This article is from the archive of our partner National Journal

Black consumers are an underestimated force in the American economy, but not for long.

A new Nielsen report on “the untold story” of black consumers, especially affluent ones, shows that as the black population grows, so will its economic influence and buying power.

The report highlights 2015 as a “tipping point” for black Americans in their “unprecedented impact” across a number of areas, especially television, music, social media and on social issues. Demographic trends combined with the power of social media have collided to empower an increasingly educated, affluent, and tech-savvy black consumer base. As a result, it’s a key time for companies to “build and sustain deeper, more meaningful connections” with black consumers, according to the findings.

“We're going to see a change in the face of America, as multicultural communities and populations grow more. Companies who aren't addressing that issue now are going to find themselves a bit out of sorts when the minority become the majority,” says Cheryl Pearson-McNeil, coauthor of the report and Nielsen’s senior vice president for strategic community alliances and consumer engagement. “Marketers have got to keep pace in understanding what's important to diverse communities.”

Black buying power is projected to reach $1.2 trillion this year and $1.4 trillion by 2020, according to a report from the University of Georgia’s Selig Center for Economic Growth. That’s 275 percent growth since 1990, when black buying power was $320 billion. Already black consumers represent the largest consumers of color group in the marketplace, the report shows. That trend will continue as the country becomes more diverse, driven in part by growth in immigration from the Caribbean and Africa.

Because they’re younger on average, black consumers are trendsetters and tastemakers for young consumers of all races, according to the Selig Center. They define mainstream culture and wield immense influence over how Americans choose to spend their money. Any marketing campaign targeting millennials “must include messages to reach African-American youth,” notes Nielsen.

Savvy marketing experts have picked up on this and tailor their campaigns to win over the hearts and wallets of black consumers. But understanding black Americans and how to appeal to them is still a work in progress for many companies. Pearson-McNeil says many need a strategy—and soon. “I think some companies are still figuring it out, honestly,” she says, “which is why we spend a lot of time ensuring that our clients are aware of the changing demographics, and making them feel comfortable with this information so they know how to figure it out.”

Janie Boschma

As the infographic shows, a number of factors have converged to elevate black consumer power. Black high school graduates are now more likely than their white peers to enroll in college. They’re not only younger and educated, they’re tech-savvy and have seen a major uptick in income over the past decade. Growth among each income category above $100,000 has surged, especially for African Americans making $200,000 or more annually.

Meet Them Where They Are—Online

Nielsen’s report highlights the opportunity to reach those affluent black consumers online. They’re more plugged in and more receptive to mobile advertising. They are also more likely than their white peers to shop online and interact with brands on social media. African Americans earning more than $100,000 annually are more likely to shop online for movie tickets, groceries, and wine than are whites making similar incomes, Nielsen reports.

Major brands have already connected with top bloggers for advertising on their posts, and Pearson-McNeil says developing those kinds of online relationships with consumers early is key.

“What social media does is it actually levels the playing field. It gives African Americans more voice in sharing how they react to brands and products and services,” she says. “Taking as much advantage as you can of reaching people where it is convenient for them to engage and interact with your brand is a really smart business move.”

High-income African-American consumers are also much more receptive to mobile advertising than high-income whites. Nielsen reports that black households making more than $100,000 are significantly more likely than white households with similar incomes to think mobile advertising provides useful information about both new products and bargains. They’re also much more likely than their high-earning white peers to use social networks to support companies and brands (44 percent more likely) and to find out about products and services (29 percent more likely).

Cheryl Pearson-McNeil, Nielsen's senior vice president for strategic community alliances and consumer engagement

That equates to major opportunities for eyeballs and sales in the short term and for building brand loyalty over the long term. “You get that loyalty when you have a younger base to begin with, and if that's where they're going, that's where you need to be,” says Pearson-McNeil. “Mobile, and mobile ads seems to be one of the key places to reach that segment.”

But those ads have to be culturally relevant and nuanced. Hiring a black model for the sake of diversity isn’t going to cut it without also incorporating smart messaging through a broader engagement strategy, says Pearson-McNeil, who is African-American.

“An important part of that is to not talk to or at consumers from these particular segments but rather to connect with them,” she says. “I can see a black model in one ad and appreciate the fact that there's a black model there, but I can respond better to an ad that not only showcases the black model but also showcases something that is going to connect with me from a cultural perspective, that lets me know that that black model gets my black experience, and therefore the company gets the black experience and has tried to connect with me on that.”

The Shonda Rhimes Effect

Television producer and writer Shonda Rhimes famously said (accepting the Ally for Equality Award from the Human Rights Campaign) that she isn’t diversifying TV, but “normalizing it”—making TV more accurately reflect the country. Rhimes has engaged black viewers more than any television producer ever simply by including them—creating complex narratives starring more multidimensional characters of color.

Her intentional inclusion has also had the indirect effect of creating a space for advertisers to reach those viewers. Viewers tuning in for a Rhimes show are also there—voluntarily or not—to watch the ads that fund her shows.

While ad placement is an obvious strategy, Nielsen’s report also notes the wealth of data companies can mine from Twitter. Viewers increasingly tweet during programs and interact with writers and actors. Later, they might also tweet about a new pair of shoes. The result? A marketer’s goldmine for targeting.

The four shows with the most engaged Twitter followers are Power, Black-ish, Empire, and How to Get Away With Murder. Cross-referencing tweets about those shows and users’ other tweets, Nielsen has pinpointed how each show’s followers are likely to shop and interact with brands. For example:

  • Empire’s Twitter base is 24 percent more likely to also tweet about wireless providers than any other product or service;
  • How to Get Away With Murder’s Twitter fans are most likely to tweet about cosmetics (32 percent);
  • Power’s tweeters are most likely to tweet about footwear (49 percent); and
  • Black-ish fans are most likely to tweet about travel services (38 percent).

“That's the really cool thing about the direction we're going in, from a combination of social-media platforms and TV and the integrated nature of both,” says Pearson-McNeil. “When you can pick what's going on on television by just following your Twitter posts, if you see what's really lighting up the posts, businesses can't stick their heads in the sand and ignore that.”

Call it synergy, chemistry, or social media, the fact is that black consumers remain the cultural trendsetters they have always been. The difference is that now companies can find them, aggregate their behavior data, and use it to shape how they reach these in-the-know and influential consumers.

This article is from the archive of our partner National Journal.