On June 22, 1969, the Stonewall Riots in New York City marked the start of the gay rights movement in America. Three decades later, gay men and lesbians have emerged as a potent consumer segment. Financial services, one of the hottest categories in this market, is playing a prominent role in developing the Web as a gay-friendly media.
Gay.com-a news, culture, and chat site-now draws 1 million sets of eyeballs a month. In May, as American Demographics went to press, gay.com was about to announce a deal with two Fortune 500 companies to provide financial services online. And in April, gfn.com, the Gay Financial Network, became the first gay Web site to offer its members the opportunity to sign up for annuities and mortgages online.
Why go online to reach gays? One reason is that media vehicles for targeting this audience are limited in both size and scope. And TV is too inefficient to make a buy worthwhile, according to Howard Buford, chief executive officer and president of Prime Access, an ad agency specializing in the black, Latino, and gay markets. There's also the resistance of networks to contend with: ABC, for example, rejected a commercial for a lesbian cruise company slated to air during the Ellen coming-out episode in April 1997.
Besides TV, there's print, which has been the primary media for reaching the national gay and lesbian market. But print has its drawbacks, too. Circulations are low, in large part due to fears among gays and lesbians about what will be done with their names after they have subscribed. And only two magazines can be considered national: Out, with a paid circulation of 175,000, and The Advocate, with a paid circ of 100,000.
"The real issue with this market is: Where will you get something like Ebony with a circulation of 1.6 million?" says Buford. "The Internet may just be the media that makes reaching the gay community viable."
Lou Fabrizio, former publisher of Out, agrees. Gay.com lured him away from the magazine to be its vice president of advertising. "I did the math," Fabrizio said. "Everyone wants more numbers, and this site is visited by 1.2 million individuals a month." That's larger than the combined circulations of Out and The Advocate.
The research speaks volumes: Gay men and women were three times more likely than the general population to be online in 1997, according to Simmons Market Research; and a recent survey of gays and lesbians from Greenfield Online shows that 65 percent of gay and lesbian Internet users go online more than once a day. Once there, 71 percent buy products or services.
Why financial services? Gay households have a median income of $55,670, according to Simmons; 86 percent of gays and lesbians who use the Internet have no children in their households, according to Greenfield Online. About 70 percent of gays have at least a college education, and work in professional or managerial jobs, and 89 percent say they are more likely to buy a product if its advertising is targeted at them, according to Simmons.
And the time is right. "I don't think anyone can discount the impact that the AIDS crisis had on marketing efforts to gays," says Scott Matter, communications director at Mulryan/ Nash, an ad agency specializing in the gay market. "Especially for companies that are doing financial planning-selling mortgages and long-term financial planning to this market didn't make sense." Now, with mortality rates plummeting for people with AIDS-down 46.4 percent in 1997 from the previous year, according to the U.S. Department of Health and Human Services-financial service companies are at last making the effort.
Data from Greenfield's study suggests that the Web is a particularly good place for financial companies to reach gays-especially those most likely to use their services: 35-to-44-year-olds.
Many are not being reached by other media: Almost 40 percent of gays online say they don't have a local gay or lesbian newspaper, 70 percent say they don't read The Advocate, and 74 percent don't read Out.
And almost 21 percent of gay 35-to-44-year-olds online frequently visit financial sites; 24 percent frequently manage or track finances, stocks, and bank accounts online; and 60 percent think they're part of an unrecognized market that needs to be tapped.
Some financial services companies have already recognized the importance of the gay market. American Express Financial Advisors, the leader in marketing financial services to gays, has offered domestic-partner planning services since 1996. But the involvement of its independently contracted financial advisors goes back further. For years, the advisors have offered seminars in the gay community, advertised locally, and sponsored gay pride events. James Law, a financial advisor with Amex in New York City, says that in 1993, the advisors approached corporate management with the idea of making the gay market a national priority.
Management then spent a considerable amount of time and money on its own market research, including hiring two people to oversee market development. "We went out and talked directly to gay and lesbians in focus groups," says Margaret Vergeyle, vice president of emerging markets, of which the gay and lesbian market is part. "What they told us was: 'I want to work with a company that understands me and that I believe is serious about me and not just making a quick buck. I want to know how this company treats its own employees."
Census data isn't collected on sexual orientation, but estimates from a variety of sources, including the Kinsey Report, place the gay population between 6 percent and 15 percent of the total. (Most marketers use a more conservative 5 percent to 7 percent, which puts the numbers between 10 million and 14 million.)
While Amex runs television ads to build brand awareness, the company buys print to reach niche markets. So in 1996, it tweaked copy for gay readers, and began running ads in Out and The Advocate. Last year, American Express Financial Advisors spent $237,000 nationally in the gay press, according to Competitive Media Reporting, less than 1 percent of its total ad expenditures.
Vergeyle says the marketing efforts have definitely paid off, but declined to release any numbers. As for the Internet, she says, "We aren't quite there yet, but the gay market has such a high incidence of being online that the company will be exploring it."
Of course, gfn.com hopes to have staked its claim as the gay financial Internet site by then. President Jeffrey Newman projects 100,000 registered users by the end of the year. But his site may have to fight for market share with gay.com. After all, with a million visitors per month, gay.com will be a serious contender as soon as its financial partners are in place.
To date, none of Prime Access's financial clients have advertised on either site. "We're kind of waiting to see who will be the dominant gay force on the Internet," says Buford. Who's going to be the Disney, the Ebony, the Univision? he asks. "That remains to be seen."