Costly Red Campaign Reaps Meager $18 Million

Costly Red Campaign Reaps Meager $18 Million

Bono & Co. Spend up to $100 Million on Marketing, Incur Watchdogs' Wrath

By Mya Frazier Published: March 05, 2007 COLUMBUS, Ohio (AdAge.com)

It's been a year since the first Red T-shirts hit Gap shelves in London, and a parade of celebrity-splashed events has followed: Steven Spielberg smiling down from billboards in San Francisco; Christy Turlington striking a yoga pose in a New Yorker ad; Bono cruising Chicago's Michigan Avenue with Oprah Winfrey, eagerly snapping up Red products; Chris Rock appearing in Motorola TV spots ("Use Red, nobody's dead"); and the Red room at the Grammy Awards. So you'd expect the money raised to be, well, big, right? Maybe $50 million, or even $100 million.

Try again: The tally raised worldwide is $18 million. The disproportionate ratio between the marketing outlay and the money raised is drawing concern among nonprofit watchdogs, cause-marketing experts and even executives in the ad business. It threatens to spur a backlash, not just against the Red campaign -- which ambitiously set out to change the cause-marketing model by allowing partners to profit from charity -- but also for the brands involved.

Enormous outlay

By any measure, the buzz has been extraordinary and the collective marketing outlay by Gap, Apple and Motorola has been enormous, with some estimates as high as $100 million. Gap alone spent $7.8 million of its $58 million outlay on Red during last year's fourth quarter, according to Nielsen Media Research's Nielsen Adviews.

But contributions don't seem to be living up to the hype. Richard Feachem, executive director of the Global Fund to Fight AIDS, Tuberculosis and Malaria, the recipient of money raised by Red, told The Boston Globe in December, "We may be over the $100 million mark by the end of Christmas."

Rajesh Anandan, the Global Fund's head of private-sector partnerships, said Mr. Feachem was misquoted, and defended the efforts by Red to increase the Global Fund's private-sector donations, which totaled just $5 million from 2002 to 2005. (The U.S. Congress just approved a $724 million pledge to the Global Fund, on top of $1.9 billion already given and $650 million from the Bill & Melinda Gates Foundation.)

Hugely frontloaded

Red has done as much as we could have hoped for in the short time it has been up and running," he said, adding: "The launch cost of this kind of campaign is going to be hugely frontloaded. It's a very costly exercise."

Julie Cordua, VP-marketing at Red and a former Motorola marketing exec and director-buzz marketing at Helio, said the outlay by the program's partners must be understood within the context of the campaign's goal: sustainability. "It's not a charity program of them writing a one-time check. It has to make good business sense for the company so the money will continue to flow to the Global Fund over time." She added that since many of Red's partners haven't closed their books yet on 2006, more funds likely will be added to the $18 million.

But is the rise of philanthropic fashionistas decked out in Red T-shirts and iPods really the best way to save a child dying of AIDS in Africa?

Parody mocks Bono

The campaign's inherent appeal to conspicuous consumption has spurred a parody by a group of San Francisco designers and artists, who take issue with Bono's rallying cry. "Shopping is not a solution. Buy less. Give more," is the message at buylesscrap.org, which encourages people to give directly to the Global Fund.

The Red campaign proposes consumption as the cure to the world's evils," said Ben Davis, creative director at Word Pictures Ideas, co-creator of the site. "Can't we just focus on the real solution -- giving money?"

Trent Stamp, president of Charity Navigator, which rates the spending practices of 5,000 nonprofits, said he's concerned about the campaign's impact on the next generation. "The Red campaign can be a good start or it can be a colossal waste of money, and it all depends on whether this edgy, innovative campaign inspires young people to be better citizens or just gives them an excuse to feel good about themselves while they buy an overpriced item they don't really need."

Fears of nonprofits

Mark Rosenman, a longtime activist in the nonprofit sector and a public-service professor at the Union Institute & University in Cincinnati, said the disparity between the marketing outlay and the money raised by Red is illustrative of some of the biggest fears of nonprofits in the U.S.

"There is a broadening concern that business is taking on the patina of philanthropy and crowding out philanthropic activity and even substituting for it," he said. "It benefits the for-profit partners much more than the charitable causes."