The Spending And Digital Habits Of Black Consumers Present Opportunities For Marketers

African Americans are continuing to emerge as powerful consumers and creators. The borderless digital age has allowed for explosive creative growth and buying power within the black community. As social consciousness increases and African American influencers grow in prominence, black consumers and creators are poised for a massive increase in buying power — both on traditional platforms and new “financial ecosystems,” those created by African American entrepreneurs. Although marketers must be aware that African Americans are not a monolithic group, understanding emerging trends and themes can be a useful tool for strategizing campaigns.

According to the Selig Center for Economic Growth, “black buying power will rise from $1.3 trillion in 2017 to $1.54 trillion in 2022. This estimate for 2022 reflects a 5.4% increase over last year’s estimate of reaching $1.46 trillion in 2021. The 108% increase in black buying power between 2000 and 2017 outperformed the 87% rise in white buying power and the 97% increase in total buying power (all races combined) during the same period.”

Some other facts about the buying and digital habits of African Americans:

• 54% of the African American population has lived their whole lives in the digital age.
• Social networking reaches far into the African American population as a platform for creation and communication, with 81% of users engaging on a smartphone, 43% on a tablet and 13% on a computer.
• 73% of African Americans are gamers, and the lack of diversity in the gaming industry is pushing innovation from the African American community.
• 19 million of Twitter’s 67 million users are African American.
• African Americans over index against the rest of the U.S population for grocery spending, and interest in trying meal kits is growing among black consumers, more so that non-Hispanic whites, 40% vs. 29%.
• At a rate of two-to-one versus non-Hispanic whites, African Americans feel “really good” about seeing celebrities in the media that represent them or share their ethnicity.

Black Consumers Have Buying Power, Value Authenticity And Exhibit Brand Loyalty

African Americans make up 14% of the population, but there are many areas where their spending is proportionally substantial. “Black shoppers spent $473 million in total hair care (a $4.2 billion industry) and made other significant investments in personal appearance products, such as grooming aids ($127 million out of $889 million) and skin care preparations ($465 million out of $3 billion),” according to Black Impact: Consumer Categories Where African Americans Move Markets, a study by Nielsen. In general, African Americans are spending more in the beauty marketplace than in prior years, and their spending habits are influencing other shoppers.

Research shows that there is a “halo effect” around the spending decisions of black consumers, and it’s impacting other demographic groups. “These figures [in the chart above] show that investment by multinational conglomerates in R&D to develop products and marketing that appeal to diverse consumers is, indeed, paying off handsomely,” says Cheryl Grace, Senior Vice President of U.S. Strategic Community Alliances and Consumer Engagement at Nielsen. In the beauty market specifically, because of the spend of black consumers, beauty products are becoming more diverse and appealing to the general market as well. This mainstream growth sends a strong message to marketers that employing multicultural growth strategies and optimized, inclusive and targeted messaging can pay off.

A brand’s cultural relevancy and engagement with social issues also resonates with black consumers. “38% of African Americans between the ages of 18 and 34 and 41% of those aged 35 or older say they expect the brands they buy to support social causes, 4% and 15% more than their total population counterparts, respectively,” according to the Black Impact report.

This expectation that brands will be socially and culturally aware, coupled with the prevalence of social media use among black consumers, has increased pressure on companies to build new relationships with African Americans and protect their existing market shares within the black community. With 44% of African Americans more likely to support or interact with brands online than their white peers, nurturing these nascent interactions could be critical for brand growth.

African Americans Are Young, Creative And Influential

The mean age of African Americans is 34, making them the second-youngest racial or ethnic group in America, with 26% clocking in as Millennials and 28% under the age of 18. According to the study From Consumers to Creators: The Digital Lives of Black Consumers by Nielsen, the growing influence of young African American culture is reflected in their use of digital media as a tool for creation and entrepreneurship.

61% of African American adults agree new technology is “fascinating” to them, with technology use running the gamut from video and audio streaming to ideation web sites. In addition, African Americans are more likely than non-Hispanic whites to learn about technology from others, to read about new technology products and to recommend or advise on technology products they like. Their media consumption also over-indexes non-Hispanic whites when it comes to all smartphone related interactions and time spent listening to the radio.

African Americans are becoming vocal, educated media consumers and creators. Recent deals by Netflix with the Obamas, Shonda Rimes, Spike Lee and Ava Duvernay illustrate the financial and creative investment major corporations are committed to making with black artists and innovators. Amazon followed suit by signing an option agreement with filmmaker Jordan Peele, and Apple a multiyear content package with Oprah. As the Digital Lives study points out, these and other prominent African Americans often hire from within the black community, which likely impacts brand loyalty for black consumers and has a positive impact for viewership across all demographics.

The powerful “halo effect” increases viewership, showing once again what can happen when black consumers engage with a product.

“The influence of African American-created content is having a profound effect on the mainstream, as evidenced by a recent Nielsen analysis of TV viewership, in which shows with a predominantly black cast or a storyline focused on a black character, such as Black-ish, How to Get Away With Murder and This Is Us, drew substantial non-black viewership,” according to the Digital Lives study.

In addition to working with existing platforms like Netflix and Amazon, African Americans are also creating “entirely new black financial ecosystems” that are unique platforms and business models. These businesses are “mixing and merging genres and causes from hip-hop and eco-consciousness to rock music and skateboarding culture.” For instance, acting and hip hop royalty Will Smith and his son Jaden founded Just Water, a bottled water company that aims to have a lower ecological impact than its predecessors. Like Jaden Smith, these ventures are often fronted by young social media savvy celebrities that have the resources to try new projects, creating inventive companies and outlets for engagement. Black entrepreneurship is also happening in the start-up world by non-celebrities, exploring imaginative beverage and exercise businesses and forays into medicine, PR and interior design.

Marketers Should Recognize The Powerful Tools Available To Create Brand Excitement For Black Consumers

“Black consumers have brokered a seat at the table and are demanding that brands and marketers speak to them in ways that resonate culturally and experientially–if these brands want their business,” says Nielsen. As a group that skews younger, authenticity, connection and social awareness are important to black consumers. Marketers must be aware of this when crafting campaigns for this market sector. By understanding that black consumers and creators are growing in power and influence, marketers who position themselves well can grow brand loyalty with African Americans, enjoy mainstream gains and increase diversity among their customer bases.

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About the Author

Sarah Cavill is a Marketing Communications Writer at Digital Media Solutions (DMS), the fastest-growing independent digital performance marketing company. DMS helps its clients accelerate growth by deploying diversified and data-driven customer acquisition solutions that deliver scalable, sustainable and measurable marketing results. DMS performance marketing solutions connect the right consumers with the right offers at the right time to achieve the marketing objectives of our clients. DMS is continually innovating to provide new and emerging media and technology solutions that minimize waste and maximize results across the most competitive industries. Since its inception, DMS has demonstrated incredible year-over-year growth which has earned recognition on the Inc. 5000 list in 2014, 2015, 2016, 2017 and 2018.

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