By Gary J. Nix
- Nearly $1 out of every $5.75 of buying power in the U.S. belongs to an African American, Asian-American or Native American households
- Multicultural consumer spending is up from $458B in 1990 to $3.2T in 2021
Multicultural groups’ consumer spending power is growing, despite industry ad spending not reflecting this power. It’s time for brands to get on board because nearly $1 out of every $5.75 of buying power in the U.S. belongs to an African American, Asian-American or Native American households, this is a significant shift from 2000 when that number was only 66 cents. Let’s take a look into the burgeoning importance of multicultural ad spending and its role in securing diverse customers.
Why This Matters: With companies trying to recover from post-pandemic revenue drops and panic based on a potential recession, tracking real data around buying habits is critical. The University of Georgia’s Selig Center for Economic Growth’s 2022 Multicultural Economy report found that 17.4% of real money spent in the U.S. came from African-Americans, Asian-American, and Native American households. Hispanic consumers are also set to grab a large share of this shift in disposable income. By 2026, these shoppers are expected to control 12.1% of the total.
The states with the largest increase in buying power mirror those with the fastest growth in their populations. It is notable that 10 states with largest increase in buying power also had the fastest population and industrial base growth: Utah (102%), Colorado (91%), Washington (89%), Idaho (88%), Oregon (80%), Arizona (78 %), California (77%), Texas (77%), Nevada (77%) and Florida (75%). Also, multicultural consumer spending is up from $458 billion in 1990 to $3.2 trillion in 2021, according to the University of Georgia.
Furthermore, it’s more than worth paying attention to any group of people experiencing a 600% boost in spending in only a few decades. Many of the most financially successful companies (*cough cough* Nike *cough) have historically filled their coffers with the money from these communities. Yet, these groups represent growth opportunities for a lot of businesses. All while of these empirical numbers portrayed by trillions and trillions of dollars feel impressive, the power all of this money holds means much more.
Situational Awareness: For brands to win over diverse customers, they need to step up their multicultural ad spending game. It is said by many in the industry that the job of advertising is not to sell, but to influence. That means if you can find who, or whose money influences others to also buy, you’ve found a giant key to your brand’s prosperity. Anecdotally, there is plenty of proof regarding the cultures that set trends and get everyone to contribute their money to specific products and services.
To some, anecdotal truth is not enough. With that said, there is science, contextual science that supports these facts. Thus, once again, these big numbers coming from these audiences don’t lie. Pay close attention on how to connect and not pander to multicultural audiences. If you don’t you’re potentially leaving money on the table.
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