sponsors and their products directly out to the community, to restaurants, shopping malls and night clubs,” Carr says. “Once they get out of the office and get involved with the consumer, then they can really understand the value of the market.”

BET has also boosted product-placement pursuits. Such efforts, Carr says, are particularly valuable to marketers because of the “trend-setting role” African-Americans play in popular culture, music and fashion. Dodge Magnum cars, for example, were used to ferry stars back and forth at the BET Comedy Awards and such beauty products as Cover Girl and Pantene were featured on the Rip The Runway fashion special.

Stephen Hill, executive vice president of entertainment and music programming adds that BET officials have been talking with marketers about a number of potential product placements in their upcoming slate of original programming. “It is a natural fit,” Hill contends. “African-Americans are very brand-conscious.”

To better convey all of those opportunities to advertisers, BET hosted its first upfront presentation last year. “We felt like the time was right to do our first upfront,” Carr says. “There was competition popping up touting how well they could reach African-Americans. So we felt it was time to get out there and show them who was the real 300-pound gorilla in this area.”

BET will hold its second upfront this year in April in New York City with simulcasts in Detroit, Chicago and Los Angeles. “We will be presenting a lot of new programming — the biggest slate we’ve ever had,” Carr says.

This year, BET is launching a major marketing effort to reach advertisers, industry executives and producers via ads in trade publications, says BET executive vice president of corporate marketing Kelli Lawson. She says BET wants to make people aware of its recent investments in original programming, its new strategy of targeting 18-to-34 year old African-Americans and the strength of its brand in reaching the African-American community.

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