Burgeoning gay Web sites spark advertiser interest

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General Motors Corp.'s Saturn--which in 1995 ran one ad in a gay magazine--is returning to the market, this time via online media.

Saturn's return is significant in that it's the first major advertiser to seek the elusive audience exclusively through that medium. Publicis Hal Riney & Partners, San Francisco, is creating banner ads that break in July.

Some observers say gays may be easier to find online and some sites claim much larger audiences than national gay magazines. A major gay-market study in 1997 by Simmons Market Research Bureau confirmed suspicions that gays are large online subscribers--51.5% usage for gays compared with 15.8% for the general population.


Hoping to get a better picture of gays online, marketing agency Spare Parts has teamed up with Greenfield Online, both Westport, Conn., to survey ongoing brand habits. Greenfield is recruiting participants through PlanetOut, upstart gay.com and non-gay Internet areas to build on its existing 3,000-name database.

The first study results are due next month.

"Surveys right now are one-time shots," said Scott Seitz, Spare Parts principal. "This will be able to provide rolling monthly and quarterly surveys. We're going to really start seeing snapshots of the community's product attitude shifts."

Launched in August 1995, PlanetOut is just now beginning to find success as advertisers start warming to online gay areas. Revenue hit $250,000 for May, with recent advertisers including American Airlines, Barnes & Noble, Citibank, Coors Brewing Co., IBM Corp., Pfizer, Procter & Gamble Co., Starbucks Coffee Co. and United Airlines. Their ads range from typical banners to ones using the site's audio capabilities.

With more than 500,000 combined unique monthly visitors between its Internet and America Online platforms, PlanetOut's owners claim it reaches more consumers than the four top gay magazines combined. Cost per thousand users is $40 for PlanetOut, which has no affiliation with the Out magazine site that shut down in early 1997 after less than two years.


"We've just broken out and reached the point at which advertising is starting to be easy for us," said PlanetOut founder and Chariman Tom Rielly. "What we're seeing now with all those major accounts is they're buying Out, Advocate and PlanetOut."

Despite advertisers such as Apple Computer and Clairol, the Out online site lost up to $100,000 annually. The Advocate launched its daily news site shortly after, but has had lackluster results with monthly revenue in the $7,000 range.

Even without a separate sales force, The Advocate Web site will be one of the gay sites for Saturn. It also expects to sign on a car rental company soon and already boasts IBM as an advertiser. The site claims 10,000 unique visitors a week and has a cost per thousand varying from $24 to $42.

PlanetOut has suffered the departure of several top executives and disagreements over editorial focus. There also were concerns that it is not mainstream enough and focused too much on youth.

"People predicted our demise but we're still here," said Mr. Rielly.

The site is about to be redesigned using more than just youthful pictures that accompany each area, and groups such as the Gay & Lesbian Association of Retired Persons now have an area on the site.

"Representation is always a danger with the gay community because it's almost impossible to get it right," Mr. Rielly noted.

PlanetOut acquired GloRadio and hopes to turn it into a true radio syndicator. The area, now rebadged PlanetOut Radio, already has more than 35 hours of original weekly programming. PlanetOut recently gained help from the 200-person sales force of majority shareholder AOL.

Newcomer gay.com hasn't focused on branding itself or soliciting much advertising, but it nonetheless has built impressive traffic. Founder Mark Elderkin claims 600,000 unique monthly users by providing chat service to nearly 2,000 gay groups.

"From the beginning, we focused totally on building the community," said Mr. Elderkin, who also is president of Volano, which makes the proprietary software used by the chatters.

Though Mr. Elderkin qualifies that he draws no salary, gay.com is profitable. The site has commerce and advertising relationships with bookseller Amazon.com, travel service Travelocity, computer and software marketers Cyberian Outpost and Virtual Vineyards.


Still, gay online businesses often have the double whammy of having to overcome traditional advertisers' trepidations about the gay market and a lack of presence in the medium.

Marketers have shied from chat areas--where anything can be said--but some sites are creating ad-friendlier business and similarly focused chat rooms.

AOL's gay area, OnQ, hasn't pursued sponsorships aggressively despite impressive traffic--gay market executives estimate gays make up as much as 20% of AOL's 12 million users.

"The online world is creating a certain amount of gay homogenization," said Howard Buford, president of PrimeAccess, a New York agency. "As a result, things are not radically different now from San Francisco to Kansas City."

Copyright June 1998, Crain Communications Inc.

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