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

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.