SPONSORSHIPS, PARTNERSHIPS, AND CAUSE

MARKETING

CSR Performance 2008San Diego

October 1, 2008

Brad AllenbyFounding Director, Center for Earth Systems Engineering

and ManagementLincoln Professor of Ethics and Engineering

Professor of Civil and Environmental EngineeringArizona State University

ONCE UPON A TIME

• Perceived as good idea to combine information and communication technology with environmental values

• Partner with environmental Net portal

• “Wise Use” organization with political clout claimed company was “supporting terrorists” because of multi-link trail to environmental monkeywrench manual

Once Upon a Time

• End result: educated wise use NGO on Net, but protection of company interests required termination of arrangement– Corporation as battleground for opposing

philosophies?

• Skepticism in company towards cause marketing

Once Upon A Time: Lessons

• Need to have a keen grasp of firm’s strategy and priorities

• Need to have a keen grasp of firm’s vulnerabilities, and which stakeholders might try to leverage them

• Need to be prepared to re-evaluate (have an exit strategy)

• Need to know how initiatives fit within overall portfolio of firm’s strategies, existing positioning, and marketing thrusts

So What Is Cause Marketing?

• Marketing that involves collaboration between industry and non-governmental organization for mutual benefit.

• Differs from philanthropy because donation not usually involved; rather, it is a mutually conducted marketing operation.

Cause Marketing: History

• Early examples include Famous Amos cookies, where Wally Amos became the national spokesperson for Literacy Volunteers of America.

• The term itself, denoting formal recognition of a different type of marketing campaign, generally attributed to Amex, leading the 1983 campaign for restoration of the Statue of Liberty. Apparently successful: Amex estimated 17% in new users, 28% increase in card usage as result.

• Estimates of current value of cause marketing at well over a billion dollars a year (pre Panic of 2008).

Forms of Cause Marketing

• Product, service, or location specific• Promotion of common message (e.g., literacy,

research on particular disease)• Product license, endorsement, or certification• Employee programs• Online increasingly popular (e.g., online charity

auctions)• Let your imagination go: as governance

becomes more complex, so there are more opportunities for collaboration

Examples

• Boston Beer with Accion USA to create Samuel Adams Brewing The American Dream, microfinance program supporting entrepreneurs in food and drink sector.

• Dell and Goodwill on computer recycling• Saturn with Habitat for Humanity (600 dealers

involved )• American Express and Share Our Strength

“Charge Against Hunger” – 4 year collaboration that’s already raised $21M.

Examples

• British Telecom and Childline, 24-hour hotline for children in distress

• American Restaurant Association and American Red Cross “Dine for America” – raised $12M post-Katrina

• Toys “R” Us and Toys for Tots• Campbell Soup and the NFL – “Tackling

Hunger” program distributes millions of cans of soup to hungry

Potential Benefits

• NGO:– Can benefit from penumbra of firm’s brand– Revenue enhancement– Can help solidify NGO brand image for potential

members– If synergy with firm’s customers, can be easy way to

identify possible supporters– Leverages firm’s marketing scope and sophistication,

thereby extending NGO reach significantly• But does anyone market better than Greenpeace?

Potential Benefits

• The firm:– Positive public relations (shows willingness to work

with, and support, community/cause groups beyond just donations)

– Positive customer relations, as NGO brand and cause align with firm’s customer interests, thereby generating emotional attachment to firm

– Process of identifying partners and creating joint marketing initiatives can help firm identify opportunities that might otherwise not be apparent, refine strategy, and refine message

– Enhance revenue and market share

Potential Downsides

• NGO– Must be very careful with partners, since NGO credibility often

involves being non-commercial and not benefiting from commercial activities

– Must not dilute NGO culture (NGOs known for combative positions must be very careful in collaborating, because their current membership reflects their public position)

– Without adequate planning, can be very resource intensive for NGOs with limited means

– If special expertise is involved (e.g., particular types of technology, or specialized market/cost information), must be careful not to be whipsawed by greater information resources of firm

– Intense need for prioritization, given increasing demand for NGO partners by business

– Need to avoid capture by firm

Potential Downsides

• The firm– NGOs can be market- and technophobic; at the least, they will

seldom appreciate the commercial, political, economic, and regulatory constraints faced by firms

– Few NGO causes are “all good,” which means that selecting any NGO needs to be weighed against the customers or communities that will be put off by cause

• Corollary: those few NGOs that are widely perceived as neutral to good will be very popular among cause marketers (e.g., breast cancer as cause, or American Cancer Society)

– Aligning NGO and firm interests adequately to support a close collaboration can be difficult, especially if firms lack experience in cause marketing

– Note that both explicit and implicit strategies and agendas must be considered

American Cancer Society Cause Marketing Guidelines

• Product match: “only with products that meet strict guidelines and scientific standards for reducing the risk of cancer.”

• Brand effect – positive impact on ACS brand• Risk to ACS “assessed on a case-by-case basis”

including company ownership, holdings, public “baggage”

• Customer value: “relationships must generate additional value for the customer: education, goodwill, financial.” (italics added.)

• Reach – ultimately nationwide

www.independentsector.org/mission_market/ACS_guidelines.htm

American Cancer Society Cause Marketing Guidelines

• Revenue – need “fair revenue” for use of ACS trademarks

• Best of Breed – “Corporate partners must be industry/category leaders”

• Maintenance and internal infrastructure – must be proportional to returns received; lower maintenance/high yield opportunities to be favored.

• Measurements of mutual success – appropriate metrics developed for each relationship, e.g., lives saved, brand value to ACS, ability to meet corporate partner objectives

• ACS local organization involvement – case-by-case negotiation among ACS, local affiliates, and partners

www.independentsector.org/mission_market/ACS_guidelines.htm

Modern Cause Marketing:The (RED) Case Study

• What is (RED) / (PRODUCT) RED?

(RED) is a business model created to raise awareness and money for the Global Fund by teaming up with the world's most iconic brands to produce (PRODUCT) RED branded products. A portion of profits from each (PRODUCT) RED product sold goes directly to the Global Fund to invest in African AIDS programs, with a focus on women and children.

Source: www.joinred.com

(RED) Case Study Continued

• Is (RED) a new charity?

(RED) is not a charity. It's a business model designed to create awareness and a sustainable flow of money from the private sector into the Global Fund, to help eliminate AIDS in Africa. Consumers buy (PRODUCT) RED, and at no cost to them, money is sent directly to the Global Fund.

Source: www.joinred.com

(RED) Case Study Continued• How does (RED) work?

• Established brands partner with us and license the (PRODUCT) RED mark to create (PRODUCT) RED products and services. (PRODUCT) RED partners send a portion of the profits made on (PRODUCT) RED products directly to the Global Fund, to fight AIDS in Africa. The consumer does not pay extra for this. (RED) never handles this money – it is sent directly to the Global Fund.

• A licensing fee for use of the (PRODUCT) RED mark is charged to manage and market the (RED) brand. This fee is paid by (PRODUCT) RED partners, and does not infringe on the amount of money they send to the Global Fund via sales of (PRODUCT) RED items.

Source: www.joinred.com

(RED) Case Study:Multifirm Cause Marketing

• Which brands are involved so far?

American Express

Apple

Converse

Dell

Emporio Armani

Gap

Hallmark

Microsoft

Source: www.joinred.com

Concluding Thoughts

• What is your strategy?– Corporate– Marketing– Stakeholder management– Issue management

• What are your vulnerabilities?– Prior to cause marketing initiative– Associated with cause marketing initiative

• Who are your customers? A firm that deals with other firms will probably not have the same incentives for cause marketing as a customer facing firm (e.g., a mining company versus a running shoe company)

Concluding Thoughts

• Understand your respective institutional frameworks. The firm must try to understand NGOs, and NGOs must try to understand firms

• Have an entrance strategy, and two exit strategies: one for when things go right, and another for when they don’t

• How flexible can your partner be? Know their agenda, know their membership characteristics, and know enough not to ask or expect them to act outside their culture or knowledge base– A ecosystem oriented NGO is not a good partner for a high

technology solution to paper demand management