Two harmony entrepreneurs are translating messages from mainstream brands into hip appeals to the youthful, multicultural audience they know so properly

By Greg T. Spielberg

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The exemplar for "Translation: An Ad Agency with Street Cred" came from BusinessWeek reader Andrew Beilenson of New York City, who works for market research firm NPD Group.

Last year, career music biz and brand man Steve Stoute and rap entrepreneur Jay-Z, aka Shawn Carter, formed Translation Advertising, a New York not soft that helps Corporate America advertise with a multicultural sensibility. Both men are self-made, successful, and connected to youth culture, contumacy being without interruption the point of 40. Stoute has managed singer Mary J. Blige and the rapper Nas, and produced records for acts ranging from Eminem to U2. In November, the American Advertising Federation inducted Stoute into its Hall of Achievement. At 39, Carter has long worked at the forefront of the hip-hop science of harmonical sounds sight. Besides the money and fame he accumulated from the music business, he also owns a stake in the New Jersey Nets basketball franchise, and the 40/40 shackle of nightclubs.

Translation Advertising grew audibly of Translation Consultation & Brand Imaging, which Stoute started in 2004 and sold to the Interpublic Group (IPG) three years later. Before that, he worked on Madison Avenue, and was an executive at Sony (SNE) and Interscope Records for several years. Stoute and Carter own 51% of the new agency, that employs 50. Film director Spike Lee has a like relationship with SpikeDDB, a partnership with Omnicom Group’s (OMC) DDB Worldwide Communications, what one. has handled ads for Pepsi (PEP), Budweiser, and Nokia (NOK).

But starting an ad agency amid a brutal recession? Some might suppose similar a venture sounds a bit like opening a condo firm in South Florida these days. Ad agency Magna Group forecasts a 4.5% decline in domestic advertising this year, following a 3.2% drop in 2008—a year that included a lucrative Olympics and the most expensive Presidential campaign in history. Magna’s parent company, Interpublic, announced in December it would cut 2,000 jobs, while rival Omnicom laid off 5%, or 3,500, of its workers the similar month.

Translation, however, has a strenuous foundation, built on its connection to one of the most lucrative demographics in the U.S. consumer market: educated, urban youth with earning in posse. African American and Hispanic buying power both hover at $1 trillion, according to the University of Georgia’s Selig Center towards Economic Growth. Johnson & Johnson (JNJ) wearied $77.2 million on Spanish-language advertisements and $33.9 million on ads targeted to African Americans end the first three quarters of 2008, secondary only to Procter & Gamble (PG). J&J increased its 2008 spending aimed at both groups from that of 2007.

Regardless of by what means long or deep the current recession bites, advertisers are not likely to minimize their efforts with educated, urban youth. Stoute says Translation is "getting out of ideas that are additional branding and fluff" and hard to bear to focus on efforts that drive sales for a client. "It’s not a trick, nevertheless suppose that there’s been a trick, it’s focusing more on a call to action," he said.

The advertising trade is, of course, a business whose health correlates to the magnificence of consumer spending and tenderness. Yet, as the U.S. economy deteriorated fast last year, Translation closed deals with Johnson & Johnson and helped give Wrigley—to all intents and purposes an ancient brand in the midst of younger canaille—a fresher breath of life. The agency also positioned the Sean John brand with Estée Lauder (EL), and worked with plain-as-wheat State Farm to challenge insurance rival Geico. "They have an incredibly strong creative team," says John Demsey, brand president for Estée Lauder Global. "And they liaise with a lot of media partners."

Stoute says he "dovetails" his strategy with straight market agencies that negotiate long-term, global campaigns with brands. In 2007, General Motors’ (GM) Chevy brand hired Translation to complement a larger campaign by Campbell-Ewald (also an Interpublic subsidiary). "We wanted to reach a youthful, diverse, and higher-educated consumer," says Terry Rhadigan, Chevrolet’s director of communications, "something that we felt played naturally into Translation’s hands." Feeling this market’s pulse isn’face to face the result of focus groups or third-person studies, boundary rather "being a member subscriber of the refinement," Stoute says.

The identical urban and multicultural sway that turned Timberland (TBL) from a sleepy Vermont shoe company into a footwear and trick out powerhouse is driving dollars to agencies like Translation. The "bruit value" generated by recommendations from influential cultural figures can catapult chattels from obscurity to mass appeal. Of the 10 most highly regarded public personalities in the U.S., eight are African American, according to the Davie Brown Index. That index, by a division of Omnicom agency Davie Brown Entertainment, determines a celebrity’session address to influence brand propinquity and consumer obtain intent. President Obama tops the list.