Black History Month is a time to reflect on the historical sacrifices of African Americans and celebrate their important contributions to society. Increasingly, it also has become an opportunity for brands — ranging from Coca-Cola to Sephora — to foster connections with consumers who value diversity, according to Oren Reshef, an assistant professor of strategy and entrepreneurship at Olin Business School at Washington University in St. Louis.
Yet year after year, corporations miss the mark with Black History Month campaigns that range from inauthentic to offensive. In a time of bitter polarization, even the best-planned campaigns risk alienating a subset of consumers.
With these concerns in mind, how can corporations foster more equitable markets and connect with consumers who value diversity while also avoiding backlash? Reshef’s research, forthcoming in American Economic Review, demonstrates one such way.
Reshef and co-authors Abhay Aneja, at the University of California, Berkeley, and Michael Luca, at Johns Hopkins University, analyzed the impact of a search function introduced by Yelp in June 2020 that makes it easier for consumers to specifically identify Black-owned restaurants. Their analysis, which spanned from April 2019 through August 2021, showed labeling restaurants as Black-owned significantly boosted demand, as measured by increasing online engagement, phone calls, food orders and in-person visits.
On average, Black-owned restaurants under this label had a 67% increase in online traffic compared with the baseline. A later rollout of a Latinx-owned business search function resulted in a similar 60% increase in online traffic.
However, the researchers noted that the success of this label largely depended on consumer demographics and attitudes in the market. The positive effects were most pronounced in predominantly white, left-leaning areas with lower biases against racial minorities.
Yelp’s Black-owned business label launched during the height of the Black Lives Matter movement. However, additional analyses suggest timing was not the only factor in its success, Reshef said. For instance, nearly 10% of Yelp businesses labeled as Black-owned opted in more than a year after launch. The researchers observed similar increases in consumer engagement for these late adopters once the label was applied.
Additionally, a similar campaign introduced in 2023 by Wayfair, an online furniture sales platform, led to increases in engagement and revenue for Black suppliers.
“Our research sheds light on an emerging tool for companies interested in social impact: making it easier for customers to find and then invest in companies in a way that aligns with their values. Our analysis shows revealing minority ownership — a relatively low-cost change — can improve the economic outcomes of minority-owned businesses,” Reshef said.
Designing a winning strategy
Interest in supporting minority-owned businesses has grown in recent years thanks to social movements, like Black Lives Matter, that highlighted racial disparities and inequality in the U.S., Reshef said. That shift in consumer interest led to corporations — including Amazon, Target and Instagram — adopting strategies to foster more equitable markets.
One common approach has been promoting minority-owned businesses by informing customers about the business owners’ racial backgrounds. However, Reshef warned that there are risks to doing so.
“From past research, we know that revealing suppliers’ race on a platform can lead to an increase in discrimination. We have evidence of this happening on Airbnb and eBay, for example,” Reshef said. “As we approached this project, we were worried the same thing would happen on Yelp.”
One of the unique factors of Yelp’s program — which may explain its success — is that consumers “opted in.” The Black-owned label was only shown to those who chose to use the search function. In this way, Yelp’s design only targets the right consumers, Reshef explained.
Another important factor in Yelp’s program is that it provided consumers with information but stopped short of providing preferential treatment for minority-owned businesses, Reshef said. For example, if Yelp had offered a discount exclusively for orders from Black-owned businesses, consumer reaction may have been different.
Altogether, Yelp’s program offers a model for businesses to foster equity during Black History Month and all year long.
“We expect firms to cater to consumer demands,” Reshef said. “If consumers want bigger cars, if they want cheaper products, we expect firms to produce them. If consumers want to have more Black-owned businesses and want a more equitable platform, I think that’s exactly what platforms like Yelp should be providing.
“This is a win-win situation: Consumers are happier because they’re getting what they want. Black suppliers are doing better — they’re increasing sales. And the platform is also doing better.”
