An increasing number of mainstream companies are selling directly to gays and lesbians. How does it feel to be an ideal market? Marketing strategists that specialize in the gay dollar say being a dream market can bring the gay community political leverage, more visibility and increased tolerance: Sounds like a win-win, but even the experts say gaining social progress from corporate interactions is a tricky, two-way street.

On Thursday, April 29, the Greater San Diego Business Association, a San Diego association of GLBT businesses, will present its second annual Expo to introduce the business world to “The Growing Gay Market”. While the GSDBA is itself a local organization consisting largely of GLBT-owned and -oriented businesses, the purpose of the Expo is not just to promote businesses from the gay and lesbian community, but also to promote the gay and lesbian community as an ideal market for mainstream companies, and to build bridges between gay and lesbian businesses and other parts of the San Diego business community.

“The EXPO is primarily important to lower barriers between different communities in San Diego and in the county,” says GSDBA Executive Director Joyce Marieb. She explains that one of the main purposes of the Expo is to foster relationships within the San Diego business community and to bring businesses together through their common interests, whether they are situated in the GLBT community or not.

“We are all in business and we all need to promote the economic well-being of the region,” says Marieb.

This is why the GSDBA sponsors what Frank Sabatini, Jr., media director for the event, calls the only business-to-business educational event in the gay and lesbian community. “The San Diego community is more aware of the importance of the gay and lesbian market than many secondary cities,” says Sabatini. “San Diego is stepping up to the plate, but it’s still a long time coming.”

This year’s full-day Expo will have between 50 and 82 exhibitors, with more than 350 people expected at the event’s luncheon. In addition, there will be a celebration with live music at the evening’s event commemorating the GSDBA’s 25th anniversary.

The Expo is partly designed to further the more general goals of our city’s GSDBA. According to Marieb, one of the main purposes of the association is to allow the mostly small businesses that make up the GSDBA to join together to represent themselves and their presence to the wider community.

“We have an association because it’s easier for us to leverage our power,” Marieb explains. “When you’re part of a larger organization it allows for increased networking.”

Apart from building bridges between different parts of the business community, the Expo also has the goal of getting businesses to recognize the importance of the gay and lesbian community as a valuable market, according to Sabatini. In many ways, it is this goal of the Expo that is the most interesting — and may be the most important to the gay and lesbian community at large.

“The EXPO highlights the incredible buying power of the GLBT community and puts a human face on that community,” Sabatini says. “Those businesses tend to underestimate the buying and business power of our community. So, first and foremost, its purpose is to introduce mainstream businesses to the GLBT community, but it’s a two-way street.”

Oftentimes when we hear about the gay dollar, we get a barrage of statistics on how wealthy the community is, and how much disposable income we have. But for Vicki Garcia, owner of San Diego-based Marketing Impressions, and for Jeffrey Garber, president of OpusComm Group — and a speaker, with Garcia, at the Expo –loyalty is the operative word.

While the mainstream marketplace is price-driven, the gay and lesbian market is “fiercely brand loyal,” says Garber.

“Even though the community is diverse, we share some qualities,” says Garcia. “We are first adapters and more adventurous, more willing to try new products and services. And gay and lesbian consumers are loyal over other consumers; if you reach out to them, they remember and tend to be more loyal.”

Garber agrees: “Very active consumers coupled with brand loyalty makes a wonderful market for advertisers to tackle.”

The fact that gay and lesbian consumers are so loyal to brands, combined with the fact that we are discriminating consumers, means that in our case, “consumerism is a form of activism that can ultimately translate into legislation,” says Garber. “Advertisers have to approach the market in a very sophisticated manner,” he explains. This means that companies who want to sell to the gay market are required not just to advertise to the community but also to actively court us, with effects both on the way they advertise as well as other factors that the gay dollar is sensitive to.

If advertisers choose to court the gay market, they must choose how open they are willing to be in their advertising.

Advertisers can be subtle, using “gay-vague” ads in which the people portrayed might be identified either as gay or not. Among the most prominent of these in recent years is the commercial Volkswagen ran on the coming-out episode of the TV sitcom “Ellen” . The ad pictured two men out for a drive, picking up and then abandoning a found armchair without picturing any real interaction, either verbal or physical between them. However, it was quickly read as two gay men by many gay and lesbian viewers, while straights assumed that the men were merely roommates. At the same time, as reported by the website Commercial Closet, “Volkswagen denied that the men were intended to be boyfriends and said it was surprised anyone would think so.”

The advantage of such gay-vague ads for advertisers is that they run little risk of backlash.

However, loyalty of our sort apparently comes at a price. According to Garber, the gay and lesbian market can also be more demanding.

“Although some of my colleagues say it does, vague advertising doesn’t work,” says Garber. “Our research shows it doesn’t.”

Garber argues that while a few years ago these sorts of ads would have garnered gay business, they simply aren’t effective anymore because they don’t show sufficient commitment to the community. And one of the things that gays and lesbians demand with their dollar is a commitment to us as a market. “Advertisers can’t have their cake and eat it, too,” Garber says. “The risk of alienation [for courting the gay market] is very low and the fear of backlash is minimal.”

Garcia partly agrees with Garber’s estimation. “I think that the fear of backlash is there from experience with advertisers,” she says. “Companies do get negative feedback, but if they ride it out, it goes away.” And at the end of the feedback, they keep the market they had and gain a new, loyal market.

If companies wish to gain gay market share they need to be more overt in their advertising, either placing gay-specific ads in gay publications or — even more openly — placing gay-specific ads in the mainstream press. As Garcia points out, Abercrombie & Fitch has chosen to use advertising campaigns that are identified as gay by people in the mainstream and they have continued to be successful both in the mainstream market and in the large gay market that they have created.

So, one way in which marketing to the gay and lesbian community can be of lasting advantage is through the open recognition of the community that this forces.

But there is another way in which the size and loyalty of the gay market can have ultimate benefits. Just advertising to gays and lesbians isn’t enough to gain trust and brand loyalty, Garcia says: “For companies, when you reach out to the community you have to be consistent when they [the gay and lesbian consumer] get there. You have to walk the walk and talk the talk.”

According to Garber, gay and lesbian consumers are sophisticated and educated about the products and services they consume. So, if they are going to gain the GLBT dollar, companies have to exhibit real commitment to the community and this means jumping through some important hurdles. If gays and lesbians are going to spend their money consistently with a company, Garber says, they demand that the company is sensitive to its gay and lesbian employees, exhibiting fairness and non-discrimination. They also demand that the companies they patronize court the market exactly as they would any other part of the market, with a full commitment to the community.

“Eighty-two percent of our respondents are more likely to buy from gay-friendly companies,” says Garber. In effect, this means that our spending power can be used as a carrot to reward those companies that treat their GLBT employees and customers well.

At the same time our spending power and brand loyalty can be used as a stick to punish those companies who do not treat us well. Among the best examples of the ways in which the gay and lesbian community has been able and willing to use its collective pocketbook to force corporate change is the long-lived Coors boycott. Starting in 1977 and continuing well into the new millennium, gays and lesbians joined other minority and labor groups in a boycott of Coors products based on employee relations within the Coors Corporation. The boycott was also in response to the Coors family’s original involvement in conservative groups such as the Heritage Foundation, the Free Congress Foundation, the Castle Rock Foundation and other groups opposed to many of the goals of the GLBT community. This led to such spectacles as large anti-Coors protest contingents in Coors-sponsored Pride parades.

The sheer length of the boycott — at least in some circles — demonstrated the long memory of our community and its economic effects. “The community can be like children being grounded,” says Garber, remembering who has harmed us in the past. And, as Garcia puts it, “We take it personally. We as a community have a long memory of who has helped us and who has hurt us.”

Coors eventually changed many of its internal policies, including introducing non-discrimination policies and a gay and lesbian employee group, and then started reaching out to the community through advertising and event sponsorship in the mid 1980s and the 1990s. Eventually, the Human Rights Campaign rated Coors as 86 out of 100 on its Corporate Equality Index of gay-friendliness in 1992, better than either Miller (at 57) or Anheuser-Busch (at 43), and Coors was among the first brewers to show two men together in an ad.

“There are companies that can reverse their error,” says Garber. “The gay and lesbian consumer is very receptive as long as the company isn’t pandering.” Other boycotts against companies like Cracker Barrel and the recent boycott of Cirque du Soleil for its termination of HIV-positive acrobat Matthew Cusick, have shown how effective the gay and lesbian dollar can be when withheld as well as when spent.

If mainstream businesses underestimate the economic importance of the GLBT community, then it makes business sense that they ought to pay more attention than they have to our community. But, there are also factors that identify our community as not just an underestimated market but in many ways an ideal market for businesses. What are the factors that could make us such an ideal target for companies looking for consumers?

Garber’s OpusComm Group is a marketing firm dedicated to diverse marketing to the gay and lesbian community, and his company has partnered with Syracuse University on the Gay/Lesbian Consumer Online Census , a comprehensive research survey with nearly 9,000 respondents in 2002/2003.

There are a few attributes that make the gay and lesbian community particularly attractive as a market for consumer goods and services, according to Garber. In addition to the loyalty factor, Garber cites demographics and spending patterns that are appealing to sellers, as well as a higher degree of brand loyalty than the general population.

The demographic patterns aren’t that surprising. Garber’s research with the G/L Census reported that only 13 percent of gays and lesbians have children under 18 living at home (22 percent of lesbians and 5 percent of gay men), nationwide, with somewhat higher percentages in California, according to the U.S. Census. This compares to heterosexual households where a little more than half of married couples and about 45 percent of all heterosexual households have children under 18. In terms of marketing, this means that same-sex households are more likely to have income that in opposite-sex households would be spent on children. Garber points out that it’s important to realize that many GLBT households have children in them — and that number is likely to increase — but it still lags behind the rest of the population, making our community a market with more disposable income.

More surprising for some of us who live in the gay and lesbian community is what some research says about incomes. Combined with a higher percentage of disposable income, according to Garber’s research and other similar studies, gays and lesbians simply average higher incomes altogether.

“The median income in our community is $69,998, according to the U.S. Census, [while] the national median income is $42,400,” says Garber. “And 27 percent of gay and lesbian households have incomes over $100,000.” These numbers reflect other estimates of the incomes of gay and lesbian incomes, including one by the Simmons Market Bureau, which found the average income of gay men to be $63,700 in 1992, significantly above the national average. (However that study was based on inserts in national gay newspapers, which may have skewed the results to those more likely to be affluent or well educated.) It’s quite possible that the G/L Census, because it is an online survey, might also reflect those parts of the gay and lesbian community that are more affluent and better educated; it also shows us as more likely to have attended college and graduate or professional school than the general population.

A common response to these sorts of numbers is, if we really are this relatively rich as a community, why aren’t the gay men and lesbians I know doing a lot better than they are? This feeling is reflected in a representative study, a Yankelovitch survey in 1993, which found that, contrary to other studies, the incomes of gay male households averaged $2,000 less than their heterosexual counterparts, with lesbians averaging almost $5,000 lower than heterosexual households. This, at least, calls into question this aspect of the gay and lesbian community as an ideal market. However, whatever the correct numbers are, the perception of gays and lesbians as better earners and better educated makes us more attractive as a market.

Whether we have more money or not, the way we spend it differentiates us from the general population. Perhaps because we are less likely to have children, we are more likely, according to Garber, to spend our money on our enjoyment and ourselves.

“We spend more on travel and entertainment than the rest of the population,” says Garber, “we travel more frequently throughout the year and take international air trips above the average.”

This makes us more attractive to travel companies, airlines, hotels and resorts, since we more reliably spend on their products.

Also, while we may not have children, a large portion of the community are pet owners, according to Garber, making us an important market for pet stores and pet products. And, of course, just like everyone else, we own homes, rent and use banks. “So, mortgage companies, insurers and bankers should be trying to serve our community.”

In addition to being better educated and having more spending money, members of the GLBT community are also more likely than their heterosexual counterparts to spend their money on liquor, other travel-related expenses, eating out, self-care and pampering themselves with spa visits, and they are more discriminating in their consumption, according to Garcia. Echoing a phrase that first appeared in a 1991 Wall Street Journal article, Garcia says, “This is why we call them the dream market.”

Being viewed as an ideal market has its advantages and means that the gay and lesbian community is able to wield its economic power to effect corporate and social change while increasing visibility and tolerance. As Garcia puts it, “The more economic clout we have, the more political and social clout we have, the more tolerance.” This echoes Frank Sabatini, Jr.’s, feeling that, “Business and spending has historically put a human face on communities and this leads to tolerance.”

Is there a downside to this dream? There may be at least a few implicit disadvantages to being viewed as the dream market. While the ad categories most actively targetting gays and lesbians include fashion, travel, financial services and media, the first products marketed directly to gays and lesbians were beer and liquor. Garber identifies Absolut Vodka as perhaps the first product to direct advertising specifically to our community, and since the inception of its ad campaigns more than 20 years ago it has been extremely successful. Since then gays and lesbians have been consistent targets of alcohol and tobacco ads. While bars have often had a central place in our community, this continued focus in marketing reflects a one-sided view of our community, including the consistent sponsorship of large community events by brewers and liquor distributors, and, in the case of tobacco advertising, may have something to do with the higher smoking rates in the gay and lesbian community.

As Garber puts it, “We’re more than just drinkers.”

“We might feel exploited because cigarettes and liquor aren’t necessarily the best for our community,” says Garcia.

In addition to the targeted marketing of liquor to the gay and lesbian community, some aspects of the market profile of the gay and lesbian community – a profile that portrays us as faring better than our straight peers – could conceivably work against us. If gays and lesbians are already doing better than their peers, and are in fact an ideal market because of higher incomes, then gays and lesbians don’t need equality legislation and employment protection, goes one conservative argument. It is partly to counter this argument that some researchers have attempted to show that, in fact, gays and lesbians lag behind others in their earning power.

Finally, apart from stereotyping gays and lesbians as high-earning drinkers, there is something of a tendency to view the community as monolithic and uniformly urban. This perception itself leads to further stereotyping of the community.

This portrayal of the community as compulsorily urbane is a major mistake made by many advertisers, according to Garber.

“Our research shows that half of our community lives in rural and suburban areas,” he says. “Advertisers need to be sensitive to this fact.” But this perception can itself be corrected if advertisers work with the right companies, he says. “This is why you need to work with experts.”

By working with experts, and specifically those within our community, companies can avoid misperceiving the community, spreading stereotypes and offending the market they’re attempting to target. Done the right way, gay marketing can bring appreciation, visibility and tolerance to the community. Marketing professionals claim that being the ideal market can bring us the benefits of increased tolerance, in exchange for a loyal, if politically-sensitive, gay dollar. Sounds like a win-win. l

The GSDBA’s Business & Marketing Expo, “From Gay to Z”, takes place Thursday, April 29. See this issue’s accompanying “Gay to Z” pull-out guide, or call the GSDBA at (619) 296-4543 for information.