September 7, 2007 / 11:35 AM / 12 years ago

Firms wising up to the power of the pink dollar

BARCELONA (Reuters) - Targeting the gay consumer is proving lucrative for some businesses, as gay Spanish entrepreneur Juan Julia has found, but the potential of the pink dollar remains for many firms a missed opportunity.

A man walks inside By BCN, a formalwear store selling wedding gear for gay men, in Barcelona September 5, 2007. REUTERS/Albert Gea

In 2003, Julia set out to create a luxury hotel where gay guests felt comfortable. Today, as a regularly packed rooftop bar attests, his Axel Hotel, in Barcelona’s trendy gay area Eixample, nicknamed Gayxample, is a hit.

The 66-room hotel has a 100 percent occupancy rate on weekends, and Julia is opening a second branch in Buenos Aires, Argentina, next month.

But Stephanie Blackwood, managing director of U.S.-based Double Platinum, which specializes in gay and lesbian marketing, says most firms are failing to fully serve a market that comprises perhaps 6.5 percent of the population.

“There are 15-18 million gay and lesbian consumers in the U.S. alone, with buying power of $690 billion ... That ranks slightly below Australia’s GDP,” she said at an International Gay and Lesbian Chamber of Commerce conference this week, held at the Axel Hotel and ESADE Business School in Barcelona.

Attitudes towards lesbian and gay advertising are changing as more firms stop worrying about whether marketing specifically to gay consumers could alienate the general consumer.

Last year’s spending on advertising in U.S. gay and lesbian publications was $223.3 million, three times the amount spent 10 years ago in 1996, according to a study carried out by the Gay Press Report.

DISPOSABLE INCOME

And there is a compelling reason why companies are spending more to address a gay and lesbian audience; they have more disposable income than their heterosexual counterparts.

A recent Irish survey indicated an average annual pretax income amongst gay and lesbians of 44,614 euros ($60,960), compared with a national average of 32,000 euros.

Last year, Pernod Ricard’s U.S. division commissioned a documentary for its Stolichnaya vodka brand called “Be Real: Stories From Queer America”.

The film, screened at U.S. gay film festivals, featured six profiles of lesbians and gay men with an accompanying advertising slug “Authentic Vodka for Authentic People”.

Gay business leaders say companies that are first to market in this area, as in others, earn a competitive edge.

American Airlines, for instance, has targeted gay passengers since the mid-90s with a gay-orientated website with travel deals, podcasts and a gay events calendar.

“Gay consumers have become astute shoppers,” said Chance Mitchell, co-founder and CEO of the United States’ National Lesbian and Gay Chamber of Commerce.

“I only fly American Airlines, for instance, because for so long they have paid attention to gay people.”

Slideshow (5 Images)

And specifically targeting the gay consumer doesn’t mean ruling out straight clients, companies have found.

Back in Barcelona, entrepreneur Santiago Porrero finds straight men among those browsing the racks of his formalwear store By BCN, which he opened in May to sell wedding gear to gay men after same-sex marriage was legalized in Spain in 2005.

“Some come in because they are looking for something different to what’s on the market”, said Porrero. “Others come in with their girlfriends, who say: ‘You should look for something different!’”

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