Cause Marketing

What’s in a non-profit’s name?

What is “cause marketing”?

Licensing agreement between commercial product marketer and leading nonprofit organization

“Passion branding” “Social issues marketing”

Nonprofit assigns right to use name and logo in promotion of commercial products

Sponsor pays substantial sums of money for use of nonprofit’s name and logo in advertising

The rise of cause marketing

relatively recent phenomenon earliest use (1983) involved promotion by

American Express for each purchase made with card one penny

contributed to renovation of Statue of Liberty raised $1.7 million generated 28% increase in card usage

More recent examples

Visa committed to donate, based on card usage, at least $1 million to children’s literacy organization

Johnson & Johnson contributed portion of sales from children’s toiletries to World Wildlife Fund

MCI donated portion of business billings to Nature Conservancy and Audubon Society

Is it a significant form of marketing? fastest growing segment of advertising in ‘90s estimated expenditures of $1 billion on cause

related marketing campaigns in 1993 estimated expenditures on sponsorship

activities would be $6.8 billion in 1998

1994--$340 million paid to various charitable organizations in North America

1996--$485 million 2002--$835 million second largest sponsorship category

exceeds spending on tours, arts, festivals, fairs dwarfed by $7.21 billion advertisers spent on

sports sponsorships

What are the benefits to nonprofits? Further the organization’s mission Leverage the marketing budgets of

corporations by obtaining access to mass media resources it could not otherwise afford

Increase public awareness Gain an increasingly significant source of

revenue

What are the benefits to the commercial sponsors? Generate increased sales Enhance image as good corporate citizen Develop long term customer relations Build brand loyalty Differentiate themselves and their products

from other sellers and products in competitive marketplace

Most prevalent form of cause marketing Nonprofits--often health charities--entering

licensing agreements with commercial sponsors--often pharmaceutical companies

nonprofit sells use of its name and logo for use in national advertising campaigns promoting the corporation’s commercial products--often prescription or OTC drugs

Consumers bombarded with advertisements touting various products--particularly health products--in which large, familiar and trusted nonprofits’ names and logos are prominently featured

Examples prescription cholesterol drug Pravachol prominently

displays name and logo of American Heart Association

logo of American Cancer Society prominently featured in advertisements promoting Florida orange juice--in return for $1 million a year,

American Cancer Society sold exclusive rights to use name and logo in promoting NicoDerm CQ and Nicorette--in return for annual payments of $1 million

American Lung Association sold Johnson & Johnson its name to promote Nicotrol--in return for $2.5 million annually

What’s wrong with these practices? a. Consumers place a high level of trust in nonprofit organizations…1995 survey of 1,011 adults conducted for the

American Cancer Society (ACS): 96% recognized the ACS ACS received highest ratings for overall

reputation and as organization people can turn to for accurate information about cancer

1997 National Health Council study: Organizations such as American Cancer

Society and American Diabetes Association found to be “somewhat” or “completely believable” by 93% of consumers surveyed same percentage as doctors slightly higher than nurses and pharmacists

…but do not place the same level of trust in advertisements same report found 31% of consumers felt

advertisements for medications were either “not too” or “not at all believable”

b. Consumers prefer products marketed in association with a nonprofit corporation1997 Cone/Roper survey when price and quality are equal among

competing brands, 76% of consumers would be likely to switch from current product brand to one associated with good cause

1991 study published in Journal of Consumer Marketing

45.6% of consumers were “somewhat likely” or “very likely” to switch brands to support manufacturer that donates to charitable causes

1994 focus study commissioned by American Cancer Society

74% of consumers would be more likely to buy consumer products or services associated with charity such as ACS

70.5% stated that ACS message and name would increase loyalty to their most preferred cereal

40.1% would switch to second most preferred cereal brand if ACS logo and message printed on package

c. Consumers believe that products marketed in association with nonprofit are endorsed by nonprofit Focus groups and interviews with consumers reveal

that “consumers trust the ACS and feel that products which

carry the ACS logo would have been tested by the ACS” Study designed to determine public reaction to

ACS’s involvement with commercial sponsors 57% of respondents felt there was an implied endorsement

of products using ACS name

Survey commissioned by the American Heart Association (AHA)

60% would change brands in order to buy product “approved” by AHA, assuming price the same

61% assumed organization giving approval guarantees quality of product

88% believed product had been tested by organization

d. Consumers believe products marketed in association with nonprofits are superior to competing products1994 study commissioned by the American Cancer

Society 44.5% agreed or agreed strongly with the statement

“I believe this brand of cereal promoted with the ACS is more healthy for me and/or my family than any other cereal”

60.4% agreed or agreed strongly with the statement “I believe eating this cereal will reduce my/my family’s risk

for cancer”

Study related to aspirin products, 44% indicated belief that brand of aspirin

promoted with ACS would reduce risk of cancer more than another aspirin

Study related to pork & beans 40.6% agreed or totally agreed with

statement “I believe this brand of pork & beans, promoted

with the ACS, is more healthy for me and/or my family than any other brand of pork & beans”

e. Consumers do not expect marketing relationships between commercial entities and nonprofits to be exclusiveSurvey to test how people feel about the ACS

exclusive partnership with two smoking cessation aids

8% were aware relationship was exclusive

1. Public policy concerns

Public trust is at heart of nonprofit community Consumers view nonprofit organizations--

particularly voluntary health agencies whose central missions are disease prevention and cure--to be independent, unbiased, neutral sources of expertise, information and services

In order to maintain public’s trust, nonprofits need to preserve their independence and maintain practices and policies anchored in that public trust foundation

Commercial/nonprofit alliances as they are developing appear to raise questions about ability of nonprofits to maintain their integrity and independence--in both actual fact and public perception

2. Legal issues

Key issue: whether use of nonprofit’s name in association with product implies nonprofit has tested product approves of product endorses product

FTC Action

1995 FTC settled case against Eskimo Pie Corporation for advertisements for frozen dessert products

Ads used ADA name and logo and stated: “Now Eskimo Pie and the ADA are partners in

providing the pure pleasure of frozen novelties to everyone!”

FTC took position that ads implied ADA had approved or endorsed the product; it had not

Yoplait charitable promotion 1999 Yoplait Yogurt containers stated that $.50

would be donated to Breast Cancer Research Foundation for each lid returned

Television campaign with same promise 9.4 million lids returned nationwide

$4.7 million should have been donated On underside of lid--visible only after purchase--

indicated that maximum contribution was $100,000 regardless of number of lids returned

“pink washing”--using support of breast cancer research to promote products

1999 16 Attorneys General issued following five recommendations:1. Endorsements Advertisements for commercial products

should not misrepresent that nonprofit organization has endorsed the advertised product If advertisement uses nonprofit organization’s

name or logo, and nonprofit has not endorsed product, advertisement should clearly and conspicuously disclose that nonprofit organization has not endorsed product

2. Superiority claims/disclosure Advertisements for commercial products

using name or logo of nonprofit should avoid making express or implied claims that advertised product is superior to others in same product category, unless claim is true and substantiated If nonprofit has not determined advertised product

to be superior, advertisement should clearly and conspicuously disclose that fact

3. Paid sponsorship Advertisements for commercial products

using name or logo of nonprofit should disclose clearly and conspicuously that corporate sponsor has paid for use of nonprofit’s name or logo, when that is the case

4. Deception/confusion Product advertisements arising from

commercial/nonprofit relationship should not mislead, deceive or confuse public about effect of consumer’s purchase on charitable contributions by commercial sponsor

5. Exclusivity Advertising partnerships between commercial

and nonprofit entities should avoid exclusive product sponsorships where exclusive relationship exists, product

advertisements using name or logo of nonprofit should clearly and conspicuously disclose that fact

American Heart Association

Criticized for taking corporate contributions in return for use of name and logo

Criticized for use of Food Certification Program heart-check mark

Criteria don’t include low sugar content Insufficient scientific evidence of sugar as risk factor

for heart disease AHA has endorsed Cocoa Puffs Cereal

120 calories (per cup) 14 grams of sugar (40% of calories) No fiber

Cookie Crisp cereal 120 calories 13 grams of sugar

Jane Brody: “Hardly a nourishing start to the day, even if they are low in fat.”

9/11 Tie-Ins

In six months following 9/11 >$2 billion raised for related charitable causes

Marketers saw opportunity to partner with nonprofits United Way received 1,540 offers To avoid appearance of profiteering and protect its

name, UW accepted only offers in which It had final say over promotions 100% of profits went to UW

Most companies only offered a share of profits UW concluded ~ dozen deals on that basis

In year following 9/11 GAO reported 78 cases of charity fraud against nonprofit

organizations in New York 8 cases in other states

Also some problems from tie-ins with products

company promoting a sneaker “The Bravest” portion of profits to go to families of New York City’s

343 deceased firefighters by way of nonprofit organization

35,000 pairs sold at $49.95 each profit of $515,783

at time of sale no contract specifying how much of profits went to nonprofit

four months later parties agreed to 10% of profits