Finally, the Truth

How Many Gay Americans Are There and What Will They Buy?

DiversityInc, 2004

Despite increasing anecdotal evidence that the number of gay, lesbian and bisexual people in the United States is on the rise, there continues to be a dearth of hard data to accurately describe the group. What has been especially problematic is the use of some consumer-research data to support the widely held market perception that the great majority of the gay, lesbian, bisexual and transgender (GLBT) community is wealthier and better educated than most Americans.

So while marketers trumpet GLBT consumers as a "dream demographic" with loads of disposable cash burning holes in their designer pockets, some social scientists are quick to point to research indicating that gay and lesbian Americans generally earn less than their straight counterparts.

The critical question is whether the frequently irreconcilable data from market researchers and social scientists invalidates one another.

"It's not a trivial question," said Prof. Lee Badgett, a labor economist at the University of Massachusetts at Amherst and president of the Institute for Gay and Lesbian Strategic Studies (IGLSS). "The way social-science researchers think about [the GLBT community] is different from the way marketers do."

Badgett is an outspoken critic of the usual media interpretation of market-research data that has shown affluence or higher degrees of education among a certain segment of the gay and lesbian population. She said this data has been used out of context and wrongly applied to the entire GLBT community.

"We certainly know that GLBT people span diversity in different dimensions, whether it's economic or social, among other factors," Badgett said. "You need to be very specific about who you're talking about. That's a practical issue: Marketers need to define whom they can possibly target, as opposed to whom they want to target." (See also: Gay-by Boom: Gay Families Emerge As New, Affluent Niche Market.)

The primary challenge for marketers -- when it comes to honing in on GLBT consumers -- is the requirement that they must self-identify as gay, lesbian, bisexual or transgender. People of color or people with disabilities, for example, are not usually subject to the same self-identification issues. And because of continuing discrimination in this country against people with different sexual orientations and the ability for gays and lesbians to deny or to hide their sexual orientation, getting an accurate tally of the true number of "who is gay" is a complicated undertaking.

Counting The GLBT Market vs. The GLBT Community

The total number of gay, lesbian, bisexual and transgender people in the United States is estimated to be between 13 million and 17 million, according to major studies on the group. Depending on the source, the percentage of GLBT people in this country ranges from 3 percent and 10 percent of the total U.S. population. Both market researchers and social-science researchers concede that the number is an estimate of the actual GLBT population, since there is no way to derive a true count given the challenge of relying on self-identification to extrapolate a figure.

However, despite the somewhat fuzzy math, projecting the number of GLBT Americans is not derived entirely without basis.

"Whatever the number is, what we end up finding is a figure that's about 6.5 percent of the total population," said Bob Witeck, CEO of Witeck-Combs Communications, a Washington, D.C.-based marketing communications and research firm. "In almost every study, 6.5 percent of respondents consistently self-identify as gay, lesbian, bisexual or transgender."

In the past, the percentage of gay and lesbian people was believed to be 10 percent of the general U.S. population. The figure was originally derived from various studies conducted by sexual behavior researcher Alfred Kinsey in the 1930s and 1940s that found 10 percent of research subjects were exclusively homosexual. A follow-up study by Kinsey in the 1950s found that 2 percent to 6 percent of women were exclusively homosexual. The percentages of gays and lesbians presented by Kinsey's research were proven unreliable because of the researchers' sampling methods. According to data from Advertising Age magazine, though, up to 10 percent of the population in urban markets -- cities where large populations of GLBT people reside -- identified as "gay."

Witeck said the number of GLBT Americans he feels most comfortable citing is 15 million. By comparison, PlanetOut Partners, a San Francisco-based media company serving the GLBT community, estimates that there are 16.5 million GLBT people in the United States (PlanetOut Partners derives its figure based on information from its more than 3 million registered-user base).

Based on Witeck-Comb's research, 2 percent to 3 percent of those surveyed identified themselves as gay males; 1 percent to 1.5 percent as lesbians; and the remaining 3 percent to 3.5 percent identified themselves as bisexual, making bisexuals the largest subgroup within the GLBT community.

"[The findings] beg a million questions," Witeck said. "What do they mean by that? We often go into the bisexual segment and ask further questions. If you have a partner, are they the same or the opposite gender? If you don't currently have a partner, what is the gender of your last partner? We keep probing a little deeper to find out what that self-identified identity means."

Witeck said there's not yet much data describing the consuming habits of bisexual people. "We just started down that road to get a bit deeper into the segment."

According to Witeck, transgender people are numerically insignificant in terms of identifying a viable target for marketers. "It's the hardest group to identify," Witeck said. "It's also at the intersection of gender and orientation, but mostly it's gender. Transgender people could be any sexual orientation, same or opposite."

Of the 6.5 percent of all Americans who self-identify as GLBT, Witeck said these people share many of the same characteristics as other Americans (i.e. age, race, socio-economic status), with GLBT people represented across every cross-section of the U.S. population. (See also: AIDS, Hate Crimes, Marriage Top Issues For African-American Gays, Lesbians.)

A Self-Selected Market

Unlike social-science research that strives to understand demographic characteristics of an entire group being examined, market research, by its very nature, is limited to characterizing a segment within an overall demographic to understand its receptivity to a marketing message.

Even today, market research portraying gay, lesbian and bisexual consumers as a group of affluent and well-educated people continues to be used to describe the entire GLBT community, to the chagrin of social scientists, activists and many marketing executives.

"It's a double-edged sword," said Todd Evans, CEO of Westfield, N.J.-based Rivendell Marketing, a media agency that specializes in gay and lesbian publications and Web sites. "The data is sometimes used against us. It's an annoying thing to happen."

Evans said data from an early market-research study conducted in the mid-1990s on behalf of the National Gay Newspaper Guild (NGNG), a group of newspapers targeting gays and lesbians, that showed affluence among readers of newspapers aimed at mostly gay males led to misquotes and out-of-context usage by a variety of media outlets.

"You can make assumptions about that given market, but that's about it," Evans said. "There was no information back then and people were hungry for anything." Evans said media plans were developed based on "hunches" and marketing to gay and lesbian consumers in the past meant pitching to GLBT-friendly advertisers and media outlets. "But [marketers] needed numbers to prove the assumptions."

The truth was that the consumer research for the NGNG described a certain segment that was likely to be self-selected, and represented a more affluent segment of the GLBT population. As is the case with market research for readers of general newspapers, readers of gay-oriented newspapers tended to be better educated and more affluent than those people who did not read those newspapers.

"Gay and lesbian people are like everyone else," said Evans. "They are under the glass ceiling and run the gamut of income levels as everyone else."

Still, the first set of numbers seemed irresistible to mainstream media outlets like The Wall Street Journal, which in a 1998 article proclaimed gays as an attractive, affluent and as yet untapped market. And indeed, the numbers were compelling to marketers as well: According to the original study by Simmons Market Research, the average household income of readers of gay publications was more than $66,000 annually, compared to $40,000 of the general population.

After the initial report in The Journal, the high household income among the select group of gay newspaper readers was distorted to describe the entire GLBT community by other outlets and continues to be, according to Badgett.

According to Badgett's 1998 study, "Income Inflation: The Myth of Affluence Among Gay, Lesbian and Bisexual Americans," data from the General Social Survey, the 1990 Census and Yankelovich Monitor all showed gay and lesbian people with lower individual incomes than their straight counterparts.

Meanwhile, market research from PlanetOut Partners showed gay Americans with a collective buying power of $450 million. (African Americans, by contrast, according to PlanetOut Partner's research, have a buying power of $535 billion, but outnumber gays and lesbians by almost 2-to-1.) Additionally, of the GLBT people surveyed by PlanetOut, each commands a per capita buying power of more than $27,000, compared to Asian Americans' $21,000 per capita spending power.

The conflict with some market research is how self-selected the respondent pool can be. "The places where you can find [GLBT] people, the people you are finding self-identify as gay, and most of these people are on the affluent end of the spectrum," Badgett said.

However, Badgett added, "These are the people [marketers] can find. They are also the people [marketers] want to find."

Spending Habits vs. Spending Power

An accurate picture of the financial power of the GLBT market may lie somewhere between the affluence of newspaper readers and Internet-savvy consumers and the modest incomes of most GLBT people. But with or without inflated income figures, the key to reaching gay and lesbian consumers is not about how much money they make, but how much they are willing to spend and what they want to spend it on. (See also: The Best Industry for Gay and Lesbian Employees.)

"Income is besides the point," said Howard Buford, president and CEO of Prime Access, a New York-based multicultural marketing agency. "The fact is that gays and lesbians tend to have fewer children than straight people. Therefore, even if they make less than their counterparts, they have more money for discretionary spending."

Buford added that fewer children in households also means that gay and lesbian people, anecdotally at least, can spend more time pursuing careers and spend more money on products and services such as travel, pets and personal grooming.

According to the 2001 Gay and Lesbian Consumer Online Census from Syracuse University, in partnership with OpusComm Group and GSociety, nearly 13 percent of the more than 6,000 gay and lesbian respondents polled in an online survey said they had children under age 18. "That figure is surprising to people," said Amy Falkner, an associate professor at the S.I. Newhouse School of Communications at Syracuse University, who led the study. "But anyone who knows the [gay and lesbian] community knows there are many families kids."

While Falkner said the results of the study could not be scaled to represent the entire GLBT community, they serve as useful snapshots for advertisers looking to better understand the GLBT market.

A key question for marketers and consumer companies is whether to target GLBT consumers through gay/lesbian or mainstream media. (See also: "I Want My Gay TV" -- But There Will Be a Delay.)

"I'm not sure there's a whole lot to work out there [examining this issue]," Badgett said. "I'm on the skeptical end of the spectrum. Why should gay people buy products that are being touted in GLBT media? It's hard to believe that you can turn any old product into one that gay people will want to buy because they are gay."

Studies have shown that gay and lesbian consumers are more inclined to purchase products and services from companies that are gay-friendly. The Syracuse study found that eight out of 10 respondents to the survey were "more likely" to purchase products and services from "gay-friendly" companies.

Indeed, a new form of advocacy has emerged with GLBT people lobbying for change on the corporate level via shareholder advocacy. (See also: Controversial Sexual-Orientation Policy Resurfaces at ExxonMobil.)

As marketers move toward narrowcasting their messages more and more, addressing all GLBT consumers --beyond the affluent ones -- will become less a luxury and more of a priority. But there needs to be comprehensive studies of the group, both from market-research and social-science perspectives.

"There are a lot of numbers describing the GLBT market," Evans said. "But not a lot of numbers about the community."

"Because of the continued discrimination, it's virtually impossible to get a random sample of LGBT people," Falkner said.

Still, resistance from the marketplace has subsided significantly, Evans added. "The stigma against pursuing this market is virtually gone. I get proposals from the strangest companies. It's on the radar screen and there are a lot of companies that are ripe for this market."