Paved with good intentions

Marketers are wondering just how well capitalism and good causes mix after reports that participants in Bono’s (product) RED scheme have spent more on publicising their involvement than they have donated to charitable projects through the scheme. David Benady investigates

Rock star Bono’s scheme to save the world through shopping stirred up a storm this week. It has emerged that Gap, Apple, Emporio Armani, American Express and Motorola – which are taking part in his (product) RED charity fundraising scheme – have spent more money advertising their involvement than they have raised for good causes.

The implication that the brands are more interested in boosting their reputations than helping the world’s poor has provided fuel for critics who are suspicious of (product) RED’s mix of conspicuous consumption and messianic benevolence. For instance, the buylesscrap.com website says: “Join us in rejecting the tired notion that shopping is a reasonable response to human suffering. We invite you to donate directly to the RED campaign’s beneficiary without consuming.”

As Comic Relief launches the “enforced wackiness” of Red Nose Day this week and brand partners Walkers, Sainsbury’s and TK Maxx look to cash in on the gags-for-charity bash, marketers are pondering just how well capitalism and good causes mix. Cause-related marketing creates a warm glow around brands, but by putting their heads above the parapet, they become sitting targets for their critics.

Drawing attention
As Sue Adkins, international director of Business in the Community, says: “Cause-related marketing is not a convenient sticking plaster to put over the inadequacies of a brand. Rather, it will serve to draw attention to them by the media so it needs to be approached with eyes open.”

The U2 frontman’s brainwave has been to unashamedly tap into the self-interest of brand owners as a way to raise money to fight disease and to promote the issue of Aids awareness through advertising and in-store merchandise.

He has teamed up with US politician Bobby Shriver and with a helping hand from branding agency Wolff Olins – which came up with the brand positioning for Orange – created (product) RED. Under the scheme, brand owners launch products following a set of RED guidelines and donate a proportion of the profits to the Global Fund to Fight Aids, Tuberculosis and Malaria.

American Express launched the RED card in the UK last year, donating 1% of money spent on the card. Gap hands over half the profits from its RED t-shirts to the charity. Motorola is giving away £10 for each RED MotoRazr V3i or MotoSLVR phone it sells in the UK and 5% of the users’ monthly wireless bill. The Global Fund benefits – and so do the brands.

Like any product launch, these have been backed by advertising campaigns. In the UK, Mother created a campaign for the Amex RED card featuring supermodel Gisele with a Kenyan in traditional Masai warrior dress. However, a TV spot by the agency for the Motorola RED phone, which showed two black bodies evolving from a lump of flesh, is understood to have been canned. In the US, RED’s launch featured celebrity endorsements on TV and poster ads.

All this has helped to raise $25m (£12m) for the fund in the past year in the UK and since its US roll-out last October. But one news report last week claimed that up to $100m (£51.7m) has been spent on marketing RED products through advertising and public relations.

RED claims $100m is way above the real figure, and observers agree it sounds high. It has been suggested the actual sum spent on marketing could be more like $40m (£20.7m). Some add that the initial launch marketing costs are bound to be high as the organisation needs to make a big initial splash to create a sustainable brand.

A RED spokeswoman says Gap was the lead advertiser in the US launch and spent $7.8m (£4m): “RED is a business model that moves charity away from the small philanthropic budgets and on to the P&L.” She points out that the marketing budgets do not detract from the cash going to the fund. However, the Global Fund is a major beneficiary of philanthropic budgets from business. The Bill & Melinda Gates Foundation has donated hundreds of millions of dollars to it.

But even if RED’s marketing spend has trumped the amount of money raised, the organisation is unrepentant. It is founded on the principle that self-interest has been a much-neglected method of charity fundraising. RED plays on the profit motive to inspire brands to raise cash and awareness to fight disease. As Shriver said in one interview: “I hope people working in these companies – I hope the people in Gap – have enough RED profits to buy a house in the Hamptons.”

In a similar way, Comic Relief head of fundraising Karl Reynolds says brands get involved with Red Nose Day partly because they know it will help to boost sales. “We have case studies showing a sales uplift and how brands benefit the bottom line from an association with Red Nose Day,” he says.

On the question of whether Walkers will continue to be involved, given that it is facing a clampdown on advertising its snacks to children, he says: “We have had three fantastic campaigns working with Walkers, though we don’t have any long-term contractual relationship with them.”

From a brand perspective, (product) RED is a typical Wolff Olins creation – colour coded, bold and optimistic. Meanwhile, it is careful not to create the impression that brands are cashing in. None of the participating brands are allowed to charge a premium for their RED products, so they do not appear to be taking advantage.

However, one fault line in the RED scheme is the absence of a consistent policy on how much of the profits should be donated to the fund. Gap gives half the profits from RED t-shirts, but Apple donates £5 from each £169 red iPod Nano. American Express refuses to comment but a spokeswoman says: “American Express RED has significantly helped us to increase brand awareness in the UK, has brought in new customers and generated customer loyalty among those using the card. However, we don’t disclose the performance of our individual products.”

Diminishing returns
The lack of transparency could induce scepticism among consumers if they think some RED brands are donating less than others. As the scheme seeks more participants, some question whether the proportion of profits donated to charity will decline, weakening the brand promise.

Meanwhile, RED claims the money it has raised for the Global Fund will put 160,000 Africans on life-saving anti-retroviral drugs and feed and educate orphans in Swaziland. It is statistics such as these that show the power of cause-related marketing to disarm critics and leave them spluttering. After all, who would be willing to tell a group of Africans that they cannot have the anti-retroviral drugs they need because the manner of raising the funds seems morally questionable?

Cause-related marketing exercises such as these pull the rug from under the feet of those who would portray brands such as Gap or Nike in a negative light following accusations that they exploit sweatshop labour. It shifts the focus away from issues where brands are weak and on to an argument they cannot lose. It may be cynical. But it saves lives.

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