(FORTUNE Magazine) – When the head of a 12-week-old advertising agency casually mentions that he's going after--and expecting to get!--a hefty chunk of business from big spenders like Anheuser-Busch and McDonald's, it's not unreasonable to stifle a bit of a chuckle, roll your eyes, and think to yourself, "Who does this guy think he is?"

Well, in this case, he thinks he's Spike Lee, a guy who--under his company, 40 Acres and a Mule--has directed ten feature films, developed successful ventures in merchandising and retailing, and created some of the most memorable and innovative commercials of all time. In the late 1980s, his distinctive Air Jordan ads for Nike became the template for marketing cool. (One of them featured the diminutive Lee as a skinny-legged, funky-glasses-wearing bicycle messenger named Mars Blackmon, who never stopped yapping and introduced us to the show-me-the-money phrase of its time: "It's gotta be the shoes!") Today the advertising landscape is littered with campaigns that owe hosannas to Lee's cinema verite, his hip use of black and white photography, his deliberately rough-hewn feel, as well as his clever use of celebrity endorsers, in particular Michael Jordan. (Indeed, Jordan's burgeoning acting career can be traced to his hilariously stoic endurance of the Blackmon character: "No, Mars," he explained patiently. "It's not the shoes.")

Now, as one of the most recognizable and respected brand names in media, Lee thinks he can beat the big ad houses at their own game with his newest venture, Spike/DDB, a fifty-fifty partnership with one of Madison Avenue's most prominent agencies, DDB Needham.

He may be right; just out of the gate, the shop has already signed two high-profile accounts. You'll soon start to see its ads promoting the May 3 heavyweight championship rematch between Evander Holyfield and Mike Tyson, an account with around $15 million in billings. It also picked up Finish Line, a shoe retailer in the Midwest, which is expected to provide some $8 million in billings.

Not a bad start for any fledgling agency. But for Spike/DDB to become a major player in the ad game, Lee will have to traverse a treacherous divide that has long pitted the largest agencies against the handful of black-owned firms that have struggled for years to get companies to see the value in targeted, ethnic advertising, and, in doing so, obtain an equitable share of the estimated $173 billion advertising market. Indeed, the very creation of Spike/DDB has highlighted an uncomfortable truth about the ad business: Outside of country music, it may just be the most lily-white business on earth. According to a 1997 study by the U.S. Bureau of Labor Statistics, only 4.1% of the industry's labor force is African American, a figure that includes the primarily African-American employees at the 25 or so major black-owned agencies. As Mark Robinson, the newly hired head of Spike/DDB, puts it, "The advertising agency business used to be almost entirely a business of middle-aged white guys from the suburbs. Today, it's almost entirely a business of young white guys who live in both the city and the suburbs."

What Lee wants to do is change that, which is, after all, the right thing. Yet his noble goal hasn't kept Lee's arrival on the ad scene from stirring up the close-knit community of black-owned agencies. "If Mr. Lee wanted to form a relationship, he could have picked out some of the successful black agencies instead of going back on the plantation," says Vince Cullers, CEO of the Chicago agency that bears his name. Lee is unfazed by such talk. "First," he replies, "I'm not on a plantation, because I own half of this. This is a joint venture. Second, I think that if I'd come to Byron [Lewis, CEO of Uniworld, the largest black-owned agency, with $140 million in billings last year] or [Thomas] Burrell [CEO of the Burrell Communications Group, another major black-owned agency] and said, 'I want to come in and own half your company,' they'd have looked at me like I was crazy, and rightly so." What's more, he continues, with one or two exceptions, his directing jobs have not come from black-owned agencies. "If they don't want to hire me as a director," he asks, "why do they want to hire me to go in on a fifty-fifty partnership with their businesses, which they've worked to build from the ground up?"

The reaction to Spike/DDB among the major agencies, in contrast, has been more sanguine. Sniffed an executive at one of the largest shops: "I don't think it's a threat."

To put some of this jabber in perspective, it helps to first understand the history behind the chasm between the major agencies and their ethnic-targeted brethren: The advertising industry was founded on a belief in mass marketing. Reach as many people as you can, the formula goes, and you're bound to hit plenty of consumers. Since you and I were seen as part of a shuffling herd, agencies saw little need for specialized knowledge about us individually--and especially little need for expertise in marketing to ethnic consumers; it was assumed that they watched, listened to, and read what everyone else watched, listened to, and read. Now we know better. Consider television. With only three major networks, it was once possible to reach a broad swath of America simply by putting an ad on broadcast TV. Today, with the proliferation of mini-networks and cable, narrowcasting rules. A recent study by the BJK&E Media Group, the research arm of Bozell Advertising, found that the list of top 20 programs among black households had only one show in common with the top 20 among whites: Monday Night Football. As Burrell says without hesitation, "Mass marketing is dead, or at least moribund."

Meanwhile, many talented African Americans, shut out of the major agencies, gravitated to a handful of smaller black-owned agencies, which created a niche for themselves by developing successful campaigns aimed at black consumers for those companies that were slowly comprehending the value of speaking directly to ethnic markets. According to Ken Smikle of Target Market News, a Chicago publication that tracks industry trends relating to the African-American consumer market, national marketers spent an estimated $865 million to reach black consumers last year, a small portion of the overall dollars spent (less than 1%) but 16% higher than the amount spent in 1990. Only about a third of that total ($330 million) was spent with black-owned agencies, in part because those agencies lack the ad-buying clout and economies of scale possessed by the large, general-market shops.

The ad business is finally shifting in its appreciation for targeted marketing, whether by gender, age, or ethnicity, as the industry's ancient mass-market beliefs continue to be proved false. What's more, advertisers are belatedly realizing that talented minorities can actually--gasp!--enhance a campaign. And not just one aimed at ethnic consumers either. "Black people know more about white consumers than white people know about black consumers," Burrell notes. "We live in a white society, and we have to learn to function in a white world. Also, the black market has become the leading edge for other segments, especially youth. Appealing to black consumers is a way to appeal to the rest of the market."

As companies have come to realize this, black-owned agencies have seen a trickle of general-market business come their way, including the likes of McDonald's to Burrell's and Mars's 3 Musketeers account to Uniworld.

This still tiny but growing stream of new business is why Spike/DDB has touched a nerve among some black advertising executives. Why now, they ask? Robinson, whom Lee lured from Uniworld, tries to defuse the potential rift by describing Spike/DDB as distinct from both the general-market and the ethnic agencies. The term he prefers is "urban market agency"; he elaborates, "it's not necessarily that our target consumers are urban Americans, but that we're leveraging our insight and expertise about urban America because of its influence against virtually all American consumers."

Funny thing. That sounds exactly like what the other black-owned agencies have been saying about themselves for years. "I think Spike's being a bit disingenuous by saying he's not going to compete with the black agencies," says one black media executive. "Just say you're going to compete, and get on with it. That's business."

Byron Lewis, the head of Uniworld, says one of his most immediate concerns is retaining the talent he's spent years cultivating. "If [Spike/DDB] encourages the major agencies to hire more African Americans, Hispanics, and everyone else, and to advertise more heavily in targeted media, then I see the only entities that would have any difficulty will be African-American agencies." But, he adds philosophically, "it's competition we just have to face." And he holds out the hope that, should the shop succeed, it could result in more general-market business being funneled to other black-owned agencies and produce an influx of a rainbow of new talent, sentiments echoed by Robinson, who says Spike/DDB will help ethnic agencies "broaden their portfolio and help clients see them in a more expansive light."

Still, ethnic agencies aren't going to sit back and wait for Spike/DDB to expand--or take--their business; they're fighting for their own piece of the action. Burrell, for one, argues that for general-market clients looking to harness black expertise, the logical place to go is an agency whose head is devoted to advertising full-time, not one chaired by a filmmaker dabbling in the business. "I truly don't think Spike Lee is going to stop making movies," says Burrell. "He may be able to do an excellent job in his spare time, but I know there are talented people who could do it full-time." Lee, in return, scoffs at the notion that he might give the agency anything less than his full attention. "I'm in this from head to toe," he says. "I'm not just going to drop in to pick up my check, no way, no how." Indeed, Lee currently plans to direct all spots for the agency, even as he continues to write books, teach courses, oversee a new half-hour show for ABC, venture into cyberspace, and, oh yeah, make movies. How will he pull this off? Simple. Explains Robinson: "He works while the rest of us sleep."

In the end, the black-owned agencies may not have nearly as much to worry about as the seemingly complacent general-market ones. It is, after all, their accounts that Lee has in his cross hairs. And yet general-marketers seem truly nonplussed by Lee's arrival. Here's the take from one white executive at a major agency: "There are certainly some classes of product that only appeal to African Americans, and it could make sense for a marketer to home in on resources with expertise in that area. But if it's a mass-consumed product, you don't want to be overly conscious in that area."

Robinson is counting on just that sort of complacency to help Spike/DDB pick up accounts. The general-market agencies "don't take us seriously," he says with a smile. "It'll be at least a year before they look back on the work we've done and see that the clients we've taken away from them are now quite happy with us. Then they'll recognize that it's time to react. And we'll still be two steps ahead."