Gays a Growing Market for Online Buying

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Gay and lesbian consumers are becoming a major online buying force among niche groups, according to a study from research companies Witeck/Combs Communications and Harris Interactive.


The study, released last month, surveyed 2,287 people online in January, including 137 who identified themselves as gay, lesbian, bisexual or transgender - what the study calls the LGBT market. Thirty-two percent of Internet users in this market spend more than 21 hours per week online, excluding e-mail use, up from 25 percent in April 2000. Only 17 percent of non-gay Internet users spend that much time online, the study said.


More importantly for marketers, gays are buying more via the Internet. Sixty-three percent of the LGBT market surveyed bought products or services online, compared with 59 percent of non-gay Internet users surveyed.


"An investment in [the LGBT market] has the ability to pay off in greater percentages than it would if you invested a similar amount in a different market," said Wesley Combs, president at Witeck/Combs Communications, Washington.


Compared with racial groups, for example, only African-Americans have greater purchasing power , according to research by Witeck/Combs. The LGBT market's buying power is $450 billion, compared with $533 billion for the African-American market. However, African-Americans outnumber gays in the United States nearly two to one -- 30 million to about 16.5 million. Gay African-Americans are included in both totals.


Meanwhile, Hispanics' and Asians' purchasing power are $383 billion and $229 billion, respectively.


Witeck/Combs and Harris Interactive, Rochester, NY, have formed a partnership in which they will serve as each other's exclusive provider of services to the gay and lesbian market.


Marketers can reach gays more effectively now because of the Web's tracking mechanisms, Combs said. Businesses can drive users from gay Web sites, for example, to a unique registration Web page and collect data.


In related news, Gay.com and PlanetOut each said they have surpassed 1 million registered users. The San Francisco-based companies announced a merger in December. It is projected to close next month, the companies said, and the new company will be called PlanetOut Partners.


Mark Elderkin, president and chief operating officer at Online Partners, the parent company of Gay.com, said the Internet has enabled marketers to reach the gay audience "in numbers that really matter." He said that while companies previously had to use print circulations -- which average only about 100,000 names per publication -- to reach gays, the Internet now gives them access to millions at a time.


Elderkin said the Internet provides more accessibility because print publications usually are limited to larger metropolitan areas. Gays in small towns or who don't want people to know they read gay publications are turning to the Web.


"We made it easier for marketers and advertisers," Elderkin said. "Now it's like a one-stop shop for them. We've proven that we are a major market, one that can be accessed in numbers never achieved before."


Some companies, however, still have concerns about marketing to gays, Combs said.


"Because the issue has a tendency to draw a few more emotional responses than perhaps any other niche market, company executives need the comfort of data by which to justify their decisions," Combs said. "They're concerned about a potential fallout or backlash that may occur because of people's opinion of gays."


But during the past five years, companies have had success marketing to the LGBT market, Combs and Elderkin said. Each cited American Airlines, which has generated "millions of dollars in revenue" by marketing to the LGBT market, Combs said.


"There's a tremendous amount of credibility now, because we've seen success from big advertisers," Elderkin said. "They have really embraced the [gay] community, and it's for the better of their business."


Rick Cirillo, American Airlines' global sales and marketing manager for gay and lesbian markets, said American has been targeting the gay market since 1994, generating $18 million in business that year. Last year, the company's marketing efforts recorded $221 million in revenue, he said.


American Airlines, Dallas, has a deal with Gay.com in which it posts targeted banner ads, is listed in its travel channel and is featured occasionally in its e-mail newsletter, Cirillo said.


"It's a very lucrative market, and makes perfect sense to market to [gays]," he said. "It's a worthwhile sector to go after."


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