Recession? What Recession? Prevailing Market Wisdom Says Gays Are Less Affected by Economic Downturns Than Heterosexuals. but How Wise Is That Wisdom?
Davidson, Alex, The Advocate (The national gay & lesbian newsmagazine)
THERE ARE WINNERS and losers in recessions. The obvious losers are laid-off workers, businesses that can no longer turn profits, and nonprofit organizations that rely on charitable contributions. But among the winners are some surprises--take advertising firms that target gay folks, for example.
"Every recession has been our biggest growth year," says Todd Evans, chief executive officer of Rivendell Media, whose clients include Travelocity, Absolut, Bristol-Myers Squibb, and Johnson & Johnson. "Recessions make every company focus on who their consumers are, and that's what niche marketing is all about. The gay market is easy to target; it's an easy group to focus on."
Advertisers have it in their minds that gay people are recession-resistant, meaning they are more likely to continue their spending even in rough economic times. Why? Three reasons, Evans says: Gay people are less likely to let changes in the economy affect their behaviors, they have fewer (or no) children, and they are less likely to be strapped for cash. As a result, companies struggling to make money during down times often hone in on gay individuals and couples. "Every company wants to reach DINKs," Evans says, using the marketing acronym for "double income, no kids."
According to a study released in November 2008 by the polling agency Harris Interactive and Witeck-Combs Communications, a gay-targeted advertising consultancy, 32% of gay men and lesbians are likely to vacation for longer than a week in the next six months, despite the economic downturn, compared to 28% of heterosexuals. The study also found that gay people are more likely to continue to dine out and that gay men, in particular, are the least likely to change their restaurant spending during a slowing economy.
Bob Witeck, chief executive officer of Witeck-Combs, says he and other marketers first became aware of these trends after 9/11, when travel and restaurant spending plummeted among straight consumers but remained static, or even rose, among gays.
Armed with such data, companies have opted to invest in long-term advertising in the gay and lesbian press. Advertising growth in that segment is outpacing growth in the mainstream press, according to Rivendell Media: Estimated ad revenues in gay media grew by 148% between 1996 and 2006, compared to 51% average ad revenue growth among general consumer publications during that same period. In 2007 more than 96% of ads placed in gay print media were in local publications, with newspapers taking the lion's share of ad dollars. Still, both The Advocate and Out managed to increase ad dollars and ad pages from fourth quarter 2007 to fourth quarter 2008, according to the Magazine Publishers of America.
"With disposable-income items, you see a sustained level of advertising to LGBT individuals," says Justin Nelson, president and cofounder of the National Gay and Lesbian Chamber of Commerce in Washington, D.C. "While things have tapered off a bit, we are still buying our iPhones." But Nelson, whose organization works with 1.4 million LGBT businesses and entrepreneurs, adds that while gay consumers are being targeted for their spending habits, that does not mean that gay businesses are escaping the wrath of the recession. "A lot of gay-owned firms are hurting just like their heterosexual counterparts."
To survive, some gay and lesbian entrepreneurs--like Janie Mahlmann, who owns an IT consulting business outside Trenton, N. …