Gay Marketing Comes of Age

On the Web, gay-themed portals like Gay.com and PlanetOut.com have carved out a healthy niche for themselves. Within this niche, category-specific GLBT (gay, lesbian, bisexual, transgender) websites and online financial venues like GFN.com are emerging as popular destinations. And on Madison Avenue, gay market ad agencies like OpusComm Group are popping up to help bridge the gap between corporate America and gay consumers.

According to market research firm Witeck-Combs, which conducts research studies on the gay market in conjunction with Harris Interactive, more 15 million American adults identify themselves as gay, lesbian, bisexual, or transgender. Collectively, the GLBT community has a buying power estimated at $485 billion. This group is generally brand loyal, but has a predilection toward brands that market specifically to them.

Bob Witeck, Partner, Witeck-Combs Communications, says that the primary consideration for the GLBT community in choosing a brand is the that company's policy towards homosexuals. He says that gays are willing to pay slightly higher premiums for brands that respect their social positions, but the assumption that gays are unlike other consumers in terms of their brand attitudes "must be eliminated."

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Witeck notes that defining the gay market through its behaviors will become more important as online audience segmentation becomes more important. "Companies are seeking to grow their market share by deepening their loyalty," Witeck says, emphasizing that, "audience segmentation is the marketing of the future."

One crucial difference, he notes, between homosexuals and other demographic segments, is that "gay Americans don't exist until they reach sexual maturity," usually around 18 years of age.

Also, as Adare Independent Consultant Michael Kelleher says, many homosexuals don't self-identify themselves with gay. He notes that "you can't get around being African-American or Asian, but you can with being gay."

Kelleher is a consultant for GFN.com, which stands for the Gay Financial Network, a gay-oriented "niche within a niche" online financial magazine. GFN covers the professional, financial and legal aspects of being gay, in the vein of the African-American financial magazine Black Enterprise. Kelleher notes the similarities: "we're dealing with a disenfranchised segment of the community the same way African-Americans once were."

GFN.com repudiates the social and sexual aspects of gay life, facets Kelleher says most gay-oriented sites focus on too heavily. He adds that there are special financial considerations for gay families that are distinguishable from the average American family since gay men and women don't receive partner health or tax benefits and usually don't have children.

Kelleher admits that as a niche within a niche, GFN.com "wont get huge numbers, but we'll get valuable numbers." GFN.com attracts 200,000 monthly uniques, and 60 percent of visitors stay at the site for between 5 and 15 minutes. GFN's advertisers include IBM Corp., OneUpWeb, and US Airways. It sells ads on a cost-per-thousand basis for both the website and its two weekly newsletters. It also sells sponsorships and has content partnerships with PlanetOut Inc.

Both Kelleher and Witeck note that the pending initial public offering of PlanetOut Inc. could prove to be a significant weather vane for the future of the slowly emerging market. Because its filing came on the same day as Google, advertisers might think that PlanetOut's IPO announcement came and went rather quietly, but nevertheless its filing marks the first public offering of any gay-oriented website. PlanetOut Inc., which is currently in the quiet period prior to its IPO, declined to comment for this story.

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