Product RED’s Impact Is Shrouded In Vague Answers

November 1, 2009       Tom Pope      

The $135 million Product (RED) has donated to the Global Fund since 2006 makes people ask about where all of the money from product sales is going and its impact. The Global Fund has raised $15 billion for AIDS programs and to fight malaria and tuberculosis since 2002.

The $135 million is a small percentage of the group’s revenue, according to Brook K. Baker, co-chair of Health GAP, a network of nonprofit groups seeking greater HIV and AIDS funding. Baker is also a law professor at Harvard University.

“One kind of branding combines some recognition of the Global Fund with a consumer product and tries to gain some social kudos for the corporation,” he said.

Product (RED)’s branding aims to raise awareness and money for the Global Fund by teaming up with business. Portions of profits go to the Global Fund. Corporate members were reported to have spent $100 million to generate the first $18 million raised, according to business magazine Advertising Age.

“People didn’t understand that corporations were spending already existing dollars from marketing,” said Jenifer Willig, director, partners and marketing, at Product (RED) in New York City.

The companies involved, such as Gap or Starbucks do not disclose sales related to (RED). Answers tend to be vague. “We can proudly say that less than a year after we announced a multi-year partnership with (RED),” said Brady Brewer, vice president-marketing at Starbucks in Seattle, “contributions from millions of daily purchases of Starbucks’ products have generated contributions equal to more than 5 million daily doses of antiretroviral medicine.”

(RED) was started by rock band U2 front man Bono and Bobby Shriver in 2006 as a business to engage the private sector in the fight against AIDS in Africa. Partnerships have grown with Converse, Gap, Emporio Armani, Apple, Starbucks, Hallmark, Dell, Microsoft, and Bugaboo Strollers, along with American Express in the UK.

An alternative to using profits could have been the corporations just donating a percent of profits to the Global Fund, according to Baker.

“(RED) was created to help businesses,” Willig said. “It is an economic initiative that aims to deliver a sustainable flow of private sector money to the Global Fund that would not have happened with just donations.”

The $135 million is viewed as crucial. “We can define success by building sustainable dollars to the Global Fund,” Willig said. “That wouldn’t happen without the business model. They only raised $5 million before (RED) started and now we’re ranked 14th as a contributor to the Fund, which is ahead of many countries.”

(RED) assists five HIV and AIDS grants in the Global Fund in Rwanda, Swaziland, Ghana and Lesotho. Grants support local antiretroviral therapy, HIV prevention and education.

One success factor has been flexibility, according to Anne Erhard, vice president of cause branding at Cone LLC, a brand development agency in Boston. “They allow companies to customize the product and promotion while they harness the market,” she said.

The color red appears as an image on a Starbucks card. The same color also appears as a design on a Gap T-shirt. That color is the same as a logo image of the brand of Go RED For Women of the American Heart Association. “The branding is less about raising awareness about Product (RED) and more about using the concept to drive quality from blue chip brands to raise funds for the cause,” Erhard said.

“Some of the first ads may have made a tie-in with AIDS, although I’m not sure how much consumer awareness exists,” Baker said. “When people buy a product, maybe they’ll read the label to see it’s going to Africa and allow them to find out more on the issue.”

“It is clear on the packaging and signage that for every one-pound bag of whole bean coffee purchased in the United States and Canada, Starbucks will contribute $1 to the Global Fund to help people living with AIDS in Africa,” said Starbucks’ Brewer. “We hope the visibility on our (Web) site gives customers access to all the information they need regarding (RED) and the Global Fund to fund AIDS programs.”

Starbuck’s branding has included a special holiday introduction in 2008 in conjunction with World AIDS Day. The company followed that in January 2009 with the Starbucks (RED) Card, where five cents from every purchase was donated.

The companies claim they are educating an audience. According to Brewer, the creative for marketing shows how the money helps the AIDS patients. “The actual signage to customers states, Ă”HELP SAVE LIVES IN AFRICA,'” he said. “To date, purchases have generated contributions equaling more than 5 million daily doses.”

Willig eagerly points to an annual tracking survey that shows awareness up to 79 percent for teens and 69 percent for the demographic between 18 and 24. Those figures are greater than a 2007 survey that showed awareness at 36 percent for teens and around 50 percent for those 18 to 24. Researchers asked people to identify organizations that they know are involved with cause marketing. Willig explained that indicates how they know people are aware of (RED). “From eyeballs and impressions, they’re reaching many people,” Erhard said. “How much AIDS is in the mind of the customer is open.”

Cone’s tracking shows 89 percent of consumers demand corporate responsibility. “The consumer expects nonprofits to collaborate with corporations around social issues,” she said. “And, 75 percent say they want companies to give them the chance to buy a product to support a cause.”

Companies like Starbucks aim to tap into such an audience. Brewer has spoken recently at public forums about seeing the reaction from 10,000 store managers. “The applause and reception following the onsite announcement of our partnership with (RED) was genuine and specific to that announcement,” he said.

Baker questioned whether those people could be more motivated to pressure the country to support the Global Fund or to call for corporations to pay more in tax to deal with social issues. “Does the effort make people become consumers instead of political activists,” he said. “Does this help the government get off the hook of its responsibility?”

(RED)’s Willig explained that (RED) is looking at new ways to maximize contributions through donation events like a concert series. Another avenue of engagement is to work with a sister organization that handles grassroots activity.

A sister organization, called ONE, is a grassroots campaign and advocacy organization in Washington D.C., committed to fighting poverty and diseases. “We have a link on our Web site where people can click on an issue,” she said. “Our site also has a page that directs people to the Global Fund to donate directly.”

(RED) claims to have a community of about 1.3 million along with 500,000 people who follow the effort on Twitter.

Questions still exist, according to Erhard, whether the community developed can be engaged beyond concerts and social networks. “That would add to the degree they could be considered to have a sustainable model,” she said.

“The challenge for (RED) with the business case is the need of a reporting mechanism on social impact,” Erhard said. “Companies took a leap of faith, and now have to prove by showing they raised sales by a certain percentage or that customers are aware of (RED) because of the awareness of the company.”

Corporate marketers could benefit the most. “The effort could do some good although the branding for products boosts a Madison Avenue image for corporate social responsibility,” Baker said. NPT