Spanish-language marketing is huge. So why did this firm fail?
Amistad Media Group, Austin
Founder: David Flynn The business: Media-buying firm specializing in Hispanic markets Opened: 1994 | Closed: 2006 | Cause of death: The perils of subcontracting
Few people understand the booming market for Spanish-language advertising better than David Flynn. The founder of Austin-based Amistad Media Group was an advertising industry pioneer--the first Hispanic (he was born in Chile) to start a media-buying firm. His niche: helping companies reach small but fast-growing Hispanic communities in places such as Kansas, Nebraska, and North Carolina. One client says that by targeting these communities, Flynn helped his business increase sales by $1 million per year.
Most companies engaged in Spanish-language marketing like to work with a traditional agency, which then subcontracts work for the Hispanic market to smaller firms like Amistad. Agencies of record have a habit, however, of not giving much of the credit for a client's success to their subcontractors, so specialized advertising firms often expand their menu of services in order to move up the agency food chain. But Flynn did not branch out.
Nevertheless, for many years, Amistad thrived behind the scenes. In 2003, the firm's media buys peaked at $49 million. But Amistad had, at any given time, only a handful of clients. When any one client switched agencies, Amistad's reliance on the others grew. Novamex, a Mexican soft drink company, and the U.S. Army became the pillars of Flynn's business. And then, in 2005, the Army dropped its agency. Flynn, who by his own admission was more adept at mastering the nuances of the Hispanic market than he was at winning new business, says today that he should have hired a strong salesperson before he lost the Army's business. "If we would've had one more Novamex, we would've been fine," he says. But Amistad didn't have that and it never developed a way to find it. In March, Flynn suspended operations.