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Building a Better (RED)
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With much fanfare and the requisite Oprah moment, Product (RED) burst upon the scene earlier this month. For anyone living in a cave, RED is the brainchild of Bono and Bobby Shriver, the third arrow in these celebrity activists' world changing quiver of organizations that also includes DATA and The ONE Campaign. Unlike those advocacy-oriented efforts, RED is focused on the corporate world.

I had the privilege to sit down with Bobby and Colin Brady, the COO of Project RED, earlier this summer. Both are passionate idealists animated by a hard-nosed sense of business realities. They understood early on that they needed to deliver value to corporate participants to sustain their attention as well as to generate material cash streams to maintain the integrity of the cause.

Their premise is simple - leverage the consumer brands of major corporations and develop cause-marketing products that channel dollars to the Global Fund. The Global Fund is a transnational organization managed with support of the World Health Organization and focused on the fight against some of the most devastating infectious diseases of our time, including HIV/AIDS, Malaria and Tuberculosis (TB).

The cause is unimpeachable. We all have heard the statistics about Africa - nearly two-thirds of the people infected with the disease live in Sub-Saharan Africa - yet, AIDS continues to mutate beyond these borders and soon will imperil the Asian engines of the global economy. Scholars at the American Enterprise Institute forecast that the disease will cut annual economic growth in India by 40 percent and in China by 33 percent by the year 2025. Moreover, according to the CDC, TB remains the second leading killer of adults in the world, causing more than two million deaths each year. And, bringing up the rear, there are upwards of 500 million cases of Malaria every year that result in more than one million fatalities and billions of lost hours of productivity.

It's breathtaking simply to marvel at the coalition that Shriver has assembled. RED boasts an impressive alliance of private sector actors who have discovered a common cause in combating this enormous public health problem. Just look at the inaugural members of the coalition - American Express, Apple, Armani, Converse, Gap, and Motorola. It’s a blue chip all-star team that cuts across industries. Unlike other models, each member is not simply donating money, but doing something heretofore unheard of - they are developing new consumer products with a common branding strategy. There are so many interests at play that RED is accomplishing a tremendous feat simply to balance the corporate egos and interests all swirling about the room.

There are lots of positive posts about RED buzzing about MySpace, but you can find criticism building as well. Richard Kim, writing for The Notion, the daily blog of The Nation, singled out RED as "pernicious… corporate consumerism." Not to be outdone, conservative commentator Michael Medved swooped in from the right to deride RED as "a scam… exploiting come-hither sexuality and partial nudity." When you upset both volatile ends of the political spectrum, I would imagine that you are doing something right.

Nonetheless, others have legitimately chided the campaign for insufficient transparency behind the profit models of the various RED products.

Corporate co-venturing does have some issues, including the somewhat opaque laws that frame how corporations can market products with charitable messaging to the public. Such activities are governed at the state level where the attorney general enjoys jurisdiction at the nexus between charities and consumer protection issues. Interestingly, the law is somewhat oblique in this area.

There is clarity on two ends of the continuum. On one hand, a company can operate in the clear when it markets a product and messages a lump sum charitable benefit as long as these two activities are not tied. Thus, it is permissible to state please buy our product and, oh by the way, regardless of whether you do so, we will donate $50 million this year toward saving the world.

On the other hand, a business can market a product and express a specific financial commitment per unit to be donated toward charitable ends. Ethos Water employs this approach. Its marketing clearly states that the brand will donate $.05 per bottle sold, so every bottle makes a difference Many have commented that this appears a paltry sum, but such top-line analyses often fail to consider the complicated cost structures and layered margins across the value chain, particularly when products move from manufacturer to distributor to broker to retailer.

However, when companies can attempt to straddle the line and communicate that they will donate a percentage of profits, they start to enter a more ambiguous grey space. What if the specific product line is not profitable? What if the overall business is not profitable? And what are profits anyway? And how will they be disclosed?

In an earlier time, the iconic folksiness of brands like Newman's Own, Ben and Jerry's, and Stonyfield Farms evoked such deep consumer loyalty that they defied the scrutiny of regulators who might have wanted to investigate their promises of profit distributions. It will be interesting to see if this trend prevails. As corporate scandals like Enron and WorldCom are upstaged by more recent brouhahas over options back-dating and boardroom surveillance, public faith in business seems likely to diminish even further. It would take just one Eliot Spitzer to conduct an expose on companies that cook the books of cause marketing and abuse consumer trust. Such claims could inflict irreparable damage on this nascent sector and harden consumer skepticism.

Amid this fragile environment, it would be exciting to see Project RED take a stand. Bobby and Bono could serve the market by creating a new bar for best practices. There are simple steps that they might consider:


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  • RED should reveal the full complexity of its business model and quantify the specific profit disbursement strategies that its members are employing on a per product basis

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  • RED should provide an ongoing temperature check to allow consumers to track the efficacy of its products and the amount of dollars that each was raising

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  • RED should create an open source mechanism via its blog or another means to allow consumers to vote as to which companies and products should join Project RED

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  • RED should emphasize education as much as fashion and create channels that allow its consumers to learn more about the issues and get engaged in addressing them.


I can imagine that all these ideas would enhance the capital markets of cause marketing. Imagine if other companies followed the RED lead, indicating how their philanthropic efforts were tied to specific products. What if RED could create a competitive dynamic among its corporate members to see which business could do the most for the Global Fund? And it's exciting to contemplate the opportunities when consumer pressure might move once recalcitrant corporations to consider engaging in an effort like RED.

The last idea might be the most important. Even if RED could drive an impressive $100 million, the Global Fund already has committed a mammoth $5.8 billion toward fighting disease. Thus, RED would be donating less than 2 percent. However, if RED could alert a new generation of Americans to the issues and provide opportunities forordinary consumers can get educated and involved, that would represent a historic moment.

This is the power of RED that Kim, Medved and the other critics totally miss. It's truly not about the money nor 'corporate absolution,' but tapping consumer markets to educate and excite the next generation. Those iPod and SLVR phones aren’t marketed toward your parents, but will capture the imagination of the time-starved, attention-scarce MySpace generation and potentially facilitate their entry into activism.

RED should do more to move in this direction. For example, every RED display at the GAP should include brochures and materials that present information about these diseases and what consumers can do to make an impact. Every RED SLVR phone could send its users pre-recorded messages about the Global Fund and how they can get involved. Every RED Converse shoe might be packed with information about races or walks in which the owner can participate to raise money for the Global Fund.

The power to solve these global challenges lies not in the hands of corporate marketing departments nor faceless bureaucrats in Geneva, but in the ability of individuals to utilize the often-overlooked populist levers of capitalism to express their will and to drive their leaders to respond. This would be a singular achievement to be lauded from the rooftops. Indeed, the world might owe Bobby and Bono such a steep debt of gratitude that we would need another Jubilee campaign simply to pay it down. Now, that truly would be inspi(RED).

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Comments

Splendid analysis of a promising idea. 1% for the Planet is another coalition of companies that comes to mind after reading this article. They get around the profit problem ("What if the specific product line is not profitable? What if the overall business is not profitable? And what are profits anyway? And how will they be disclosed?") by donating 1% of their revenues (not profits) to environmental causes. Although donating 1% of revenues from "Red" products and services might be a hard pill for the corporate participants of Red to swallow, it would surely demonstrate a high level of commitment on their part. Either way, here's hoping that the number of conscientious businesses and people grows.


Posted by: Brian Edquist on 27 Oct 06

Some of us have a love/hate relationship with RED. I love it because it directs funds to a life-saving cause, and it involves people who may not otherwise step up. However, I've got some real concerns about the materialism side of the equation.

As a response or alternative, a couple of us have come up with our own little project we're calling (Red)emption.


Posted by: Mike on 28 Oct 06

I'm getting a RED ipod for my birthday next week....


Posted by: donna on 29 Oct 06

I presume you presented your steps to Bobby and Colin?

For a real-world example of how these steps can work, read Semler's 'Seven Day Weekend'

(Sorry, wrong book plug!)


Posted by: Tony Fisk on 29 Oct 06

Per the good points on "promoting" consumerism, notice the product categories here--Handbags (Armani), Handphones (Motorola), MP3 players (iPod/Apple). All of these are aspirational products (not essential products). In a sense RED understands that consumers are going to buy in these categories anyway. The message isn't "Don't buy, unless you buy RED." Rather it's "We know that you're going to buy, so why not buy something that makes you feel good and makes the world a better place."


Posted by: Adam Brownstein on 30 Oct 06

Great, great analysis. Most significant, in my mind, is your call to expand the educational component. Love the pre-recorded phone message idea. . . it would be a brilliant viral campaign ("You have a message from RED member, Bob Smith").

Biggest danger with RED is that, like the early 90s, it ends up being part of, in fact contributing to, the "awareness" fad. We've been here before and not so long ago. . . what's going to make it different this time? Last time, it was Keith Harring with funny little AIDS awareness drawings (now auctioned for far more money than was raised originally). This time, it's Bono and RED. We have the 'kids' paying attention - let's hit 'em over the head with knowledge, as you suggest.


Posted by: Tod Brilliant on 30 Oct 06

This is only positive if you accept that the current structure of our society, in which the minority possess almost all the wealth and control access to most of the available resources, should be maintained. Turning life and death into a marketable commodity is a sad indictment of our culture and the information about how RED is to function is sadly lacking. For instance, in purchasing antiretroviral drugs, is the money spent by Western consumers then spent on purchasing these drugs from Western pharmaceutical companies? As the Global Fund website states 1.8m people are projected to receive treatments versus 40m who are infected. Could a better case be made for FREE provision of drugs to those that require them and can't afford them or does this idea that life is a right upset the apple cart of our hierarchical society? It seems a few Africans can have a hand-out but giving all people who need it a hand-up is not on the agenda. RED serves to distract from this debate as it allows corporations to look like they're doing something and individuals to feel like they're doing something. And other people faraway keep doing the dying.


Posted by: Mark H on 7 Nov 06



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