Who’s Tapping Into the Dream Market?

They don't make gay laundry detergent, lesbian deodorant, bisexual tomato paste, or transsexual wine coolers, but the effort to appeal to the LGBT demographic is on the rise.

While killing time, you pick up a magazine and start perusing. Inside the cover is an ad of two young women walking along the waterline at the beach, drinking Brand X wine coolers and laughing uproariously. What do you read into the picture? Is this two best friends enjoying a girl’s trip without the boys? Or is it a young lesbian couple enjoying a romantic getaway? Although this ad doesn’t exist in reality (to the best of my knowledge — I confess I didn’t scourer through wine coolers ads to make sure), the approach used is fairly common. Advertisers design ads that can be interpreted in more than one way so that both hetero and LGBT audiences can see something appealing.

In fact, this strategy is so common it has a name: “gay window” advertising. Blatantly gay ads run the risk of alienating some potential customers, but an increasing number of companies want to let the LGBT community know that they are supporters, and so-called “gay vague” ads help them walk the thin line between these two opposed goals.

Another common approach is the double-version ad, the most famous of which is the 2007 Levi’s TV ad. In one version, a man pulls his jeans up and, in so doing, brings the street below up into his bedroom, including a beautiful woman in a phone booth, with whom he walks away. However, a second version featured a handsome man in the booth, who also walks away with the Levi’s man in the end. The dual version ad occurs more often in print ads, though, with hetero versions appearing in mainstream publications and gay or lesbian versions appearing in magazines aimed at the LGBT demographic.

Why the effort to appeal to LGBT buyers? After all, we buy the same products as everyone else; they don’t make gay laundry detergent, lesbian deodorant, bisexual tomato paste, or transsexual wine coolers (maybe the women in the ads aren’t even women). Aren’t the reasons we should buy these products the same reasons that straight people should buy them? Yes, says Tammy Voigt, who worked in the ad industry for 20 years, was part-owner of Group Nine Marketing-Advertising-PR, and now teaches advertising in the Indiana University system. However, Voigt notes, even though the reasons for buying a product are the same (value, quality, brand preference), the LGBT community as a whole has characteristics that companies look for in potential customers; in fact, she calls the LGBT community the “dream market”.

With anywhere from 20 to 32 million LGBT individuals in the United States, there is a large pool of money waiting to be tapped by advertisers. On average, gay and lesbian consumers have more disposable income than their straight counterparts, although this may change as more gay and lesbian couples get married and have kids. Not only do we have more money, we don’t hesitate to spend it — none of those dilemmas about whether to get the new washing machine or put the money in little Timmy’s college fund.

Companies are starting to recognize this fact; as of 2006, close to 200 Fortune 500 companies had incorporated the gay and lesbian communities in their marketing strategy. One estimate in 2010 put the spending power of the LGBT demographic at $743 billion. (“Packaged Facts”, Witeck-Combs Communications press release, 20 July 2010)

What’s more important to corporations than disposable income, however, is brand loyalty, and LGBT individuals have it. What this means is that once gay and lesbian shoppers find a brand they like, they stick with it, even if newer or cheaper products become available. For example, “Packaged Facts” revealed that lesbians and gays are significantly more likely to request a specific brand of liquor when ordering drinks — none of the gut-rot well liquor for us. We are also more likely to be the first in line waiting for new products, according to Voigt; we are a good percentage of the idiots standing in line all night to get the new iPhone, even though we know we can get it much cheaper if we wait a couple of months.

Not only do we want the latest gizmo the second it hits the shelf, we want to know that the company that made it has our back. According to the article “Gay Men and Women Who Believe Them: A Qualitative Look at Movements and Markets” published in January 2011, “Gay men and women are very savvy about where, how, and why companies and brands reach out to them as a demographic focus.” Consequently, our spending habits represent not just affection for a brand, but a tacit approval of the company’s policies and marketing strategy.

LGBT consumers not only favor those products that gear advertising to them, they also look at two other factors. First, they want to know that the company has non-discriminatory employment policies, avoiding those companies that fail to include protections for LGBT employees in areas such as domestic benefits, hiring practices, and sexual harassment cases. Second, LGBT individuals look to see whether a business supports LGBT events, although there is some discrepancy in what we favor. Lesbians are more likely to favor companies that sponsor gay pride parades and festivals, while gay men more frequently champion those that sponsor charity events. These three factors — advertising, corporate policies, and support of LGBT events — make up the trifecta that gay and lesbian consumers use to evaluate how they will spend their money.

This all brings us back to the initial conundrum for businesses: how to appeal to our community without alienating others. Clearly, advertising in LGBT-aimed publications resolves that problem, as the average housewife in Montana isn’t reading The Advocate. However, one study found that an ad placed in an LGBT publication will only reach three percent of the LGBT population, which provides little return on investment. In contrast, 90 percent of gay men and 82 percent of lesbians report reading mainstream magazines, such as Time, People and The New Yorker (Tharp cited in “Targeting a Minority without Alienating the Majority: Advertising to Gays and Lesbians in Mainstream Media” Journal of Advertising Research, June 2008).

One strategy beyond “gay window” advertising and dual ads is to place LGBT iconography in ads, such as a pink triangle or rainbow flag. Many heterosexual readers will miss the iconic image, while LGBT readers are likely to pick up on it. The article in the Journal of Advertising Research notes that Absolut Vodka, Anheuser Busch, and Subaru are among the companies to adopt this approach. One Subaru ad featured gay symbols on license plates and bumper stickers, for instance.

Some companies, though, don’t care about appeasing homophobic segments of the population. Voigt mentions Ikea as one company that has done enough market analysis to understand that blatantly supporting the LGBT community will reap greater rewards than losses. In other words, Ikea will make more money from loyal gay consumers than they will lose from angry conservatives; this isn’t really surprising — it’s hard to imagine that Duck Dynasty‘s Phil Robertson has decorated his hillbilly homestead with Ikea furniture.

Still, the playing field is still incredibly uneven. “Consumer Myths” reports that too often ,LGBT advertising strategies ignore the LBT parts, instead gearing ads towards gay men only. The article quotes a Miller Beer rep, who observed, “The gay community has a lot of money. It is single men with no responsibility, two good incomes in the house.” For this rep, a gay marketing strategy means appealing to gay men only, although the statement that gay men have no responsibility isn’t likely to win friends. Clearly, this person has never been in a lesbian bar on a weekend night and noticed how many beers get swilled down, or s/he would expand the definition of the “gay community”.

In the summer of 2011, AdWeek, the premiere publication of the advertising world, listed what it felt were the top 50 “gayest” ads of all time. It divided the ads into seven categories: Surprise: he/she is gay; Don’t tell mom; Swings both ways; Actually straight; Lesbians are hot: Activist; and Inclusive. Not surprisingly, most are from overseas. Here are a few of their choices:

This 2006 Hyundai ad from Sweden is listed in the “Don’t tell mom” grouping, but could just as easily be in the “Surprise” category. Neither husband nor wife comes off looking too good, although both have excellent taste, and not just in cars:

Levi’s 2008 commercial for their 501 jeans was unapologetic in its presentation of a lesbian couple. There’s no possible way that housewife in Montana will think these two are just best friends:

The ad for Europride 2009 was titled “There’s a Little Gay in Everyone”, and apparently, it looks like a rugby player in drag:

As progressive as those commercials are, their impact pales compared to that of one woman: Ellen DeGeneres. Her immense popularity has ensured that she is a valuable spokesperson, despite any misgivings about her sexual orientation. Her stint as a Cover Girl and her ads for J C Penney, along with the numerous products she promotes through her show, have helped open the door for companies to hire more gay and lesbian spokespeople. After all, if you don’t object to Ellen, why should you object to other lesbians?

As societies continue to grow more accepting of LGBT people, marketing strategists will feel more confident in including them in their ads, either as a part of a larger landscape of individuals or as the primary focus of the ad. Consequently, companies that start to reap the financial rewards of LGBT loyalty will make sure that we are included in future marketing. With billions of dollars to be made, companies won’t want to hesitant for long.