Rolling out the red carpet for gay consumers: the openly gay experts who head niche marketing firms are helping corporate America connect with the lesbian and gay market. At stake is an estimated $450 billion in spending every year. (gay-owned Businesses).

If you didn't know better, you might miss the significance of HBO's latest direct-mail piece, which in February will land in the mailboxes of 1 million homes nationwide. The piece, promoting such original programming as Six Feet Under, Sex and the City, and the new film The Laramie Project, has an understated cover line, "HBO Out Loud," that doesn't necessarily scream "gay." But neither is the wording a coincidence. Rather, it's the result of careful planning and collaboration with New York niche marketing firm Prime Access, hired to advise on language that, says Shelley Wright Brindle, HBO vice president of subscriber marketing, "would most resonate with the gay community" while still appealing to a broad heterosexual audience.

These strategic maneuvers are fast becoming the norm at Fortune 500 companies as more of them, having awakened to the eye-popping profit potential of an underserved market, spend bigger bucks on research and hire outside experts to find out who lesbian and gay consumers are, what they need, and how best to reach them. It may mean the end of invisibility as we knew it; with the latest market research estimating buying power among gay and lesbian consumers in the $350 billion-$450 billion range, corporate executives are seeing dollar signs where they once saw controversy and chaos. "The backlash thing has really fizzled," says Prime Access president Howard Buford. "It has just not been a meaningful consequence for anyone who has gone after this market."

Over the past five years in particular, Buford and other experts say they've seen companies grow exponentially less concerned with negative repercussions. "I look at it as before Ellen and after Ellen," says Wes Combs, president of Witeck-Combs Communications, a Washington, D.C.-based firm that helps companies such as American Airlines and Coors Brewing Co. develop communications strategies to reach gay consumers. "After Ellen [DeGeneres] came out, the show was canceled because it was `too gay,'" Combs says. "But the next season, Will & Grace was number 1." The furious discussion stirred up by DeGeneres's coming-out forced gay issues into the American consciousness, he adds.

Once gay consumerism was out of the closet, it was just a short hop to the marketing strategy sessions of companies in every industry. Those sessions often lead the companies to ask for help from the openly gay experts who are running niche marketing firms across the country.

"[Ellen] demystified gay people in a lot of ways--and it prompted a lot of people to come out," says Combs, who notes that the first call he gets from a company is often from an out gay or lesbian employee who wants to create a business case for marketing to the segment.

American Airlines' campaign to win the loyalty of gay travelers--this year the company will turn its attentions to gay corporate travel--began with a proposal in 1993 from Rick Cirillo, an openly gay executive at American. Cirillo was given the green light to begin courting gay and lesbian travel agents and tour operators and in the first year tracked $20 million in revenue from that segment. Nine years later, that figure has multiplied 10-fold. "And that's just what we're able to track," Cirillo says. "We're certain there's a great deal more out there."

The company has good reason to believe that, but with only 6%-7% of people in the United States self-identifying as gay or lesbian, they can only guess at how many their ads are influencing. "There are people who aren't comfortable self-identifying, but they'll fly American because it's gay-friendly," Combs says. "There's no way to track that, and that's the toughest thing, because companies want proof."

To gather as much evidence as they can, travel companies track calls from toll-free numbers or promotional codes designated for special fares so they can see immediately which consumers are responding to which ads. The British Tourist Authority began compiling a database of lesbian and gay travelers four years ago, attending gay expos in big cities across the country and then following up with those consumers to find out if they'd been influenced to vacation in the United Kingdom. Almost immediately, the tourist authority began seeing the potential reward, says Christine Braganza, director of Western region marketing--and it has just finished a travel guide to the United Kingdom designed for gay and lesbian visitors. "The gay and lesbian segment is so easy to target and maintain because it's so receptive, in that it's appreciative of all the work and effort we put in," she says.

The fierce loyalty of gay consumers to a brand they identify as supportive is the stuff of dreams for most companies. And the opportunity to emotionally bond with a group that typically has been excluded is not lost on them. "The main reason you target a group like the gay community is because we're willing to reward companies just for targeting us," says Fernando Trejo, a Boston-based management consultant in strategy and marketing. "There's a huge emotional component there."

Still, it's a business. And as much as we like to identify companies as allies, sympathizers, and friends, when it comes to marketing, the bottom line is still the bottom line. "Obviously, it isn't all altruistic," says Forrester Research senior analyst Henry Harteveldt, who follows the travel industry's spending on the gay and lesbian market. "There's an economic reason underlying all this: They want us to spend our higher-than-average disposable income there."

But how much higher are gay incomes anyway? The research is controversial at best. Studies that collect data online about the relative wealth of SINKs and DINKs (or single- and double-income-no-kids)--such as the recent Syracuse University-OpusComm Group online census, which found gay or lesbian household income was 60% higher than the 1999 U.S. median--have been criticized for being too narrow and self-selecting and for perpetuating stereotypes. "The myth is, we're all rich men living in urban cities," says Witeck-Combs CEO Bob Witeck.

And companies typically "don't appreciate the importance of the female population, the over-30 population, and people of color," adds Buford. "We need better research, which is one of the reasons we're trying to be included in the [U.S.] census."

But the proposal to include a question about sexual orientation on the census was denied last year, prompting some firms to take up the slack independently. Witeck-Combs, for one, partnered with Harris Interactive (of Harris Poll fame) to conduct polls and gather information on the relative preferences and habits of gay and straight consumers. "Our research shows that we're probably not richer, by sheer wages," he says. "But we do spend our money differently."

Which is why Witeck-Combs and Prime Access both tell clients that placing their generic advertising in gay publications won't cut it. And that leaves companies with limited ad budgets in a recession eager to find ways to appeal to more than one group with the same ads. Hence "gay-vague" advertising, designed to strike a chord with gay men and lesbians but sail straight over the heads of oblivious heterosexual consumers--or, in the best case, appeal to them as well. Furniture maker Mitchell Gold Co., a subsidiary of the Rowe Companies, figures it can snag two of its main targets--straight women and gay men--with the same handsome face featured in its furniture ads. "Our advertising is inclusive," says president and CEO Mitchell Gold. Even the company's explicitly gay ads--one of which features two men and a little girl shopping for furniture--might be interpreted differently by different viewers. "It just depends on where you're coming from," Gold says. And if a conservative heterosexual viewer should catch on and take issue with it, Gold says he could not care less: "If they feel like that, they don't deserve to have our furniture."

This strategy has definitely caught on, with companies in the fashion, alcoholic beverages, and automotive industries all touting ads that seem designed to be teasingly suggestive. It's also sparked criticism that inclusive is just a euphemism for hiding.

But that criticism doesn't hold up, says Andrew Isen, president of WinMark Concepts, a Washington, D.C.-based gay market consultancy. "People say that, but I don't believe that," he says. "I think it's very good that they're able to brand their brand in a non-sexually specific way but utilize the placement of their advertising to target the niche they want. It's tricky; not everybody can do it--so I take my hat off to them."

The jury's still out on whether gay-vague is too vague to woo lesbian and gay consumers, and companies may soon find that a successful campaign means first adopting a slew of gay-friendly internal policies, such as antidiscrimination protections, domestic-partner benefits, and diversity training. Not surprisingly, Witeck-Combs/Harris Interactive research found that 70% of GLBT respondents would be more likely to patronize companies with these policies than those without.

And that means companies are poised to capture new business if they're willing to take the plunge. IBM, for example, has been repeatedly named one of the gay-friendliest companies in the Fortune 500 ranking, but has yet to formalize its marketing to the GLBT consumer segment, says Trejo, a consultant to IBM on marketing strategy. "Until someone else in your industry does it, you don't have to," he says. "But give them a few more years. I think they'll get on board."

If anything points to a gathering critical mass, it may well be the windfall of business enjoyed by gay marketing firms in recent years--so much so that they can afford to share competitive information to find common, better ways to approach companies. Witeck-Combs has recently held meetings with Coca-Cola, Hallmark, S.C. Johnson, and several banks, among others, and Isen reports being so busy he's had to turn business away. And that means gay consumers can afford to raise their standards and save their loyalty for companies that work for it. "Judge for yourself who is respecting you for who you are and who seems to be sincere," Buford says. "That's what I do as a consumer. And that's what we find most gay consumers do."

For more information and links to these marketing companies, go to www.advocate.com

Prince is executive editor of CEO magazine.