What is cause-related marketing?
Cause-related marketing has exploded in recent years even though it is a relatively young concept. It began, on a national scale, in the early 1980s when American Express joined with the nonprofit group that was raising funds to restore the Statue of Liberty.
American Express gave a portion of every purchase through their credit card to the endeavor and an additional amount for every new application that resulted in a new credit card customer. The company also launched a $4 million advertising campaign.
The results are now legendary: the Restoration Fund raised over $1.7 million and American Express card use rose 27%. New card applications increased 45% over the previous year. All this was accomplished with a three-month campaign.
Everyone involved was a winner...the nonprofit cause received needed funds, American Express increased sales of its product and achieved a reputation for social responsibility. American Express even trademarked the term "cause-related marketing."
Now companies have fully embraced what is called "doing well while doing good." Cause-related marketing may become the primary way that businesses express their social responsibility. The growth of cause marketing has exploded, from a $120 million industry in 1990 to $1.62 billion in 2010. Plus consumers seem to really like it. Research has suggested that more than 80% of consumers like buying cause-related products.
How does it work?
There are now many versions of cause-related marketing, but basically it is an agreement between a business and a nonprofit to raise money for a particular cause. The business expects to profit by this arrangement by selling more products and by enjoying the "halo" affect of being associated with a respected nonprofit or cause.
A cause-related marketing program is not an anonymous or low-key donation to a nonprofit but one that lets the public know that this corporation is socially responsible and interested in the same causes that its consumers are. The nonprofit benefits both financially and through a higher public profile as a result of its partner's marketing efforts.
Cause-related marketing campaigns have blossomed over the last few years and can appear in a variety of interesting forms. Jocelyne Daw, in her book Cause Marketing for Nonprofits, lists some of the more popular:
- Product sales. Think of the (Red) campaign which has brought together many companies to sell specially branded products (a red Gap T-shirt or a red iPod for instance)with a portion of the selling price going to the Global Fund for HIV/AIDS prevention.
- Purchase Plus. This is a campaign waged at the checkout line at grocery stores or other retail venues. Typically a customer is asked if he would like to add a donation to his bill. The amounts are usually low enough for most people to say yes. The store processes the money and gives it to the nonprofit with which it has partnered. Promotion of the cause is usually pretty low-key but that makes these programs easy to set up and they are quick so a business can respond to, say, a natural disaster in a timely way.
- Licensing of the nonprofit's logo, brand, and assets. Licensing runs the gamut from products that are extensions of the nonprofit's mission to using its logo on promotional items such as T-shirts, mugs, and credit cards to having the nonprofit provide a certification or commendation of particular products. An example of the latter is the American Heart Association which provides recognition for products that meet their standards for heart health.
- Cobranded events and programs. Probably the best known example of a cobranded event is the Susan G. Komen "race for the cure." A cobranded program is exemplified by a London Children's Museum that teamed up with the 3M company to build and outfit a science gallery for children. The involvement of the corporation in this program is deeper than the usual "sponsorship" with scientists from the company involved in helping with the exhibits to the company's employees serving as volunteers.
- Social or public service marketing programs. Social marketing involves the use of marketing principles and techniques to encourage behavior change in a particular audience. An example is the partnership of the American Cancer Society and Novartis, on their Great American Smokeout.
How is cause-related marketing different from corporate philanthropy and corporate sponsorships?
Corporate philanthropy takes place through direct monetary gifts to a nonprofit. It is often made through the corporation's own foundation. These donations are usually for a particular program that the nonprofit will run and can be of short or long duration.
Corporate sponsorship is a bit closer to cause marketing since the corporation gives the nonprofit money to hold an event, run an art exhibit, or other time-limited activity. The funds may come from the community relations budget of the corporation or the marketing budget and the corporation expects a certain amount of publicity in the way of signage, PSAs, promotional materials etc.