Fortune 500 Companies See Money in Gay Families

Now that gay marriage has taken center stage as a hot-button issue and has been legalized in Massachusetts, Fortune 500 companies are eyeing its business potential — and seeing dollar signs.

Recognizing same-sex couples and families as an emerging market, large corporations have begun targeting the demographic in their ads.

Companies including International Business Machines (IBM), Volvo and JP Morgan (JPM) have featured gay couples or parents, mostly in print or online ads. And Subaru has been marketing to the gay population as a whole for years.

“A lot of brands are willing to go after these niche markets to grow their business, even if it’s just a two-percent growth,” said Marshal Cohen, chief industry analyst for The NPD Group (search), a market research firm. “They’re focused on the micro-lifestyles of the consumers, and same-sex families are a micro-lifestyle.”

There has been a growing trend of gay tolerance, with more companies offering benefits to same-sex couples and families and more mainstream TV shows featuring gay personalities, like NBC’s popular “Will and Grace (search)” and “The Ellen DeGeneres Show (search)” and Bravo’s successful “Queer Eye for the Straight Guy (search).”

“We’ve seen this acceptance in corporate America and in pop culture,” said Mark Elderkin, founder and president of PlanetOut Partners, which runs the heavily trafficked and Web sites. “That’s creating the foundation for corporate advertising to go out and market to this group.”

Gays and lesbians are a population that’s famously hard to track since not all gays are "out" or willing to identify themselves as gay in surveys. Estimates vary widely and range from 1 percent to 10 percent of the population.

There is even less official information on gay couples and families; the 2000 U.S. Census found that there were nearly 600,000 same-sex couples living in this country. One-third of lesbian households (96,000) have children, and one-fifth of gay male households (60,000) have kids, according to the Census.

Still, for practical purposes, most marketing and advertising experts put gays and lesbians at 4 percent or more of the total American population — an enormous market given that, according to the U.S. Department of Commerce, Americans spent $3.8 trillion on retail sales including auto and restaurants in 2003.

“It’s a significant piece of the pie,” said the NPD Group's Cohen. “This becomes an opportunity for a brand that targets that market to gain more than their fair share of the business. If I become the only brand marketing to a gay couple, I’m going to be the leader of that 5 percent of the population.”

According to Witeck Combs Communications (search) and, gay and lesbian parents spent $22 billion on their kids in 2002; that number was expected to go up to $28 billion by the end of this year, according to Witeck Combs.

Most of the gay couple and family ads are in print or online media specifically aimed at the gay community. Car companies have taken out ads featuring same-sex families, the most notable being Ford Motor Co.’s high-profile Volvo ad, which ran in gay magazines like The Advocate (search) and Out (search).

The spread depicted one gay couple with a baby and a pregnant lesbian with her partner, and the slogan “Whether you’re starting a family or creating one as you go… Volvo. For life.”

IBM ran a print ad in publications like the same-sex parenting magazine And Baby that shows several of its own gay employees, including a pregnant woman.

The travel, financial services and wedding industries have also marketed to same-sex couples and families. Some cruise lines and resorts advertise gay-family-friendly vacations. Financial companies like John Hancock Financial Services and JP Morgan Brown Co., a brokerage service of JP Morgan, have taken out ads featuring gay and lesbian couples. And the bridal business has also started going after gay couples who want to tie the knot.

“It’s not surprising that as the gay family market comes of age, marketers want a piece of that,” said Bradley Johnson, Advertising Age’s editor at large.

Though few ads have appeared in mainstream publications or on network TV, Johnson said it’s smarter and more cost-effective to target the demographic in media specifically for them.

“The logical first step is not to buy 30 seconds on NBC. The logical first step is to put your ad in The Advocate,” Johnson said. “It’s a more efficient starting point. If that works, then who knows? Maybe you take things more broadly.”

Though some corporations are gingerly reaching out to gay couples and families, the number of Fortune 500s targeting the demographic is still fairly slim. Those that are doing it only have a toe in the water so far.

“It’s just emerging and remains a bit edgy because of the political nature of it,” said Mike Wilke, executive director of The Commercial Closet Association, a group that tries to reduce discrimination and stereotyping of gays through advertising. “It’s niching a niche. They are just beginning to see value.”

More common are companies that aggressively market to the gay population as a whole — like IBM and Subaru.

Subaru sold a total of 89,607 vehicles in the U.S. in 1993 when it began targeting the same-sex segment, according to Tim Bennett, director of marketing programs at Subaru of America (search). Last year, 186,819 Subarus were sold in this country.

“Can I say it’s helped? Not definitively, but our sales have increased over the last nine years,” Bennett said. “There’s certainly been growth in it for us. Our purchase consideration within that group has risen.”

One of the Subaru ads targeting the same-sex demographic carries the slogan: “Different drivers, different roads, one car.” The company has done extensive research on how to reach gay consumers, used a gay ad agency and marketed in gay media, according to Bennett.

But plenty of large corporations are being more cautious about marketing to the same-sex demographic, considering the controversy surrounding gay issues.

“Everybody is kind of taking a wait-and-see approach,” Cohen said. “The backlash could be greater than the growth rate. That’s why a lot of brands are holding off.”

Of course, any marketing strategies in big business are based on one thing, and one thing alone. It’s the bottom line, stupid.

“The list of blue chip advertisers (targeting) gay media is getting longer and longer,” Advertising Age’s Johnson said. “There’s money to be made here. Corporate America is happy.”