Card Brands Timid In Targeting Gays

  Gays and lesbians might seem like a natural constituency for card marketers. They belong to a community of millions of heavy card users who tend to respond well to targeted messages and often wield higher-than-average discretionary income.
  Yet with the exception of American Express Co., the card industry consensus holds that marketing aimed at general audiences does a good enough job of reaching the niche.
  Ignoring the gay community completely, however, would seem counterproductive given its size and spending power. Seven percent of the U.S. population, or about 20.6 million consumers, self identifies as gay, lesbian, bisexual and transgender, or GLBT, according to Howard Buford, president and CEO of Prime Access Inc., a multicultural advertising agency in New York that has worked with AmEx and creates ads for about 20 Fortune 500 companies.
  Research conducted for the National Gay Newspaper Guild found that 87% of gay-newspaper readers own at least one credit card compared with 76% of all adults. And 21% of the readers have more than five cards, while 15% of the general population has that many. Nearly half of the readers surveyed charge more than $500 monthly on cards compared with 21% of the population as a whole, according to the survey.
  Harris Interactive conducted the two comparative online surveys of the gay and general population last winter. One polled 3,801 readers of gay newspapers and the other surveyed 2,731 adults from the general population. The Guild includes 13 member publications in major cities nationwide.
  While the card industry has made attempts to reach out to other market niches, the gay market "is wide open," says Tracy Baim, leader of a media group serving the Chicago-area gay community and publisher of the 20-year-old weekly Windy City Times, a Guild member. "Other communities, such as blacks and other ethnicities, have been tapped."
  In Baim's view, the payments industry has played it too conservatively, noting that local banks, along with the national auto and beverage industries, are aggressive marketers to gays.
  Historic card-industry policy backs up Baim's view. "Visa does very little specific-segment marketing," says Michael Rolnick, Visa director of corporate relations, regarding the GLBT audience. He says Visa currently is focused on three segments for additional marketing: Hispanics, young adults and the newly affluent, "with significant activity on the third" for the Visa Signature Card.
  "Outside of those," Rolnick says, "our general marketing practice tends to reach all the other segments. Our brand personality is inclusionary and all-encompassing."
  MasterCard International tells much the same story. "We don't think we need to do something specific to reach gays and lesbians because we are capturing them with what we are doing with our general market advertising," says Michael Lao, MasterCard vice president of U.S. brand development.
  Discover Card is not making any targeted marketing foray into the GLBT scene either, says a spokesperson for the Riverwoods, Ill.-based card issuer.
  Despite their marketing agendas, Visa and MasterCard are not ignoring the GLBT segment. Visa runs ads in gay-oriented periodicals, says Rolnick. In addition, the Rainbow Card issued by MBNA Corp. carries the Visa brand.
  The 10-year-old affinity credit card targets gay consumers and raises funds for the Rainbow Endowment, a not-for-profit organization that disperses money to various gay causes. However, a lawsuit between the card's creators and product spokesperson, tennis star Martina Navratilova, led to the suspension of the marketing of the Rainbow card this summer (see sidebar page 46).
  MasterCard does some advertising to gays, taking out ads in the national magazines Out and The Advocate to "hedge our bets," says Lao. These purchases come despite in-house filters that the association has in place that eliminate certain pubs from its advertising roster.
  Still, neither Visa nor MasterCard does much to tailor ads in GLBT publications to the audience. Both say their regular advertising is designed to appeal to a broad enough spectrum of Americans to succeed in the GLBT community.
  MasterCard makes something of an exception to its rule by sponsoring local Gay Pride events and advertising in Pride, an annual publication distributed at those gatherings across the nation. The card organization has focused on the San Francisco event since about 2001 but also has participated occasionally in others, says Lao.
  Lao describes the sponsorship as an opportunity that arose, rather than a MasterCard-initiated campaign, noting though that MasterCard sometimes develops ad materials specifically for Pride.
  Michael Wilke, a syndicated columnist and executive director of The Commercial Closet, a New York-based educational organization that reaches out to corporate executives and college students about GLBT issues in advertising, believes MasterCard and Visa simply are staying "in the closet" with regard to their marketing to gays. "They downplay their involvement" in the GLBT market, a tendency common among companies in the past but less prevalent lately, Wilke believes. The card associations understate the scope of their efforts, he says, to try to avoid controversy with anti-gay groups.
  Whatever the effort that Visa and MasterCard are making, it pales in comparison to American Express efforts to reach GLBT consumers. Indeed, AmEx has met some success in the GLBT market, with 35% of gay readers holding an AmEx card compared with 19% of American adults, according to the Guild survey (see chart page 47).
  AmEx has cast David Collins, creator of the television show "Queer Eye for the Straight Guy," in a print, television and radio campaign for its Open: The Small Business Network that targets entrepreneurs and business owners. A related Web site tells the story of Collins' success, including his use of the points he earned with the card to help cover his travel expenses incurred while putting together the show. Collins is one of a diverse group of businesspeople promoting the card.
  Meanwhile, comedian Ellen DeGeneres has been appearing as one of a group of entertainers and athletes in the "My Life, My Card" AmEx print, television and Internet campaign. The group includes actor Robert DeNiro, golfer Tiger Woods, surfer Laird Hamilton, basketball coach Mike Krzyzewski and actor Kate Winslett. DeGeneres made national headlines when she came out as a lesbian on her situation-comedy television show in 1997.
  The DeGeneres ad is appearing frequently on Logo, a new gay-oriented cable television channel, says Megan Bramlette, an associate at Auriemma Consulting Group Inc., a marketing consultant to payments firms. "They're obviously hoping she's going reach out to the gay market, but she has mass appeal as well," she says. DeGeneres' syndicated, five-times-a-week television talk show, now in its third season, is reaching Middle American homemakers, says Bramlette.
  "American Express has identified the gay community as one of its target markets," says Bramlette.
  Same-sex couples have appeared in print ads for AmEx small-business services and financial services, making GLBT appeals something of a theme for the company, some observers say.
  Curiously, AmEx itself is not quite so forthright about its gay marketing. The New York City-based issuer and network declined to provide an executive to discuss the subject. Additionally, a spokesperson would not comment directly when asked to identify the target audience of its DeGeneres marketing.
  Pre-emptive Strike?
  Instead, the spokesperson responded in an e-mail message that "American Express ads feature a number of different personalities who have achieved great success in the arts, entertainment, sports and other endeavors. ... Ellen DeGeneres ... is one of the many personalities featured in the ads. The common denominator ... is outstanding professional achievement."
  Scott Strumello, who also monitors the cards landscape for Auriemma, says AmEx is going after the GLBT consumer before MasterCard and Visa turn their full attention to that market. AmEx wisely has used the proliferation of cable-television channels that target consumer niches to run advertising campaigns aimed at specific groups, Strumello notes. At the same time, he concedes, the general approach to marketing has worked for MasterCard and Visa.
  Mobile Market
  But targeted messages would work even better, says Buford of Prime Access. "They're missing a huge opportunity," he says of the card industry leaders that have decided not to pursue the GLBT community.
  "Prime Access has conducted many, many, many focus groups in the gay and lesbian market coast to coast, and it's very clear that gay men and lesbians consistently show strong preference for advertising and brands that appeal directly to them, to who they are and how they live their lives. A very strong brand loyalty comes from that," says Buford.
  Additionally, he says, the GLBT market views less advertising clutter, suggesting an opportunity for those that invest in the segment.
  Marketers need to know, Buford says, that gays and lesbians have more discretionary income and more free time because they have fewer children than does the general population. That enables the community to travel, and most people use credit cards to pay for hotel stays, airline tickets, cruises and rental cars.
  But be careful not to stereotype the community, as gays are not monolithic, says Bramlette of Auriemma. "We aren't a club," says Bramlette, who is gay. "It's like, 'What if we marketed this card to straight people?'"
  Strumello cautions that gay consumers encompass a large group, and it is difficult to find any cause that interests everyone. The gay community is not much more homogeneous than the population as a whole, he adds.
  Any large consumer segment that favors card payments and spends big in select categories certainly sounds like a group worth pursuing. For now, AmEx appears to have taken the lead while the associations mull over their marketing plans.
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