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Spending Dollars to Raise Pennies?

Right now the monster RED campaign is drawing all kinds of fire for spending dollars to make pennies. The rhetoric is flowing hot and fast in the new media and the old.

A reporter for Newsweek even approached me for my opinion. I hope she quotes me. In the event she doesn't, I’ll post half her questions and my responses today and the remainder on Thursday.

On 3/9/07, Bennett, Jessica <> wrote:

hi paul,
ok, feel free to pick and choose from these and contribute your own thoughts if you think there's anything i've overlooked. also let me know if you've got any suggestions of background info or studies i should look into.

1. what's the premise behind cause marketing, why does it work, and how pervasive is it today?

A lot of things are called cause marketing that are probably mislabeled. As I think of it cause marketing is generally a promotional tactic meant draw on the appeal of a cause to help sell a product for a company. Like most promotions, there's usually a deadline involved. The Yoplait lid campaign for Susan G. Komen is an exception that proves the rule. The US Post Office Breast Cancer Stamp campaign is another. Both have been going on for years unabated. Cause marketing works because people have an affinity for the cause or the cause's mission and want to support it. This kind of loyalty is hardly unique to causes. NASCAR sponsors report that fans are especially loyal to their products. The most often quoted source for how pervasive it is in North America typically come from IEG, which specializes in sponsorship. IEG consideres cause marketing to be a subset of sponsorship. The last estimate I saw from IEG was that cause markeing would clock in at around $1.3 billion in 2007, although I'm sure they'll happily provide you with whatever their current estimate is. I don't know what their methodology is for making that estimate, but I suspect that they under-estimate the total amount of cause marketing. I say that because if you add up the top 10 charities doing cause marketing: Komen, Children's Miracle Network, American Heart Association, St. Jude, etc. you'd very quickly get to a number like $800- $900 million. And I suspect the rest of the cause marketing world amounts to more than just the $500 or $600 million that remains from the $1.3 billion figure.

2. to an extent, cause marketing today seems so widespread that it's almost trivial--even diesel is encouraging buyers to contribute to global warming (though "without changing one's glamourous lifestyle"). why do people buy into this? and does it really have an impact?

diesel targets kids. We beat up the current crop of kids for not being terribly political minded or active, but more than any generation today's kids are more likely to volunteer, to participate in service learning in school, etc. than their predecessors. I guess what I'm saying is that I suspect most of them see diesel's campaign for what it is: pure cheek.

Done appropriately, cause marketing does well with kids, with women, and with greens. I would say the common thread between them is that all three groups commonly profess that one of their aspirations is to make the world a better place. They think, if I'm already going to buy something, why wouldn't I buy the thing that gives back?

To your question of does it have an impact: my answer is yes but probably not for the same reason you'll hear from anyone else. The great bulk of charitable donations in this country come from individuals. Individuals can and often do designate how their money is to be used. A perfect example is Joan Kroc, Ray's widow. She left a grundle of money to the Salvation Army, but required that they use it to build community centers, which is a little bit of a stretch considering their mission. Money that comes from cause marketing campaigns comes from the collective; from everybody. As a consequence it can usually be used in ways and in places that aren't sexy to an individual donor. For that reason it can be more valuable to a charity.

3. advertising is obviously not about morals. but isn't there a moral conflict in the idea that cause marketing is tapping into consumption guilt while at the same time feeding that excess?

It seems to me that your asking the tainted money question. Every charity in the country sooner or later deals with the question of "tainted" money. And they have to decide for themselves what kind of money... for them... is tainted. And it's a different answer for one charity than it is for the next. When I was at Children's Miracle Network, for instance, we had the chance to do a deal with a beer company but we choose not to. But I believe the MDA still has a relationship of longstanding with Budweiser. Hard-core environmental charities might not take money from the oil companies. What your question suggests to me is that money that comes from a promotion that encourages consumption is considered by some to be tainted. My response is that depends on the charity. Personally, if I were the executive director of a charity that filled some basic human need; shelter, food, clothing, maybe some kinds of healthcare, there probably wouldn't be any money that was "tainted." I believe that's the way Mother Teresa looked at the large donations from Charles Keating, a man she praised effusively at the time even though he eventually did jailtime for his crimes. On the other hand, if I were the executive director of a symphony, I would certainly turn down money from someone like Keating. Finally, I can't resist the quip among nonprofits about tainted money; it goes, "'taint enough."

-More on Thursday-


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