a market kept in the closet

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Michael O'Brien had no idea he would hit a dead end so quickly. MGH Public Relations, the outfit where O'Brien is executive vice president, was hired eight months ago by Baltimore-based Chase Brexton Health Services to answer a straightforward question: Would it be good business for the HIV/AIDS clinic to expand into becoming a primary health-care provider for the local gay and lesbian community? MGH's first task was to assess demand, and O'Brien expected that to require a quick survey of existing data on the city's homosexual population. “What we got back was a list of gay bars in Baltimore,� says O'Brien. “There were no good numbers on this group's needs, or even something as basic as the number of people here who self-identify as gay or lesbian.�

All MGH had to go on, he says, were a few national surveys, and even those turned out to be unreliable because their samples were either too small or drawn from segments that were unlikely to be representative of the larger homosexual population. Chase Brexton, a nonprofit organization, couldn't afford to fund a major research project of its own, but it did commission four focus groups. These sessions provided anecdotal evidence that reassured MGH and Chase Brexton about the new strategy, and they are developing a marketing and advertising campaign around the repositioning.

O'Brien thinks some of his other clients may be overlooking this market as well, among them a national weight-loss chain. “Wouldn't it be nice to know whether or not weight loss is an issue that gays and lesbians are struggling with?� he asks. “It could be that this group is a very loyal customer base for some of our clients, but we just don't know, and a client isn't going to go on our hunches. Until better, more comparative data exists, and we can actually prove something, they're not about to throw money at it.�

The prospects are tantalizing. Ask Kent Steinnagel, vice president and group supervisor at Robert A. Becker, a Euro RSCG ad shop in New York City. Steinnagel is working on a strategy for Bayer's Vardenafil, a Viagra competitor scheduled for release next year. Company executives recently hired the Gallup Organization to help profile the heaviest users of Viagra, and while they sliced the information by age, income, region, even insurance status, they didn't think of looking into differences between gays and straights. Then Steinnagel stumbled across an article in a local paper about a small sample study of recreational Viagra usage among gays, which said that while about 2 percent of all men use the drug, 32 percent of gay men do so. Steinnagel was floored. For three years, both agency and client had been studying Viagra consumers and had completely overlooked what could be one of its best targets. “As an advertiser, I want to reach the high-volume users, regardless of whether they are gay, straight, Asian, black or green.� he says. “I didn't even realize the blind spot I had. It made me realize that we are missing a big piece of the puzzle here.�

That piece of the puzzle is drawing increasing attention. Companies ranging from tiny Chase Brexton to big players like American Express, American Airlines and Procter & Gamble are starting to recognize the gay, lesbian, bisexual and transgender (GLBT) population — estimated at anywhere from 11 million to 23 million — as a consumer market. Last year 61 national advertisers placed ads in gay publications, up from 19 in 1994, according to Prime Access, a New York City-based marketing firm specializing in this segment. But while advertisers usually demand precise data on the spending patterns, attitudes and media habits of their demographic targets, most marketing decisions about reaching GLBT consumers are based on little more than hunches.

That's because major media, product and attitude tracking researchers such as Nielsen Media Research, Arbitron and Simmons Market Research Bureau, which help advertisers determine who buys their products and which media those customers rely on, don't regularly break out GLBT consumers in general market surveys. No one knows, for instance, what percentage of gay men regularly watch NBC's Will & Grace, which features a gay lead character. Nor do they know how that percentage might compare with other audience segments or with the audiences of other TV shows, since Nielsen does not track the viewing habits of GLBT consumers. What syndicated studies there are of the segment draw respondents from “convenience samples� — such as magazine subscribers — which tend to skew upscale and can't be generalized to the total GLBT population.

Because of this dearth of data, advertisers eyeing the GLBT market have had to take matters into their own hands. Those who can afford to do so, commission proprietary studies and keep the results to themselves, while others are left either to make seat-of-the-pants assumptions about the segment's spending and media habits or to advertise via gay publications and grassroots marketing efforts, which reach only smaller pockets of this group. But the lack of information on the GLBT market does more than hamper marketers like Chase Brexton, who have some experience with the segment. It creates a blind spot for many more advertisers, like Bayer, who may have products or services that would be perfect for this group, and have no way of knowing it.

Marketers typically analyze population demographics using the RAGE matrix — for Race/ethnicity, Age, Gender and Education. Income has recently become a fifth parameter. Today, however, changing societal attitudes toward diversity as well as the growth of niche marketing have some advertisers, researchers and consumers wondering if sexual orientation should become a sixth dimension. Once a taboo subject, sexual orientation is emerging as another primary attribute by which people identify themselves. And just as an individual's age, gender and ethnicity are now widely accepted as helping shape his attitudes and spending patterns, sexual orientation is increasingly believed to have a similar influence over consumer behavior.

For instance, in deciding where to go for a mortgage, a gay man and his straight counterpart may consider very different factors, says Jeff Garber, president of OpusComm Group, a Syracuse, N.Y.-based specialist in marketing to the gay community. “The straight man's choice is more likely to be based on where he gets the lowest interest rate, but the gay man would probably be willing to pay considerably more if he found a bank that made him feel comfortable or provided special services for unmarried partners.� The 2001 Gay/Lesbian Consumer Online Census, an Internet survey of almost 6,000 GLBT consumers — conducted this summer by OpusComm, in conjunction with Syracuse University and GSociety, a media and entertainment company in Hollywood, Calif. — found that 8 out of 10 respondents agree that they are more likely to buy from companies they know are gay friendly, in terms of employee policies or other factors. Sixty-one percent say that before deciding to buy something from a company, they try to find out whether that company is gay friendly.

Paul Poux, president of The Poux Company in New York City, which specializes in GLBT marketing, says that because advertisers, brand managers and media buyers do not normally read about the spending habits of this demographic in their daily diet of surveys and reports, many simply do not see the market at all. Poux says he has been meeting with market research firms for years, trying to encourage them to include sexual orientation in their studies. He has also tried to persuade marketers to put pressure on researchers, but while he is confident that his efforts are helping to create awareness about this missed market, he's seen little change.

One reason GLBTs are so rarely broken out in general population surveys is that until recently there was little indication that they are a sizable segment. Then, Census 2000 data indicated dramatic increases in the total number and geographic dispersion of GLBT households nationally over the past decade, identifying 1.2 million adults living with partners of the same sex in 99.3 percent of all U.S. counties, up from 290,000 in 52 percent of counties in 1990 (see sidebar).

Even there, the numbers are almost certainly a considerable undercount. The census does not ask specifically about sexual orientation, only about household configuration, and as such, its figures do not include those GLBTs who are unattached or not living with their partners, which is generally believed to be the vast majority. Plus, it's assumed that some GLBTs did not answer truthfully for fear of losing their jobs or worse by admitting to homosexuality on federal forms.

So the actual size of the total adult GLBT population remains murky. Estimates among academics and marketing experts range widely, from about 4 percent to 8 percent of the total U.S. population, or between 11 million and 23 million people. According to research firm Packaged Facts, some 7 percent of the U.S. adult male population is estimated to self-identify as gay, and about 6 percent of women are self-identified lesbians. As for bisexuals and transgendered Americans — those who have physically changed their sex — very little is known as to the size of these groups or anything else, which argues further for better information.

For perspective, the size of the GLBT population is comparable to or potentially greater than that of the Asian American population (currently measured at 12 million or 4.2 percent of the total). The GLBT population is estimated to be an even larger proportion in urban areas — around 10 percent to 12 percent. As a market segment, some believe GLBTs may be an even more lucrative market than Asian Americans. According to Packaged Facts, total GLBT consumer annual discretionary spending is $340 billion, compared with Asian American spending power estimated at $254 billion by the Selig Center for Economic Growth at the University of Georgia. Plus, the GLBT population is expected to grow significantly in coming years, as more Americans — especially the younger generations — feel comfortable coming out to their families and employers. A study of congressional election exit polls conducted by The Policy Institute of the National Gay and Lesbian Task Force found the percentage of voters under 40 who self-identify as gay, lesbian or bisexual increased to 6.4 percent in 1998 from 2 percent in 1990.

The absence of general population numbers is a problem for market researchers and advertisers, because without those overall numbers it's impossible to extrapolate results from surveys to reach reliable conclusions about GLBTs nationally. “When we look at any other demographic — teens, African Americans, women — we have the census to help us balance the results,� says Jason Levy, vice president, client development and services, at Greenfield Online, an Internet market research firm, based in Wilton, Conn. “But for this group, there's no standard, which makes it hard not only to project, but also to compare to other demographic groups.�

Then there's the problem of getting a sample of respondents that is truly representative of the overall homosexual population. New York City-based Simmons Market Research Bureau has released a few studies on GLBTs over the past decade, but their samples, selected from gay magazine subscription lists, have naturally been biased toward the characteristics normally found among magazine subscribers. Early next year, Simmons plans to release the first of what it hopes will be a more in-depth annual syndicated research survey of 5,000 GLBT respondents, but again, while comprehensive, it will not be a representative sample. Instead, respondents will come from the Gay America Megafile assembled by list management company Metamorphics Media. That database is a compilation of names of organization donors, gay media subscribers and event attendees. In addition, because the new syndicated study will focus solely on GLBT consumers, it will not be directly comparable with the total U.S. market or with other demographic segments. Simmons president, Christopher Wilson, says this method is the best option, however, since random sampling would be too costly. Gathering 5,000 respondents would require at least 200,000 phone calls at hundreds of dollars a head, he says.

Wilson does say, however, that Simmons is considering adding sexual orientation as a standard demographic on its twice-yearly National Consumer Survey, a representative study which tracks the spending and media habits of 30,000 Americans. Doing so would enable marketers to look at how GLBTs index for products and services against the rest of the U.S. and other demographic breaks. An advertiser could learn, for example, the percentage of GLBT consumers who eat at McDonald's versus Burger King, or whether 18- to 24-year-old GLBTs buy more Levi's than 18- to 24-year-old Hispanics. But the decision whether or not to ask about sexual orientation is still being discussed. “If you look at Hispanics or women, there's tons of information about what kinds of questions work or don't work to elicit the most accurate and meaningful data,� says Wilson. “But there's not a lot of information on how to collect data on the gay market. Until we figure those things out, it's hard to move on this.�

The Internet has helped some research firms get around that problem. Rochester, N.Y.-based Harris Interactive found that while just about 2 percent of adult respondents identify themselves as “gay or lesbian� in telephone surveys, 4 percent self-identify when online. Harris has also discovered that how the question is asked can boost response rates. When given the option to self-identify as “gay,� “lesbian,� “bisexual� or “transgendered,� as opposed to “gay or lesbian,� a full 6 percent respond. David Crane, vice president of the research company, attributes the higher response rate to the anonymity of the Internet. Harris, recognizing the lack of data on this market, has begun to include the GLBT demographic on all its online general population surveys. But because sample sizes tend to be very small — a survey of 1,000 receives at best 60 respondents — drilling down into this group is difficult. Still, the ability to cull high response rates at lower costs may make the Internet the best way to study GLBTs, at least for now, says Crane.

But beyond logistics, many researchers admit that they stay clear of sexual orientation questions for fear of driving off respondents. “We do not ask a person their personal preferences such as religion or sexual preference,� says Nielsen Media Research spokesman Matt Tatham. “Our concern is that by asking these types of questions it might be insulting to the person and impact cooperation.� Similarly, Brenda Edwards, vice president, marketing communications at market research firm Taylor Nelson Sofres Intersearch (TNS), says her company doesn't ask about sexual orientation unless a client specifically requests such information. “We don't want to offend anyone or give them any reason not to answer,� she says. “Could you imagine asking Archie Bunker what his sexual orientation is?�

Perhaps not, but Archie has been off the air for a generation. “I personally think that the rationale that companies give for not asking the questions is a smoke screen for their lack of comfort,� says Lee Badgett, an economist at the University of Massachusetts, Amherst, and author of Money, Myths, and Change: The Economic Lives of Lesbians and Gay Men (The University of Chicago Press, 2001). Badgett says all the academic research she's ever seen on this topic indicates that most people are much more willing to divulge sexual orientation than income. And Bob Witeck, president of Witeck-Combs, a Washington, D.C.-based firm that specializes in GLBT marketing, points to the census' increased response rate. “The census results will start to make researchers aware of the facts that the questions can be asked, will be answered and good data can result.�

In fact, many GLBT consumers welcome the opportunity to share information about their spending habits, says Jeff Garber of the 2001 Gay/Lesbian Consumer Online Census. “People want to talk about who they are,� says Garber, who adds that he got several hundred thank you e-mails from respondents. “They feel extremely overlooked.� Advertisers who've become gung-ho about ethnic marketing of late may find this tidbit of interest: 81 percent of GLBT respondents in Garber's survey say they identify more strongly with their sexual orientation than their ethnicity.

Take Jonathan Zaback, for example. This 28-year-old New Yorker is offended that he's never been marketed to directly as a gay man, and says companies are missing out. “I compare my life to other straight couples my age, and my boyfriend and I are so much better off financially,� says Zaback. Even though he and his live-in boyfriend make less and spend about $1,000 a month more in rent than some of his straight friends, Zaback says they often have more spending money at the end of the month because, unlike their straight friends, they aren't saving to have kids. “We'd rather have a new home theater system,� he says. And when it comes to media research, Zaback says advertisers just don't get it. Throwing an ad in a gay publication is nothing but cheap PR, he feels. “We are not only reading Out and The Advocate all the time. If you go into any gay man's apartment you're very likely to see Vanity Fair and People as well.�

As an account supervisor for Lippe Taylor Public Relations in New York City and as a former media buyer, Zaback has been affected by the dearth of research on a professional basis as well. His company, which represents Johnson & Johnson and Bath & Body Works, among others, has been trying to encourage clients to take the market more seriously, but the lack of solid research on mainstream media consumption by gays has hindered their efforts. Maureen Lippe, Zaback's boss and president of the agency, says that while some of her clients, especially those in the grooming category, are starting to understand the viability of this market group, their marketing options are still limited to guerrilla techniques, such as putting samples in gay bars. Says Lippe: “We're losing an enormous opportunity by not going after this demographic in the same intelligent and strategic way we go after teens or blacks or women. And the only way we can do that is to be able to go to the client and say, ‘Here are the numbers.’�

It's really a classic chicken or egg conundrum, says Brad Adgate, director of research at media buying firm Horizon Media in New York City. Research and media tracking firms, like Nielsen and Arbitron, won't offer data until customers demand it. Says Thom Mocarsky, vice president of communications at Arbitron, which tracks radio listening trends: “No radio station has ever asked us to segment the audience that way, and we do what our clients want.� On the other hand, advertisers and media buyers won't demand the data until there is ample research to prove that the demographic is both viable and substantially different from the general audience. Adgate says none of Horizon's buyers or clients have yet to ask him to crunch TV ratings for the GLBT population, although, he quickly adds, if the information were available, it would certainly be welcomed and used. “The thing is, many advertisers just assume that they are already getting this audience,� says Adgate. “If they buy 18- to 24-year-old men, they assume they're getting both gay and straight, and they also assume that for most products, it really doesn't matter.�

Howard Buford, president of marketing firm Prime Access in New York City, thinks it does matter. He argues that the differences between the gay and straight market may vary significantly by product category. “Marketers are looking for the perfect consumer for their product,� Buford says. A low-income immigrant, for instance, who spends heavily on international phone calls is a better consumer if you're a long-distance carrier than a high-income person who never calls abroad. “The same level of sophistication should be happening when marketers look at the GLBT market. Industries such as travel, entertainment, financial services, automotive and fashion, should pay particular attention.�

a glimpse inside

An Internet survey of almost 6,000 Americans who identify themselves as gay, lesbian, bisexual or transgender (GLBT) reveals that 88 percent of this population is white, and 48 percent falls into the 18 to 34 age group.

Self-identification
Gay 53%
Lesbian 36%
Bisexual 6%
Transgendered 1%
Homosexual 2%
Other 2%
Race/ethnicity
White 88%
Hispanic* 8%
Black 3%
Asian/Pacific Islander 2%
Native American/Alaskan native 1%
Some other race 4%
Age
18-24 16%
25-34 32%
35-44 32%
45-54 15%
55-64 4%
65+ 1%
Gender
Male 55%
Female 44%
Education
Some H.S. 1%
Graduated H.S. 9%
Some college 32%
College grad 37%
Graduate degree 20%
*Hispanic can be of any race; columns may not add to 100 due to rounding or because “other� was not included.
Source: 2001 Gay/Lesbian Consumer Online Census, an online survey of 5,869 GLBTs in the U.S., conducted by OpusComm, Syracuse University and GSociety.

we are family

Lesbian, bisexual and transgendered women are almost five times as likely to have children in their households as their male counterparts.

GLBT POPULATION
MEN WOMEN
Relationships/Family
Single 33% 21%
Single and dating 20% 14%
Partnered 43% 58%
Civil union/Married 1% 5%
Children under 18 5% 23%
Household Income
Under $30K 12% 20%
$30K-$69,999 37% 41%
$70K-$99,999 22% 20%
$100K+ 29% 16%
Politics
Democrats 67% 71%
Republicans 14% 8%
Independents 17% 19%
Note: columns do not always add to 100 due to rounding or because “other� was not included.
Source: 2001 Gay/Lesbian Consumer Online Census, an online survey of 5,869 GLBTs in the U.S., conducted by OpusComm, Syracuse University and GSociety.

straight up

Of the top five “most watched/read� magazines and TV programs named by GLBTs in the 2001 Gay/Lesbian Consumer Online Census, gay-themed The Advocate and Will & Grace are the biggest winners. But mainstream media should not be overlooked: 15 percent of GLBTs watch ER and 12 percent read Time as well.

PERCENT OF GLBTS WHO WATCH/READ

Top 5 TV programs
Will & Grace (NBC) 34%
Queer as Folk (Showtime) 27%
ER (NBC) 15%
Sex and the City (HBO) 13%
Friends (NBC) 13%
Top 5 magazines
The Advocate 32%
Out 20%
Time 12%
Newsweek 12%
Curve 9%
Top 5 cable/satellite TV networks
HBO 33%
Discovery 31%
Showtime 29%
Lifetime 25%
CNN 18%
Source: 2001 Gay/Lesbian Consumer Online Census, an online survey of 5,869 GLBTs in the U.S., conducted by OpusComm, Syracuse University and GSociety.

out in force

Fifty-eight percent of GLBTs have gone to a bar or club in the past month.

PERCENT OF GLBTS WHO HAVE…

Spent over $100 on entertainment per month 58%
Spent over $300 on entertainment per month 17%
Watched cable/satellite TV in the past month 72%
Rented a movie in the past month 68%
Went to the movies in the past month 62%
Went to a club/bar in the past month 57%
Went to a music concert in the past 6 months 44%
Went to the theatre in the past 6 months 48%
Source: 2001 Gay/Lesbian Consumer Online Census, an online survey of 5,869 GLBTs in the U.S., conducted by OpusComm, Syracuse University and GSociety.
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