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Queer Eye for the Marketing Guy

6/24/2005 8:00 PM Eastern

June’s monthlong celebration of gay pride winds up this week, but the cable industry’s attention to the gay and lesbian market will hardly go back into the closet until next year.

On Thursday, MTV Networks will launch Logo. While it joins two other fledgling services as a destination for the LGBT (lesbian, gay, bisexual and transgender) community, Logo is the first among them to reach out broadly to advertisers.

Logo’s debut brings another opportunity to test the potential of a consumer group that has been attracting considerable attention, and not just from the religious right.

Much of the focus has been on advertising growth. After a protracted slump following 2001’s dot-com implosion, advertising spending in gay and lesbian publications sprang back last year, surging 28.4% over that of 2003.

Industry-wide figures aren’t yet available for the first five months of this year, but growth appears to be continuing.

“Our business is very strong,” says Todd Evans, CEO of gay media-rep firm Rivendell Media. “It feels like a banner year.”

Howard Buford, founder and CEO of Prime Access, a New York advertising agency specializing in the LGBT market, concurs. “Business is up versus a year ago, and we’re certainly getting more inquiries.”

Marketers’ growing attention to the LGBT market may seem ironic a year after 13 U.S. states passed laws barring same-sex marriage. But companies, forced by competition to segment their messages to ever more carefully defined consumer segments, are simply responding to the numbers.

Research on the gay community has improved considerably in the last five years, as big marketers, alerted in part by the instant success of Queer Eye for the Straight Guy, have conducted more proprietary studies of the LGBT market.

What they found confirms what gay publications have been tracking since 1982: The LBGT community is large, generally affluent, notably tech-savvy and unusually loyal to companies that reach out directly to it.

Recent estimates put the U.S. gay community at 15 million individuals aged 18 and up. That’s larger than the Asian-American market, which is estimated at 12 million people of all ages.

SPENDING STRENGTH

LGBT buying power, pegged at $580 billion in 2004, will reach $610 billion this year, according to a study by Witeck-Combs Communications and Market Research.com. Meanwhile, the Gay Press Report, which tracks advertising in local and national gay publications, found more than 150 Fortune 500 brands active in the gay market last year, up from 72 in 2001.

Significantly, the report also found that last year was the first in which a majority of ads in national LGBT publications (59%) used creative specifically targeted to gay consumers.

“Years ago, Absolut was the only vodka speaking directly to the gay community, but today, there are five or six vodkas advertising,” Evans says. “Marketers need to start making a bigger impact, so instead of just putting their general-market ads in gay publications, they are developing creative specifically for the gay community.”

One thing marketers keep turning up as they research the gay community is its extraordinary loyalty to advertisers who speak to them directly.

“In some studies, response rates in the gay community have been twice as high as the general market on measures like 'intent to purchase’ and 'awareness of advertising,’ ” Buford says.

Lesbian and gay consumers have long attracted attention from travel, financial-services and automotive companies, along with local restaurants and bars. They may hold particular promise for cable operators, thanks to their tendency to be early adopters and to subscribe to and watch more premium TV.

STRONG MEDIA STATS

Studies by Forrester Research and Harris Interactive/Witeck-Combs have found gay and lesbian consumers are one-third more likely than their heterosexual peers to be broadband users, twice as likely to own HDTV-capable sets and two-and-a-half times more likely to own personal video recorders.

In addition, nearly 70% subscribe to cable, compared to 61% of non-gays. And 45% say they frequently or occasionally watch pay cable networks, compared to 37% of heterosexuals. Research by LPI Media, publisher of national magazines The Advocate, Out and Out Traveler, has found its readers are four times more likely to subscribe to Showtime, creator of iconic shows The L Word and Queer as Folk, than the general market.

Logo’s launch marks an interesting moment in the history of gay marketing. As the first ad-supported LGBT TV destination that appears likely to reach a sizable audience, it offers an opportunity for more marketers with TV-sized budgets to enter a field long dominated by local print and online.

Evans agrees: “Logo will do for the LGBT market what BET [Black Entertainment Television] did for the African-American market — help define it, and that will help the market overall.”

At the same time, Logo’s arrival presents a challenge. An ad in a gay-targeted publication is far less visible to the general market than a spot on Logo will be, thanks to the network’s distribution on digital basic cable.

“The question for advertisers is whether to go on TV, where their ads are totally out there for everybody to see, or to stay in print media, which is a little more circumspect,” says John Nash, president of Moon City Productions, which handles gay-targeted campaigns for Subaru and premium on-demand service here!. The car company, which has been marketing to gays for a decade and is one of Logo’s charter advertisers, has chosen the less-circumspect route. “This is smart marketing to them,” Nash says.

Logo’s initial rollout, which is limited to digital cable and focused primarily in big cities, and its marketing campaign, which concentrates on gay media and venues, could allow it to fly below the radar of the religious right for a time. But Nash has few illusions about the storm that may occur.

“This could be the next salvo out of the gun in the culture wars,” he says. “We all have our fingers crossed on this one.”

For cable operators, Viacom and Logo’s advertisers, a firefight with the traditional-values crowd won’t be pleasant, but it isn’t likely to dent the bottom line. “History has shown that [boycotts against marketers] don’t amount fiscally to anything,” says Michael Wilke, founder of Commercial Closet, a nonprofit organization that tracks how gays are portrayed in advertising. “The main thing advertisers have to fear is attention in the media.”

Whatever the outcome, Logo will debut with a range of advertisers. Although it has announced only three — Subaru, Orbitz.com and Paramount Pictures — sources within the company confirm reports from the advertising community that others have signed on.

Nash bets Logo’s content will quiet any potential controversy.

“I suspect people will be surprised by what they put on,” he says. “It’s not that much different from general-market TV. Gays and lesbians will see themselves, but it won’t be difficult for general-market consumers to watch, because they’ll be entertained.”

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