As the holiday season approaches, the spirit of giving often prompts people to make charitable donations. Fortunately, thanks to cause marketing, that spirit can live on long after the decorations disappear. When cause marketing is done well, not only can the people in need benefit, but so can the companies that support them.
The concept emerged in 1983, when American Express coined the term to describe its Statue of Liberty Restoration campaign. For every purchase made with an American Express card throughout the campaign, a penny went to the restoration effort, and for every new card issued, a dollar was donated. Critics argued that consumers wouldn't be happy that American Express was taking liberties with their pennies, but they were wrong—the partnership raised $1.75 million for the restoration, bumped up transaction activity by 28 percent, and drew 17 percent more new users.
Cause marketing has become an effective tactic for companies that demonstrate social responsibility by giving to organizations and individuals in need. According to market research firm Lab42, 80 percent of Americans think companies should strive to be more socially responsible. A separate study by Cone Communications, a public relations firm whose research focuses on cause marketing, showed similar results, revealing that 90 percent of consumers are likely to switch brands to support good causes.
"With everything else being equal, people will choose to do business with a company that has made it a priority to help others," says Scott Pansky, an instructor at the UCLA Extension program and a nationally recognized speaker on cause marketing. "People want to be socially conscious, especially if it doesn't mean they have to spend more," he adds. And some groups are even willing to pay a little extra. According to recent research from PR Week, 64 percent of Millennials are willing to dish out an additional few bucks in the name of a worthy cause. "As humans, we all want to do good and we all want to help each other. If given the opportunity, we like to show support to companies that want to do the same," Pansky says.
Nearly 87 percent of all corporations make charitable donations or participate in philanthropic programs, but cause marketing is tricky, and not every campaign is successful. For charitable organizations, working with a corporate partner is a chance to raise funds and awareness, so every opportunity is tempting. Nevertheless, organizations have to steer clear of corporations with conflicting interests that run the risk of attracting the wrong kind of attention.
In 2003, the American Academy of Pediatric Dentistry (AAPD) signed a $1 million agreement with the Coca-Cola Foundation to promote messages about children's dental health. "There is such an important message our organization is trying to get to the public, and Coke has an exceptional reach to consumers, and the opportunity is there to help us reach them," David Curtis, D.M.D., then-president of the academy, said in a statement that year.
The deal launched a polarizing discussion. Some dentists criticized the organization for working with a company selling sugary products that would damage children's teeth, while others argued that soda is not any worse for kids than other types of sweets and that the value of Coca-Cola's far-reaching marketing arm was worth the backlash. The reactions soon grew overwhelmingly negative, and the AAPD was accused of selling out to a corporate partner.
Corporations can make mistakes when choosing charitable partners, too, despite the best of intentions from both sides. A ubiquitous presence during Breast Cancer Awareness Month and year-round, the pink ribbon has become synonymous with the cause it represents. Organizations such as Susan G. Komen for the Cure have used the pink ribbon in their marketing and awareness campaigns for years, and brands have been eager to form partnerships with them during Breast Cancer Awareness Month to help a good cause and boost business. As a result, pinkwashing, which refers to the practice of "smacking a pink ribbon on products without a deep financial commitment to the cause," has become a problematic phenomenon, Pansky says.
"Sadly, breast cancer is a reality for many people, so it's no surprise that consumers sympathize and want to contribute to research efforts.... Pink ribbon marketing can be very effective at helping raise funds for research while helping brands sell their products. That balance can be achieved, and has been achieved by several companies. But, unfortunately, others are not completely transparent about their efforts, which raises suspicion and skepticism," Pansky says.
In some cases, donations are capped. When Hershey's turned its Bliss chocolates pink in honor of Breast Cancer Awareness Month in 2010, the company capped its donation at $300,000. The total wasn't dependent on sales of the chocolate. The information was available in the fine print, but most consumers made purchases to support the cause without knowing the details. Other companies have been guilty of similar tactics. Last year, the NFL came under fire for allegedly donating only 8 percent of the funds raised through its pink ribbon campaign to cancer research, after suggesting it would donate more.
Campaigns structured in this manner make companies "tons of money," Pansky says, and what's more, these organizations "ruin it for others." Pinkwashing has become so mainstream that pink ribbon campaigns are starting to feel like a gimmick. "There are pink ribbons everywhere, and there are all these stories that suggest it's unclear where the money goes or how much of it actually reaches the cause