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Are Gays All Rich?

Posted on October 24, 2002 and read 11,028 times

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We’ve all heard it many times: the gay market is richer, more loyal and better educated than the mainstream population – a “dream market.” But are we?

A newly published study from the research group Packaged Facts estimates the gay market is worth $425.5 billion, slightly lower than previous estimates of over $500 billion. Yet a report in the May issue of Demographics refutes the idea of gay affluence and echoes a 1998 analysis from the Policy Institute of the National Gay & Lesbian Task Force and the Institute for Gay & Lesbian Strategic Studies.

As recently as five years ago, the “gay market” was barely of interest to major corporations. For a then-28-year-old national publication like The Advocate, the best advertisers were primarily alcohol companies and viatical firms (which bought out life insurance policies from people with AIDS). There was no Xerox Corp., International Business Machines, Subaru, General Motors Corp.’s Saturn, Gap Inc., Reebok International, or United Airlines.

Back then, corporations had to be convinced to even take a phone call from a gay publication seeking ad dollars. Ad agencies used a host of excuses to keep gay publications at bay, including a lack of market research and concern about being in a sexual editorial environment.

Gay Newspaper Survey was Used by Many

To eliminate one of the reasons, the 10 largest gay US newspapers in 1988 – Washington Blade, Bay Area Reporter, San Francisco Sentinel, The Weekly News (Miami/Ft.Lauderdale), In (Boston/New England), Windy City Times (Chicago), Bay Windows (Boston), Philadelphia Gay News, Update (San Diego) and Southern Voice (Atlanta) – banded together to help pay for the first study of the market by the widely respected firm Simmons Market Research Bureau. The results of the paper’s readership survey were highly impressive, with income and education levels significantly above that of the median population. Among its results, it found that 60 percent of readers were college graduates, compared to 18 percent for the general public.

The study became a benchmark that was widely – and inaccurately – applied to the broader gay market. In 1992, OUT magazine launched with the sole purpose of convincing advertisers that it was a safe place for them, with no sexual ads but offering high demographics – the same numbers cited in the Simmons survey. And in the early 1990s, the now-defunct Chicago gay marketing firm, Overlooked Opinions touted a $514 billion gay market.

The Challenge of Finding Gay People

The problem of gay market statistics is twofold: accurate data is difficult to obtain and there is wide misunderstanding and misuse of existing information. The first problem is just identifying the gay population, because the very question of how many gay people there are is in itself political.

Studies offering the incidence of homosexuality have ranged from Kinsey’s pioneering 1948 study that found a 10 percent figure, to a low of 2 percent by the Guttmacher Institute. While most agree the gay population is better represented in major cities, self-identified gays might be between 6 percent and 7 percent of the overall population, says the report by Packaged Facts. That totals just over 7 million gay men and nearly 6 million lesbians. As more people come out, Packaged Facts estimates that the self-identified gay population will grow 13.3 percent over the next five years and total 14.8 million in 2004.

But even today, not many people are willing to pick up the phone and answer the question, “Are you gay?”

Thus, finding a random sampling of lesbians and gays, when they don’t always identify themselves as such isn’t easy. Frequently, researchers have relied on “convenience samples,” culling names from existing marketing lists of people who have subscribed to gay magazines or catalogs and donated to gay causes. This practice was used in a 1997 follow up Simmons study and was criticized for skewing to higher incomes (it found the average gay income at $47,000), since people who can afford to buy magazines and donate to causes are less likely to be broke. Research relies on a lack of bias in its questions and its respondents and applying these figures to the whole community is inaccurate.

Another problem is people often confuse the differences among gay male households‚ income, individuals‚ income and disposable income. A “household” indicates two wage earners and when both are men – who are widely known to earn more than women – the result is higher than one-man-and-one-woman or two women. “Disposable income” refers to money that is left over after the expenses are covered. Gay people are said to have higher disposable incomes chiefly because they don’t appear as likely to raise children. The gay community was charmingly known for a while in the marketing industry as DINKS, short for Double Income, No Kids.

Gay Men May Earn Less Than Straights

People usually get lost in the true facts of the demographics of the gay market but, until recently, no one seemed to mind because the goal was to gain recognition from corporations for being a valid market. But other assessments now challenge early assumptions.

“Income Inflation,” a 1998 report by Lee Badgett for the Policy Institute of the National Lesbian & Gay Task Force and the Institute for Gay & Lesbian Strategic Studies came to very different conclusions based on an assessment of varying data sources.

In an analysis of 1990 census data, the General Social Survey and a study by the Yankelovich Monitor, the report found that gay mens’ earnings ($21,500 to $26,321) were actually 4 percent to 7 percent less than heterosexual men ($22,500 to $28,312). More dramatically, a look at a 1995 General Social Survey by Badgett found that gay men may earn as much as 27 percent less than heterosexual men. Workplace discrimination was cited as an explanation.

In contrast, lesbians, who remain almost entirely overlooked by marketers, were found to earn as much or more than heterosexual women ($13,399 to $15,056 for lesbians, compared to $9,038 to $18,341).

The report from Badgett, who is with the Department of Economics at the University of Massachusetts at Amherst, also found kids are present in gay households more often than anticipated. Her study of 1992 Voter News Service exit poll data found that 31 percent of lesbians compared to 37 percent of heterosexual women had children under 18 in the home, and 23 percent of gay men compared to 33 percent of heterosexual men. Packaged Facts says gay and lesbian households with children totals more than 2.2 million.

Financial Versus Political Interests

What the statistics say has impact in both the marketing and political worlds. Gay media want to make the community sound as attractive as possible to marketers – who until recently did not see it as a valid group – as do market research firms such as Simmons, Overlooked Opinions and Packaged Facts, who want to sell their studies. Meanwhile, anti-gay forces want to prove to the rest of society that gays don’t need protections because they already earn more money and are better educated. Supreme Court Justices even cited high gay incomes in the crucial Amendment 2 civil rights case from Colorado. Thus, gay activists want to avoid giving them any ammunition.

In recent years, major corporations such as American Express, Subaru and drug-maker Glaxo Wellcome have invested hundreds of thousands of dollars each in proprietary research to understand specifically how their brands fit into the gay market. They have been among the most committed companies to the gay market.

Everyone has an interest in getting the facts correct and better research is finally shedding light on the vaguely understood lesbian and gay market. Marketers will do best when they commission their own research and watch for pitfalls.

One “fact” that remains unexplored in recent research is gay brand-loyalty. While many may attest to remaining loyal to early players such as Absolut vodka, will such favor continue to hold in an increasingly crowded marketing environment? After all, how many people can cite the entire list of alcohol brands now vying for the gay dollar, let alone be loyal to them?

The Commercial Closet project is a unique, non-profit education and journalism organization dedicated to charting the evolving worldwide portrayals of the gay community in mainstream advertising.

Its goal is to educate advertising agencies, marketers and the world-at-large as an ongoing journalistic effort and through sharing its collection and observations on how gays are represented as a minority group in commercials worldwide.


Michael Wilke is the Director of The Commercial Closet The World’s Largest Collection of Gay Advertising. A former AdvertisingAge reporter, he has charted the emergence of gay marketing and advertising since 1992






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