Point/Counterpoint: (RED) Raises $100 Million, Spends 82% On Advertising

(RED), the global co-branding experiment that directs a percentage of (RED) product revenues towards fighting AIDS in Africa, has only directed $18 million out of $100 million spent. AdAge reports that this is raising eyebrows other than our own.

The disproportionate ratio between the marketing outlay and the money raised is drawing concern among nonprofit watchdogs, cause-marketing experts and even executives in the ad business. It threatens to spur a backlash, not just against the Red campaign — which ambitiously set out to change the cause-marketing model by allowing partners to profit from charity — but also for the brands involved.

Charities are usually judged on the percent of contributions spent on programs, rather than administration. (RED) is not a charity. In a letter to AdAge’s editor, (RED)’s CEO Bobby Shriver explains why this makes all the difference.

Because (RED) is explicitly NOT a charity, we encourage our partners to go about their business including their marketing. This sells the products; the products generate the $25 million. In addition, this marketing would have been spent anyway, on other product lines. It never would have been (nor will it ever be) given to the Global Fund.

We tell you who’s right, after the jump.


They are both right.

As a novel experiment in co-branding, (RED) has been a success. Dollars that would have been spent on Great Moments In Commercial History are instead advertising products whose sale helps fight AIDS in Africa. That said, buying a (RED) product, does not make you Mother Teresa reincarnate.

There are several options if you truly want to help fight AIDS in Africa.
•Donate to a real charity. Sites like Charity Navigator help find organizations with low administrative overhead that work on issues you care about.
•Volunteer your time. Almost every organization will accept help when it’s offered.

Tell us in the comments how you help make a difference. — CAREY GREENBERG-BERGER

Costly Red Campaign Reaps Meager $18 Million [AdAge]
(RED)’s Letter to AdAge
Charity Navigator

Comments

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  1. Citron says:

    I think that’s misleading to the buyer, who more than likely believes that a more substantial onamount of their purchase is going to the Global Fund than a measly 18%. You’d think that at least the entire markup for a RED product vs a normal product would be going towards the Global Fund.

    Oh well. I don’t buy pink breast cancer branded things and the like for this reason exactly. I just donate money directly, or buy some of those charity paper balloons/stars/hands (whatever they’re collecting money for) you get to sign your name on at the grocery store. Those are pretty neat.

  2. forgeten says:

    the problem is they market it as a charity. If they state 15% of revenue will go towards aids or whatever it its fine but from want little I know about it they don’t do that so people think they are paying the premium on the products to fund a charity not to increase revenue of apple

  3. rocketslide says:

    Those products appeal to people who like the appearance of helping, but don’t care much about actually being helpful.

  4. mattshu says:

    This is similar towards my feelings about stores that offer to take your charity money and put up something on the wall with your name on it, then they are able to say they made a contribution to that charity, when it wasn’t their money at all, rather the money donated by customers.

  5. kimdog says:

    This kind of stuff makes charities cringe (I should know, I work for one). It gives people the false sense that they are actually doing something to make a difference. If you want really want to do something worthwhile, just send a check to your favorite charity (but check them out on CharityNavigator.com first). After all, your deduction is 100% tax deductible to a certified non-profit organization.

    OH… and the tag line of the RED campaign makes me crazy “Help ELIMINATE AIDS in Africa”

    Ummmm…. we are no where near eliminating AIDS anywhere. The best we can do is try to get essential medicines to those who need it, and slow the spread. Eliminate my foot.

  6. Papa K says:

    I relate these to those rubber bracelets people wear.

    This is for the same group of people who go to Antioch to “save the whales” while they’re in college. It’s a lot of smoke and mirrors, they’re helping a little bit while still padding their bottom line.

    I say GOOD FOR THEM! Even if people don’t care, some money is going to charity. Me? I’ll donate directly.

  7. kimdog says:

    Doh, I guess I should have finished reading Carey’s write-up.

  8. kimdog says:

    Actually one more comment… the RED campaign didn’t actually raise $100 million dollars. The initial outlay of marketing money from the companies involved (Gap, Motorola, Apple, etc) to promote the campaign was estimated at $100M. The money actually raised from sales and donated to the Global Fund was $18M.

  9. Citron says:

    @mattshu: I don’t care if the grocery store or movie theater or firehouse takes credit for my $1. At least the whole $1 gets to whatever charity it’s for. I’m not the sort of person who claims charity on my taxes or requires a This Old House color-changing coffee mug (best. PBS gift. ever.) so it’s not a big deal to me.

  10. NeoteriX says:

    @rocketslide:

    Exactly. :)

    As someone that regularly goes to the Food Bank to volunteer, I can sympathize with the seeming hypocrisy, and people can shout “Why not spend those $300 directly on charity instead of getting that fancy pants (Red) iPod” until they’re blue in the face.

    These people feeling good about their (Red) purchases will never donate that $300 to charity so if we can sucker them into buying something that donates a little bit, it’s better than nothing. Who cares if they sleep better at night even though they shouldn’t.

  11. matt1978 says:

    Who thinks just because it’s a charity means most of the money goes to help whatever? I worked at the Y here in (rhymes with “emphis”) for many years, and I can tell you personally, upper management burns through your donation like a house on fire. I’m not saying everyone of them is like that, but even the reports on guidestar.com rarely tell the whole story.

    There are tons of 990s that are full of empty words and unfulfilled promises.

    Rule of thumb: Give to the YWCA instead, they do actual work.

  12. Dustbunny says:

    I want to put in a plug for Portland’s very own Mercy Corps. They’ve been rated as one of the most efficient charities, in terms of how many donated $$$ actually go to the intended recipients. And AFAIK, they don’t sell their donor’s names to other charities either. At least I haven’t noticed an increase in my junk mail.

  13. Beelzebub says:

    SUCKE(RED)

  14. spryte says:

    I don’t expect every dime this RED thing makes to be put toward their stated goal, but it could be a slightly higher percentage…especially if they weren’t using egotistical celebrities to advertise.

    How do I help make a difference, Carey? Well, up until recently I worked for an insurance company that services nonprofits in CA (and is actually a really awesome company, despite the fact that it involves insurance, har har). Plus, I donate what I can to various organizations. I only wish I had more to give…y’know, like a CEO’s salary. I wonder how Mr. Bobby Shriver makes his own, personal difference in the world…

  15. QuirkyRachel says:

    The same thing happens with the pink products to support breast cancer. It’s not that all of those products are just feeding big business, but it’s so easy to put a cause on something and lull consumers into thinking that they’re buying something *and* giving to a worthy cause. There was actually a campaign a year or two ago called “Think before you pink,” to encourage people to consider where the money is actually going.

  16. birdbrain says:

    I can understand why people are upset that this (RED) project spent so much money on advertising, etc. But I think, like their CEO said, that’s because people are expecting that it is a charity, but it isn’t. I bought a (RED) ipod. Obviously, the majority of the money is going to go to Apple. But since I was looking for an ipod anyway, the $10 that IS going to go to a charity is better than the 0$ that would have gone if I’d gotten a green ipod. So don’t be so quick to judge. Just because people have red ipods, doesn’t mean that they don’t care about being helpful. That’s pretty presumptuous to say.

  17. asherchang says:

    As much as I love this blog, sometimes it gets a little sensationalistic… “82% on advertizing”? If you actually read the letter to AdAge, the guy says that $100 million was the number expected to be raised in a year, and Red started in November.

    And even within AdAge’s article the exact phrase that they used was “Maybe $50 million, or even $100 million.”, which seems at best a rough guesstimate, and completely unattributable to any reliable source (sorry, WP nerd). And for your headline to go ahead and interpret THAT as “82% on advertizing” is just….. blah.

    Although I do agree that the advertizing seems a bit overdone, and we should stop buying so much crap and just give more.