Subaru’s marketing strategy had just died in a fit of irony.

It was the mid 1990s, and sales of Subaru cars were in decline. To reverse the company’s fortunes, Subaru of America had created its first luxury car—even though the small automaker was known for plain but dependable cars—and hired a trendy advertising agency to introduce it to the public.

The new approach had fallen flat when the ad men took irony too far: One ad touted the new sports car’s top speed of 140 MPH, then asked, “How important is that, with extended urban gridlock, gas at $1.38 a gallon and highways full of patrolmen?"

After firing the hip ad agency, Subaru of America changed its approach. Rather than compete directly with Ford, Toyota, and other carmakers that dwarfed Subaru in size, executives decided to return to its old focus on marketing Subaru cars to niche groups—like outdoorsy types who liked that Subaru cars could handle dirt roads.

This search for niche groups led Subaru to the 3rd rail of marketing: They discovered that lesbians loved their cars. Lesbians liked their dependability and size, and even the name “Subaru.” They were four times more likely than the average consumer to buy a Subaru.

This was the type of discovery that the small, struggling automaker was looking for. But Subaru had been looking for niche groups like skiers and kayakers—not lesbian couples. Did the company want to make advertisements for gay customers? At the time, in the mid 1990s, few celebrities were openly out. A Democratic president had just passed “Don’t Ask, Don’t Tell”, and after IKEA aired one of the first major ad campaigns depicting a gay couple, someone had called in a bomb threat on an IKEA store.

Yet Subaru decided to launch an ad campaign focused on lesbian customers. It was such an unusual decision—and such a success—that it pushed gay and lesbian advertising from the fringes to the mainstream.

If you’ve ever wondered why people joke about lesbians driving Subarus, the reason is not just that lesbians like Subarus. It’s that Subaru cultivated its image as a car for lesbians—and did so at a time when few companies would embrace or even acknowledge their gay customers.

You Are What You Drive

How do you advertise a car that journalists describe as “sturdy, if drab”?

That was the question faced by Subaru of America executives in the 1990s. After attempts to reinvigorate the company’s declining sales with a sports car and a hip, young ad agency failed, they turned to their niche marketing strategy.

“That was and still is a unique approach,” says Tim Bennett, who worked as Director of Advertising. “I’m always amazed that no one copied it.” Instead of fighting every other car company over the same demographic of white, 18- to 35-year-olds living in the suburbs, Subaru would target niche groups of people who particularly liked Subarus.

In the 1990s, Subaru’s unique characteristic was that the company increasingly made all-wheel-drive standard on all its cars. When Subaru marketers went searching for people willing to pay a premium for all-wheel-drive, they identified four core groups who were responsible for half of the company’s American sales: teachers and educators, healthcare professionals, IT professionals, and “rugged individualists” (outdoorsy types).

Then they discovered a 5th: lesbians.

“When we did the research, we found pockets of the country like Northampton, Massachusetts, and Portland, Oregon, where the head of the household would be a single person—and often a women,” says Bennett. When Subaru marketers talked to these customers, they realized these women buying Subarus were lesbian.

“There was such an alignment of feeling, like [Subaru cars] fit with what they did,” says Paul Poux, who later conducted focus groups for Subaru. The marketers found that lesbian Subaru owners liked that the cars were good for outdoor trips, and that they were good for hauling stuff without being as large as a truck or SUV. (In a line some women may not like as much, marketers also said Subaru’s dependability was a good fit for lesbians since they didn’t have a man who could fix car problems.) “They felt it fit them and wasn’t too flashy,” says Poux.

Many of them even felt an affinity with the name.

‘Subaru’ is the Japanese name for the Pleiades, a six-star constellation. When Kenji Kita, the CEO of Subaru's parent company, Fuji Heavy Industries, chose the name in 1954, he chose it to represent how six Japanese companies had merged to form Fuji Heavy Industries. But in English, the constellation is also known as the Seven Sisters—the same name as a group of American women’s colleges.

An example of Subaru's niche marketing—in this case to appeal to outdoorsy types. Subaru

Of all the niche groups, lesbians may have exhibited the most fervor. "These women were practically commercials for Subaru," John Nash, the creative director of the ad agency that ultimately made Subaru’s gay and lesbian advertisements, recalled in 2004.

Subaru’s strategy called for targeting these 5 groups and creating ads based around its appeal to each. For medical professionals, it was that a Subaru with all-wheel-drive could get them to the hospital in any weather. For rugged individualists, it was that a Subaru could handle dirt roads and haul gear. For lesbians, it was that a Subaru fit their active, low-key lifestyle.

But it was easier to get senior management on board with making ads for hikers than for lesbians.

From Subaru to ‘Lesbaru’

Talking with people involved in Subaru’s 1990s marketing campaign, the constant refrain is how different the environment was back then.

“I can’t emphasize enough that this was before there was any positive discussion [of LGBT issues],” says Tim Bennett. Gay causes seemed to be on the losing side of the culture war: the Clinton Administration had just created its “Don’t Ask, Don’t Tell” policy regarding homosexuality in the military, and in 1996, Congress would pass the Defense of Marriage Act.

Pop culture had also yet to embrace the LGBT cause. Mainstream movies and TV shows with gay characters—like Will & Grace—were still a few years away, and few celebrities were openly gay. When Ellen Degeneres became a rare exception in 1997, and her character in the show Ellen came out as gay in an episode of the sitcom, many companies pulled their ads.

''We don't think it is a smart business decision to be advertising in an environment that is so polarized,'' a spokesperson for Chrysler explained after the company pulled its ads. ''The environment around this is so angry we feel we lose no matter what we do.''

Gay-friendly advertising was largely limited to the fashion and alcohol industries. When a 1994 IKEA ad featured a gay couple, the American Family Association mounted boycotts, and someone called in a (fake) bomb threat on an IKEA store.

Today, this IKEA ad of a gay couple shopping for a dining room table seems mundane. But in 1994, the film crew was tense, and its airing incited backlash and New York Times op-eds.

As marketer Paul Poux explains, the attitude of most businesses toward LGBT advertising was: “Why would you do something like that? You’d be known as a gay company.”

In the 1990s, Poux worked at Mulryan/Nash, an agency that specialized in the gay market. Early in his career, he made cold calls to ask companies for their business. “All the rules of marketing went out the window at this fear” of marketing to gays and lesbians, he says. “People would choke up on the phone. It was tough.”

It was in this context that Subaru marketers like Tim Bennett and Director of Marketing Tim Mahoney hired Mulryan/Nash, the ad agency, and pitched Subaru’s Japanese management on ads for lesbian customers. Reporter Ron Dicker ably captured some of the cultural confusion that followed:

When one Subaru ad man, Tim Mahoney, proposed the gay-targeting ads in talks with Japanese executives, the executives hurriedly looked up “gay” in their dictionaries. Upon reading the definition, they nodded at the idea enthusiastically. Who wouldn’t want happy or joyous advertising?

“It was certainly a learning process for everybody,” says Bennett.

According to Bennett, who is gay, they never faced disrespect within Subaru. But Bennett did not reveal his sexual orientation, fearing it would overshadow the effort, and it took a year and a half to get everyone at Subaru onboard. For a car company, openly marketing to gay customers still felt new, if not taboo. Bennett recalls holding company meetings with names along the lines of “Who Are Gays and Lesbians?”

A fifty-year-old business conglomerate like Fuji Heavy Industries, the parent company of Subaru, is not normally where you’d look for a leader in social progress. But the corporate environment did have its advantages.

For starters, there was a great business case for the marketing campaign. Subaru was struggling, and its niche marketing campaign was plan A for redemption.

The internationalism of global business also had its advantages. The Subaru team knew they had to support their gay and lesbian employees if they wanted to appeal to lesbian customers. So they scheduled a meeting with a senior Japanese executive to make the case for domestic partnership benefits.

Bennett and his colleagues had prepared to argue their case at length, but the meeting lasted 20 seconds. The executive, who had worked for Subaru in Canada, already knew about benefits for same-sex couples. “He said, ‘Yeah that’s fine. We did that in Canada years ago. Anything else?’” says Bennett. “It was the easiest thing we did.”

By 1996, Subaru ads created by the Mulryan/Nash ad agency were appearing both in gay publications and mainstream media.

Although the marketing team worried about conservatives mounting a boycott, Subaru developed a public stance: Since Subaru sold cars to a “diverse and well educated” group of people, their customers wouldn’t be offended by the ads.

Inside Subaru of America, though, not everyone was united on the effort. There was public backlash, and Tim Bennett says the campaign survived naysayers inside Subaru only because their team really cared about the project and had the support of straight allies in the company.

And the Subaru company line did have some truth to it. In response to the ads, Subaru received letters from a grassroots group that accused the carmaker of promoting homosexuality. Everyone who penned a letter said they’d never buy a Subaru again.

But the marketing team quickly discovered that none of the people threatening a boycott had ever bought a Subaru. Some of them had even misspelled “Subaru.”

Like nerds who grow up to confront their bullies, Subaru executives realized that the people opposing the acknowledgement of gays and lesbians were not as imposing as they seemed.

An Open Secret

Lesbians’ affinity for Subaru is a popular punchline: Like wearing birkenstocks, it’s the stuff of Saturday Night Live sketches and self-deprecating jokes about lesbian stereotypes.

Subaru’s seminal role in gay advertising is famous in the business and marketing world, but the carmaker’s role in cultivating its lesbian-friendly image is less well known among laypeople. That’s likely because so many straight people were blind to the advertisements.

For their first Subaru ads, Mulryan/Nash hired women to portray lesbian couples. But the ads didn’t get good reactions from lesbian audiences.

What worked were winks and nudges. One ad campaign showed Subaru cars that had license plates that said “Xena LVR” (a reference to Xena: Warrior Princess, a TV show whose female protagonists seemed to be lovers) or “P-TOWN” (a moniker for Provincetown, Massachusetts, a popular LGBT vacation spot). Many ads had taglines with double meanings. “Get Out. And Stay Out” could refer to exploring the outdoors in a Subaru—or coming out as gay. “It's Not a Choice. It's the Way We're Built” could refer to all Subarus coming with all-wheel-drive—or LGBT identity.

"Each year we've done this, we've learned more about our target audience," John Nash, the creative director of the ad agency has said. "We've found that playful coding is really, really appreciated by our consumers. They like deciphering it."

The delight among niche audience groups in “uncoding” the hints in Subaru ads surprised the marketing team—and in the case of its gay-friendly ads, so did straight audiences’ ignorance. While gay and lesbian consumers loved the shout outs in the license plates, straight people would only notice features like a bike rack. Paul Poux, who helped come up with the license plate idea, says he held focus groups with straight audiences where he’d show ads featuring gay couples. Even after an hour of talking about gay issues, they’d think a man was shopping with his uncle.

In articles at the time, Subaru executives said they felt uncertain about the “intrigue” created by the perception of “secret coding.” But Paul Poux says there was some comfort to the fact that the gay marketing went under the radar. As more companies began marketing to LGBT audiences, secret coding became something of a playbook known by the term “gay vague”—a way for companies to reach queer audiences with minimal risk of a conservative backlash.

This famous Volkswagen ad, which was perceived as gay-friendly, is incredibly subtle. But it aired in 1997 during the famous "coming out" episode of the sitcom Ellen.

That said, Subaru did not hide its support of gay and lesbian customers. While Volkswagen played coy about whether an ad perceived as gay-friendly really portrayed a gay couple, Subaru sponsored events like gay pride parades, partnered with the Rainbow Card, a credit card that instead of cash back offered donations to gay and lesbian causes, and hired Martina Navratilova, a lesbian and former tennis pro, to appear in Subaru ads.

Navratilova’s role in Subaru’s ads held a level of poignancy. She had been publicly outedagainst her will, and while she spoke honestly about her identity, she had lamented that gay athletes had “to hide in the closet to sell [themselves] to Madison Avenue.”

For her to become the face of a car company during her retirement because she did not hide that she was gay, says Rainbow Card co-creator Pam Derderian, was a beautiful, full circle moment.

The Subaru Legacy

Subaru’s gay and lesbian focused marketing campaign was a hit, and the company’s efforts continue today.

Not only is the association between lesbians and Subaru part of pop culture. But in focus groups and online polls, gay and lesbian customers consistently choose Subaru vehicles as their favorite cars or Subaru as the most gay-friendly brand. As one participant put it, “Martina Navratilova is a spokesperson. What more do you want?”

That reputation translated into financial success. As a Harvard case study on the lesbian-focused ad campaign noted, Subaru’s flat sales turned into steady growth. Subaru’s parent company recently rebranded the entire company under the Subaru name due to the car’s surging popularity. In the 2010s, only Tesla grew faster than Subaru, which led Subaru’s president to worry that Subaru could get “too big.”

Lesbians buying Subaru cars did not single-handedly resurrect the carmaker—lesbians were just one of five niche groups Subaru targeted in the nineties. But the gay market was one of the best for Subaru. The carmaker tracked the effectiveness of its niche marketing by partnering with 40-50 organizations—like outdoor associations and the Rainbow Card—to offer discounts on Subaru cars. Every year, Tim Bennett says, the LGBT organizations were in the top 5 in terms of cars sold.

Subaru was not the first company to create advertisements for gay and lesbian consumers, but it was the first major company in the United States to do it so transparently and consistently. Subaru’s lesbian-focused ad campaign was widely discussed in the New York Times, Washington Post, and trade magazines, and its success helped spur wild growth in gay and lesbian marketing. By the early 2000s, marketers were writing articles that calledgays and lesbians an “underserved market” and “perfect consumers.”

It was an uncomfortable embrace. The perception of the gay market as “a goldmine” relied on a misperception of all gay people as part of Dual Income, No Kids couples. A number of academics criticized corporate America’s embrace of the LGBT community as commodification: While companies wanted the profits that came from marketing a gay sense of style, they focused on upper-class and white gay identities—never gay people of color or those unable to afford medical treatment for HIV/AIDS.

But according to Pam Derderian, who co-created the Rainbow Card with her partner Nancy Becker, that perspective underestimates the intelligence of LGBT consumers.

To show that Subaru cared about its gay and lesbian customers, she says, the carmaker supported causes that they cared about. Through its sponsorship of the Rainbow Card, Subaru, along with other companies like Visa and British Airways, contributed millions of dollars to HIV/AIDS research and LGBT causes that helped both their customers and gay and lesbian people who could never afford a Subaru.

Moreover, Derderian, like many gay people who see a company advertising to the gay market, vetted companies interested in sponsoring the Rainbow Card by seeing if they ensured fair policies (like benefits for same-sex partners) for their employees. This led to a trend of companies making their internal policies more gay-friendly when they wanted to advertise to gay customers. When Ford created gay-friendly ads, it revised its policies for its workforce of over 100,000 employees.

There’s a tendency to view companies’ involvement in causes as greedy ploys. This author feels that way, especially given the cynicism-inducing conclusions of previous Priceonomics investigations. Looking into the history of engagement rings led us to marketers who made up the tradition to sell more diamonds. Searching out the origins of the phrase “Breakfast is the most important meal of the day” revealed that it’s a 1944 ad campaign designed to sell more breakfast cereal.

In this case, it’s heartening that the origins of lesbians’ stereotypical affinity for Subarus is not a cynical marketing campaign, but a progressive one. In a sense, all Subaru did was notice a group of customers and create ads for them. But that was a big deal. Subaru's ad campaign acknowledged a group that often felt unwelcome and invisible.

So today, in 2016, which group is next?