Last year, U2 frontman Bono and The Governator's brother-in-law Bobby Shriver rolled out the (PRODUCT) RED campaign in support of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Launched first in the U.K. and then in the U.S. in October, the cause-based marketing campaign works with various corporate partners to brand special (RED) products. The profits from these product sales are split in some way between the retailer and the Global Fund.
The campaign seemed to offer a win-win-win. Trend-conscious consumers would spring for a stylish (RED)-branded Apple (NASDAQ:AAPL) iPod Nano or Motorola (NYSE:MOT) RAZR phone and feel good about themselves for doing their part, while doing what they do best -- shopping. The participating companies would not only appear to be good corporate citizens, but they would actually be relieving global health issues by means of their greatest skill -- selling stuff. Last but not least, a new and potentially sustainable stream of funds would go toward preventing and treating diseases that are ravaging sub-Saharan Africa.
The (RED) marketing model was called into question in a recent AdAge article that accused the participating companies of spending about five times as much on marketing than they have raised for the Global Fund. A great deal of bickering has ensued, with skeptics and apologists pretty much speaking right past one another.
Activists such as the wags behind the parody site http://www.buylesscrap.org/ argue that people should donate directly to charities rather than buy a Gap (NYSE:GPS) T-shirt they could (red)ily live without. Indeed, that would be most efficient, but how many people have heard of the Global Fund? How many people have heard of The Gap?
Defenders reply that marketing dollars were merely (red)irected toward the campaign from existing budgets. They argue that the companies would never have donated the ad budget money directly to the Global Fund, thus completely missing the point about consumer dollars. However, they also point out that the intent of the campaign is partly to raise awareness through the (RED) brand, leading people to subsequently become more charitable than they had been previously. (RED) has conducted a study to support this claim.
What's the likelihood of a backlash against the (RED) partners in the face of this sort of criticism? I think it's quite slim. People who view this marketing as self-serving or woefully misguided consumerism were not all that likely to buy the products in the first place. But for the rest of us who are buying iPods whether they're (RED) or not, it seems to be a perfect entrepreneurial opportunity to leverage those sales into positive social change. That reminds me, I need a new iPod ...
Fools are no slouch when it comes to charity. In last year's Foolanthropy campaign, we raised over $300,000 for five select charities. Check out the ongoing discussion board.
Gap is both an Inside Value and Stock Advisor recommendation.
Fool contributor Toby Shute owns one defunct iPod, but he doesn't own shares in any of the companies mentioned. He welcomes your feedback. The Fool's disclosure policy has street c(red).
