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Seeing red: corporate partners seeking high-impact deals.

You might call it the golden age of cause marketing. Like adolescents in a television after-school special, "everyone's doing it."

"We're at the center of a perfect storm," said Carol Cone, president of Boston-based Cone Inc., because linking social issues has become mainstream, with "amazing milestones" in the past year. You might have heard of a little thing called the (RED) campaign, but there have also been multiple cover stories about philanthropy in major media outlets, as well as an Oscar nod for a documentary on global warming.

"It's not just for-profits that get it in a sophisticated way" Cone said. Look at Oprah Winfrey building a school in Africa, billionaire Warren Buffett giving away his fortune, and "Idol Gives Back" raising tens of millions of dollars through the most watched show on television.

(RED) could be considered the highest-profile launch in cause marketing history. As with any large campaign, there have been accolades and criticisms, said its president, Tamsin Smith.

(RED) illustrates the power and complexities of cause marketing, said David Hessekiel, president of the Cause Marketing Forum, which held its fifth annual conference this past spring in New York City. (RED) is a brand licensed to partner companies (American Express, Apple Computer, Converse, Motorola, The Gap and Giorgio Armani). Each has a (RED) product with a portion of profits to benefit the Global Fund to Fight AIDS, Tuberculosis and Malaria.


"We went to the best global marketing companies for help," Smith said, "to embrace the brand icon and take it to power of RED.

"The (RED) business model is simple: Put creative genius to work in a way that benefits all involved," Smith said.

Since its U.S. launch last October, (RED) raised $25 million for the Global Fund, five times what the private sector has given in four years, and a higher contribution than the combined nations of Australia, Switzerland, Luxembourg and China. The amount also ranks among the top 15 contributions to the fund.

For all its success, the (RED) campaign has faced its share of criticism, spawning a Web site that advocates direct donations to nonprofits (, as well as an Advertising Age cover story questioning the cost to raise $25 million.

People put their own reputations and companies on the line to participate in (RED), and there were some who declined. "I hope the risk-averse companies were wrong," Smith said.

(RED) is a Limited Liability Company (LLC) essentially involved in branding and marketing, Smith said. The partner companies pay fees to cover things like Smith's travel, money is generated from products, and companies write checks directly to The Global Fund. The fund takes no overhead, and money goes into the field through the regular management process, Smith said.

The portion of money for the Global Fund varies for each product. Apple's IPod Nano sells for $200, with $10 from each going to the fund, while at Gap, it's 50 percent of the profits from (RED) products.

Smith concedes Gap's situation is much more complex than Apple's, and for that reason, the portions may vary by industry. In some cases, companies want to avoid revealing proprietary information, such as profit margin on each product. "We wanted what makes the most sense for them without having their investor relations people saying 'Don't do this,'" she said.

In the end, partners have been very pleased with (RED)'s results, Smith said, while the Global Fund has raised its profile.

The key elements of a cause marketing campaign are: Authenticity, Connectivity, Transparency, and Sustainability (ACTS), according to Cone.

"There's a lot of very ubiquitous, not very impactful stuff" out there, Cone said, which is why nonprofits and companies have to take cause marketing to the next level. Today, cause marketing campaigns must be more integrated and sophisticated and longer-term, not just a matter of slapping a ribbon on a company logo.

What worries her most in the results of the 2007 Cone Corporate Citizenship Study is the fewer people who would tell a friend or family member of a product or company's commitment to social issues. The 2007 study indicated only 30 percent would tell a friend, down from 43 percent in the 2004 survey.

"In the cacophony of thousands of messages thrown at us a day, credibility is the most valuable currency of all, and it comes from you and me," Cone said.

A customer loyalty study by Whirlpool indicates emotional brand loyalty is worth 2.5 times that of rational brand loyalty. "Rational influence is necessary, but alone is not sufficient," said Jeff Davidoff, vice president of marketing and communications for Whirlpool Corporation.

Whirlpool uses the same marketing system and analysis as any product, Davidoff said, and like any other, works on how to improve and make it better each year.

Response to its Kitchen Aid/Cook for the Cure campaign, featuring pink products to benefit Susan G. Komen for the Cure, has been overwhelming, Davidoff said, adding that finding a way to connect core business to activate the purpose within customers is critical.

"Some industries are just not going to work with cause marketing," said Holly Darden, director of marketing programs for The Nature Conservancy (TNC) in Arlington, Va. There are three ways companies work with TNC: contribute money, seek advice on paper issues, and cause marketing.

The wave of corporate scandals several years ago trickled down to nonprofits, which raised the scrutiny for all, said Darden. It included a series of The Washington Post articles in 2003 that examined TNC from a governance perspective and its alliances with corporations.

TNC revamped some of its practices, creating a risk committee to examine new marketing opportunities, as well as a conflicts committee to ensure no conflicts of interest, and a chief ethics and compliance officer. The nonprofit also requires disclosure statements from companies, Darden said, which may take more time to get deals done.

The American Diabetes Association (ADA) in Alexandria, Va. applies a set of guiding principles when weighing cause marketing pursuits, said Nancy Stinson-Harris, managing director of corporate development.

When Burger King approached the ADA to create "better for you" food options, the nonprofit was intrigued by the opportunity to help educate people about better food choices. During year-long discussions that included media training, however, it was clear that the nonprofit could not withstand criticism of partnering with a fast food franchise, she said.

In another case, rather than criticize the soda industry ADA partnered with Cadbury Schweppes, makers of Diet Rite, to focus on consumer choice and saw it as an opportunity to get healthy messages out.

"Sometimes cause marketing is the right thing to do," said Stinson-Harris, "sometimes it's not the way to go."
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Title Annotation:CAUSE MARKETING
Author:Hrywna, Mark
Publication:The Non-profit Times
Date:Sep 15, 2007
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