THE HIDDEN POTENTIAL OF BRANDS
There are many ways a brand can make an impact on society, and entire stakeholder ecosystems benefit from the success of a brand. If you take a closer look at the current state of cause marketing approaches by big brands, it becomes clear that brands have a huge unlocked potential to do good and win the hearts and minds of consumers at the same time.
In even the most mundane categories, like dish soap or detergent or trash bags, there exist brands that sell over $1 billion dollars per year. If you look at the financial statements from the most prominent big consumer packaged goods companies, you’ll see that advertising, as a percentage of sales, is in the range of 5% to 13% (1). So for a hypothetical big $1 billion dollar brand, this is potentially $50 million to $130 million dollars in marketing expenditures.
These days, one of the core tools a brand can use to build its equity is to champion a great cause, donate a certain portion of profits to this cause, and benefit from the goodwill generated. In 2014, it’s expected that cause sponsorships will generate $1.84 B, growing slightly from 2013 (2). On the surface, cause marketing is a great, win-win for brands and for charitable organizations. Charities win, as they have more revenues to support their missions. Companies win, as consumers are excited, and more willing to purchase from a brand that supports a cause they are passionate about. In fact, 91% of consumers are willing to switch brands of comparable quality and price if that brand supports a good cause (3).
Unfortunately, some consumers are convinced by the mere presence of a cause campaign. In fact, many brands are only donating the bare minimum needed to convince consumers of their degree of charitability. In some cases, consumers find out, and brands pay the price for a lack of transparency. For example, the NFL received a lot of criticism when its accounting of breast cancer awareness merchandise revealed that only 11.25% of sales are donated to the American Cancer Society.
In another example, though without public outcry, one well known soap brand says that it stands for helping the environment. Though this perception is core to the brand’s success, it caps its donations at $1 million over an unspecified time period. $1 million is nothing to sneeze at, but when you compare it to the total brand’s budget, it’s miniscule. If a hypothetical brand sells $1 billion, and its cause marketing is capped at $1 million, it’s obvious that there’s an opportunity for this brand to more seriously make a difference.
There are many more examples which deserve critical review, but a common theme already exists. To most brands, cause marketing is a tactic used to increase sales, and the impact made is a side benefit, not the goal. This situation is problematic because brands can easily buy their way into improving public perceptions without authentically striving for an impact. A few dollars to charity x, a nice logo on the package, and, like magic, your brand is now a global benefactor.
There’s good news here, because the current state of cause marketing also presents a tremendous opportunity. Brands have the potential to do so much good in the world by virtue of their large scale. Imagine if your favorite brand removed a donation cap on its cause marketing and actually stood to make a difference?
It’s for this reason that we started Cause Hair and Body Care™. We want to provide consumers with the best in organically-based shampoos, conditioners, and lotions, but we want to use our market power for good. We are guided by the phrase “Healthy hair. Healthy body. Healthy planet.” as it’s our ethos to provide great products that are good for you and the environment, in addition to using our business as a source for good. This is why we’ve designed our business to have a 50% profit donation model from the outset. For every dollar we bring in, half of it will go to environmental restoration and protection efforts in the San Francisco Bay estuary. It’s clear that brands can and should strive to make a difference beyond dollar donations, and though we’re starting initially by having a profit donation model, our vision for good extends beyond our income statement.
(1) Analysis of 10-K Reports
(2) IEG Sponsorship Report via Cause Marketing Forum
(3) 2013 Cone Communications/Echo Global CSR Study via Cause Marketing Forum