Ten years ago 58% of the country disapproved of same sex marriage.  The U.S. President campaigned on a federal ban of same sex marriage and 11 states voted to amend their constitutions to define marriage as only between a man and a woman.  Although the LGBT community was an attractive demographic to marketers due to their higher than average amount of disposable income with an estimated $610B to spend[1] – known as “dinks” (dual income, no kids) – many companies were reluctant to sign on as advertisers and supporters of gay rights.

Brands that did market directly to gays and lesbians were rewarded with market share and a fierce loyalty.  In fact, forty percent of gay consumers in 2004 reported that – quality and value being equal – they would prefer to purchase products from companies that advertise in gay and lesbian media.[2]  Conversely, products and services from companies that were discriminatory towards the LGBT community were no longer part of the consideration set for gay and lesbian consumers.

The New Dynamic

Times have changed – both politically and commercially.  Driven largely by the inclusive Millenial generation and people who have discovered that they know someone gay (89%), approval of same sex equality in the U.S. continues to rise.[3]   Recent polls show that 77% of the U.S. population approve of equality in the workplace and 59% support gay marriage[4].

Gays and lesbians are increasingly out of the closet, and corporations, once fearing backlash, are signing on not only as advertisers, but also as vocal supporters of gay rights. For example, 80 companies signed on to an amicus brief in one of the legal challenges to DOMA in 2011, which the U.S. Supreme Court struck down in its June 2013 decision in Windsor vs. U.S.  However, the traditional courting of the “gay market” ignores a much larger market opportunity.  LGBT friends and family (i.e. Allies), are showing their support not only as citizens, but also as consumers — making purchasing decisions that align with their views on LGBT equality.  The latest estimates (2012) put the total buying power of the adult LGBT population at nearly $800B[5].  When you add Allies, that number is far greater.  This is the “LGBT+A” market.

“There is no LGBT consumer market that we envisioned 10 years ago, or perhaps five years ago. It is more of an LGBT accepting consumer market – made up of economic players that are guided by their values in deciding where to work, where to shop, where to live, where to invest, you name it,” says Bob Witeck, of Witeck Communications, which has been providing counsel and consultion for Corporate America about the LGBT market for more than two decades.  “The sea change means that many millions more are motivated to behave in gay-friendly and receptive ways today when making purchasing and life decisions.”  

The Evolution of Gay Allies: From Denial to Action

With nearly half of the U.S. population with a close friend or relative that is gay, for many, equality for gays and lesbians has become personal. Many people (including President Obama) have described themselves as evolving or having evolved on the issue of gay rights.

The chart below illustrates what some have called their “journey” on this issue – moving from disbelief and shame to acceptance to pride and activism.  Each generation starts and ends somewhere differently on the continuum.

Figure 1: "Not My Son"

(Note: Son can be swapped out to daughter, or may apply to any relationship)

As society moves to the right of the continuum, the desire to act in order to protect and support friends and loved ones grows.  For example, of the 77% of the straight U.S. population that support equal rights in the workplace, 14% have become “active allies” having performed two or more LGBT-supporting actions, such as aiding a coworker in his or her coming out, or speaking up to coworkers in defense of LGBTs.[6]

The recent resignation of Brandon Eich, former CEO of Mozilla (developer of the Firefox browser), is another example of allies taking action — and seeing results. Eich, the firm’s top technologist and the inventor of JavaScript, is a strong voice for open source standards for the web.  But he was also a known supporter of the Proposition 8 movement in California that sought to keep that state’s gay marriage ban in place. Upon his ascendancy to the CEO’s role, three of the company’s board members and members of Mozilla’s user base grew angry.  The LGBT community did not publicly unite to drive Brandon Eich to step down, though many did take to social networks to object to his leadership.  Remarkably, it was their straight allies, including popular dating site OKCupid who, in a bold move, blocked Firefox users from entering their site with a letter explaining their position and links to competing browsers.

 The Opportunity

While some companies may be cautious, defensive or even fearful of  LGBT +A activism, there are many who see the market opportunity in this new demographic and are looking to capitalize on it.  For example:

State and local governments that have legalized same sex marriage are enjoying boosts to their economies because of it, with everything from marriage license revenue to gains in the hospitality industry.  State tourism boards, such as Nevada and New York, have launched websites and advertising campaigns catering to the lesbian, gay, bisexual and transgender community, with Las Vegas’s 2012 ad campaign featuring the tagline, “Everyone’s welcome. Even straight people.”

In sports, ESPN featured coverage of ‘out’ college football star Michael Sam during the 2014 draft and received the highest ratings in NFL draft history.  Sam was a huge merchandizing draw with his jersey ranking 2nd in sales among rookie shirts being sold on NFL.com.  Likewise, soon after Jason Collins came out as the first openly gay player in the NBA, his No. 98 jersey, chosen in memory of Matthew Shepard whose 1998 murder in Wyoming was ruled a hate crime, rose to the top spot for sales on NBA.com. The NBA then announced that proceeds from the sales, as well as from auctions of Collins’ autographed game-worn jerseys, would benefit two LGBT supporting charities, the Matthew Shepard Foundation, and the Gay, Lesbian & Straight Education Network (GLSEN).[7]

While new brands such as Hotwire are releasing campaigns (“Lucky Me”) to reach this market, some of the world’s oldest and most trusted brands are embracing the new market as well.  Coca-Cola aired its “America the Beautiful” commercial during Super Bowl XLVIII that included two dads roller-skating with their daughter.  Honey Maid, the homespun maker of graham crackers, launched their heartwarming “This is Wholesome” campaign that included a gay couple among other family structures, with the tagline: “No matter how things change, what makes us wholesome never will.”  Even more striking was the follow up “Love” ad that ran as an answer to the hate mail the company received. Senior Marketing Director for Mondelēz International (which owns Honey Maid) Gary Osifchin said:

“We recognize change is happening every day, from the way in which a family looks today to how a family interacts to the way it is portrayed in media. We at Honey Maid continue to evolve and expand our varieties to provide delicious, wholesome products so they can be a part of everyday moments of connection in a world with changing, evolving family dynamics.” 

In financial services, Credit Suisse has launched an LGBT Equality Portfolio that allows clients to invest in a suite of companies from the S&P 1500 Index that have a demonstrated track record of supporting LGBT employees while also being attractive when measured by traditional valuation approaches.  The Credit Suisse LGBT Equality Index™ is a capitalization-weighted equity index that measures the performance of U.S. companies recognized for supporting and promoting equality for members of the LGBT community. Index inclusion requires a score of 80 or above on the Human Rights Campaign’s Corporate Equality Index (CEI), considered a national benchmark for corporate policies and practices related to LGBT employees. The index is the result of conversations between Credit Suisse and LGBT Capital, a thought leader in the field of LGBT-related socially responsible investment activity.

Credit Suisse has also launched an associated investable portfolio, the Credit Suisse LGBT Equality Portfolio, Powered by HOLT®, a Credit Suisse proprietary valuation framework with a disciplined cash-flow approach to company analysis and stock selection. The new portfolio is available exclusively to Credit Suisse Private Banking USA clients.

“Wall Street, and Credit Suisse in particular, has a strong track record of providing leadership and support for LGBT-related issues,” said Timothy O’Hara, Credit Suisse Global Head of Equities. “We are very pleased to be launching an Index that tracks the economic impact of LGBT-supportive policies.”

Conclusion

As the average American becomes more supportive of gay rights and Millenials become a major economic force in the U.S. economy, organizations that embrace the powerful new LGBT+A market will thrive.  Those companies that don’t take advantage of this opportunity will likely lose the access and loyalty of this fast-growing market and ultimately, cede market share to those that do.

 

Joanne Jacobson is a member of the Cornerstone Board of Directors and an Entertainment and Media executive.  She most recently worked at Viacom Media Networks, VH1, MTV and CMT channels, developing growth and turnaround strategies including new business development.  She was a founder of Viacom’s network LOGO, the first ad supported multi-platform channel dedicated to serving the LGBT community.

 

[1] Witeck Combs Communications, 2005
[2] Harris Interactive, 2004
[3] Pew Research Center, May 1-5, 2013
[4] The Washington Post/ABC News National Poll , March 5th 2014
[5] Witeck Communications and MarketResearch.com / http://www.hrc.org/resources/entry/lgbt-marketing-and-advertising
[6] LGBT IN THE WORKPLACE: “POWER OF OUT 2.0” STUDY, Center for Talent Innovation
[7] http://www.nba.com/nets/news/nba-auction-autographed-jason-collins-brooklyn-nets-jerseys