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A New Market
Marketing to gays, lesbians lucrative


Carlos Morales realized that InterContinental Hotels and Resorts had to "come out" about two years ago.

After searching for a consumer market that would continue to spend lavishly -- particularly on pricey InterContinental hotel suites -- in a poor national economy, Morales knew the Atlanta resort company needed to shift its marketing approach; they needed to advertise directly to the gay and lesbian community.

Morales called InterContinental's ad agency, the Campbell Group Inc., in Baltimore. Morales and Campbell's co-Creative Director Cristina Creager and account executive Stefan Muirhead decided the best way to get new gay and lesbian customers was to alter one of the resort company's standard ads, featuring an InterContinental Beachcomber suite on the waters of Bora Bora.

The Campbell Group's ad campaign was one of the first Baltimore examples of a national advertising trend that is yanking top name brand companies out from under their conservative shells and pushing their products on the national gay and lesbian market.

"Things are changing quickly now," said Bob Witeck, CEO of Witeck-Combs Communications, a Washington, D.C.-based consulting firm. "It's not a high-risk enterprise, but there's still people who fear if you speak to gays and lesbians you will lose all your customers. But we're in the business of business, not social policy."

The customer response at InterContinental couldn't have been better, Morales said.

"I've been attending some of the Pride events in D.C. and West Hollywood and received quite a bit of feedback," he said. "We had about 10 couples who said, 'Wow. That's the Beachcomber where we spent our honeymoon.' It's doing absolutely great."

A Giant National Market

Major brand names like American Airlines, Disney and Bridgestone tires have been targeting the national gay and lesbian market for years, filling the pages of metropolitan gay and lesbian publications with ads.

The market's enormity alone has enticed companies to forget about possible negative stigma and jump into the market. About 6 percent to 7 percent of the entire U.S. adult population is gay, lesbian or bisexual, according to Witeck Combs market research. That's 13 million to 15 million potential niche customers who many local companies overlook.

"There are lots of fields where there is no outreach to gays and lesbians," Witeck said. "But a lot of companies are feeling the pressure to find niches; niche marketing is the last frontier."

But while the national gay and lesbian community's population size doesn't match other large minority groups nationally, it is one of the biggest buying forces. Those 13 million to 15 million people that make up the U.S. market are worth about $450 billion, Witeck said. America's Hispanic and African-American markets are about double the size and worth $581 billion and $646 billion, respectively, according to Witeck research.

"The data does support a few things: brand loyalty," Witeck said. "[Gays and lesbians] are more apt to be online. They're more apt to choose luxury products. They seem to flock to products that are more distinctive."

The gay and lesbian community doesn't necessarily make more money, Witeck said, but they do have more of what retailers and companies drool over: disposable income.

"A lot of urban livers tend to be gay and lesbian," said Jack Gilden, president of Gilden Integrated, a Baltimore advertising firm. "Two incomes, no kids, big incomes -- it's a great market."

But without a solid local gay and lesbian market, there's no incentive for companies with smaller advertising budgets to shell out the big bucks to market to niche communities. Official population numbers for gay communities in areas around the country are often inconclusive and based on debated statistics, so firms are often wary to commit to an underwatched market.

Baltimore's gay and lesbian population, however, is substantial and entirely marketable, several public policy and advertising experts said. According to research by the Urban Institute, a Washington, D.C.-based nonpartisan public policy think tank, Charm City's gay and lesbian population could be up to 50 percent larger than the national average.

Several studies, including Witeck-Combs' research, have said that 5 percent to 7 percent of the entire U.S. population is gay or lesbian, which means 7.5 percent to 10.5 percent -- or about 50,000 to 70,000 people -- of Baltimore may also be gay, said Gary Gates, a research associate at the Urban Institute.

Census numbers about metropolitan gay populations are often vague since they only examine those in same-sex relationships, and not all gays and lesbians are going to have partners, Gates said. But among 62 U.S. metropolitan areas -- a city and its outlying suburbs -- the Baltimore area ranked 33rd. Baltimore City ranked 26th.

Anthony W. McCarthy, publisher of Baltimore Gay Life newspaper, said advertising in his paper has transformed since its debut more than 20 years ago.

"Our [gay] community is extraordinarily brand loyal," he said. "Companies [who advertise with Gay Life] are rewarded with that brand loyalty. Our advertisers are recognizing that value."

National brand name companies' shift from apprehension toward the gay community to a full on marketing attack has been a progression over the past two decades, McCarthy said. In the past few years, national brands like Anheuser Busch, Comcast Corp., the Sundance Channel and Artisan Entertainment have bought ad space in Gay Life, sales manager Robert Blount said.

The newspaper's ad-vertising department is already in the beginning stages of attracting bigger national companies who have placed ads supporting the gay and lesbian community in other publications, Blount said. Last week, he mailed media kits to American Airlines, Subaru, AT&T, HBO, Showtime, the Discovery Channel and Avis.

Gay Life brings in $15,000 to $20,000 in ad revenue per issue and is published every other Friday. A full-page ad costs about $850. The newspaper has a circulation of 15,000.

Gay? We want you!

Advertising to the gay and lesbian community has changed drastically since the '80s when advertisers clearly weren't in touch with the market, said Andy Dumaine, creative director at the Campbell Group.

"[Today's ads are] really just a recognition of that target being a valid target," he said. "[Advertisers] in the late '80s said, 'Hey! You're gay! Come stay here!' Now it's just people as people. Then, they went out of their way to make sure you knew it was about the gay community.

"In today's marketplace the last thing you want to say is, 'Hey. You're gay; we want you.' You simply want to connect with people. Do something subtle. You don't have to be gay to write compelling messages, but you don't want to rely on clich├ęs and stereotypes. A little humor and cynicism goes a long way in the gay market."

Along with a newfound sense of humor, companies seem to be changing their marketing approach in recent years, after being fearful of anti-gay backlash in the last two decades, Witeck said. Some backlash still exists: Early last month, several conservative activists wanted to fly anti-gay banners over Disneyworld in Florida to protest the amusement park's gay and lesbian promotion that attracts more than 100,000 gays and lesbians annually.

However, several top advertising firms have been researching new ways to capitalize on more appealing niche markets. Baltimore's Eisner Communications has its own multicultural advertising division that caters to minority groups, including gays and lesbians. Mini-markets have become too attractive to ignore, Eisner Creative Director Stephen Etzine said.

"Mass marketing isn't mass marketing anymore. There are lots of genuine, smaller markets you can reach much more efficiently," he said. "Anybody who doesn't pay attention to these markets is crazy."

Muirhead agreed.

"Recent research has shown the gay community spends $90 billion globally," he said. "[Conservative companies] want safe. They do not want to upset anybody."

Corporations -- and ad agencies -- that continue to shy away from the gay and lesbian market are going to lose in the end, he said.

"We will be more than happy taking the business from you," Muirhead said.

Posted on aef.com: July 7, 2003

 

Jonathan Cribbs, Baltimore Business Journal. July 4, 2003

Copyright © 2003 American City Business Journals, Inc.. All rights reserved.