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Monday, Dec. 10, 2007 at 4:51 pm

Cause Marketing: Making Money by Giving it Away

By Ronald Patiro
December 10th, 2007

The concept isn’t new, but it’s one of the hottest buzzwords in online retail for a reason.

Cause marketing” is the term being used to describe all manner of cross-promotional efforts between for-profit businesses and non-governmental/non-profit organizations. Typically, it involves a portion of for-profit sales going toward a given cause. Today, more than 1 of every 4 retailers are promoting charities at some level — and the Web seems to be speeding that growth. In 2006, IEG reported that cause marketing sponsorship in the U.S. totaled $1.34 billion. (In 1990, that figure was only $120 million.) This year, cause marketing is expected to reach $1.44 billion in the U.S.

Is Cause Marketing Worth It?

Potential Pitfalls

  • As Holly explains, “Consumers are too savvy. They want to know who the charity is, what their exact involvement is, and how it fits in with your core brand.” In other words, people want to know their money isn’t going to a George Costanza-esque “Human Fund.”
  • 70% of people want to see the company’s leaders participating in the cause.
  • The company’s motives may be called into question, particularly if it’s experienced years of negative press (e.g., Wal-Mart).
  • It must be accountable. Although there are often tax benefits for businesses engaged in cause marketing, it has to be a good deal for the non-profit as well. Not only must non-profits protect their own brands, they have tax concerns, too. As always, it’s important to look before you leap.
  • ROI is a must. It could appear disingenuous when a company is spending, say, 7 figures promoting a particular cause when the campaign is only netting a 5-6 figure return. That type of situation begs the question as to whether the company really cares, or if it’s just a branding or PR stunt. Otherwise, why wouldn’t they just donate the money they’re spending directly to the cause instead of spending it on promotion? (The Microsoft Small Business Center has some great tips on how to avoid these types of missteps.)

It looks like this trend is here to stay, particularly in the U.S., where the government continues to cut social spending and the gap between rich and poor grows each day. Consumers will continue to expect a greater involvement from the private sector to put money toward public causes and will reward the businesses that do so. As long as cause marketing is conducted in a transparent manner, it can benefit to both business and non-profits.

Add Your Comments

Comments (5)

  1. There is a new alternative for non-profits, GiveStream ( http://www.givestream.com) offers a set of free and easy-to-use online fundraising and community-building tools that help nonprofits create their own branded easy giving center.

  2. Cause marketing is a great opportunity but can also be very treacherous. Advocates have their own agendas.

    More importantly, never assume that the nonprofit’s values align with your customers just because the charity says so.

  3. Personally I also prefer to shop on websites which donate some amount to charities. if I can find same price on two websites then I would like to buy from one which has a cause attached to it.

  4. Yes I like to buy products from companies that contribute, such as cancer research or green house technologies.

  5. I think this is a great idea to support a worthy cause. Really gets peoples attention too.

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