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When John Cortez went shopping for a T-shirt with a (RED) logo at a Gap clothing store, he knew part of the proceeds would be sent to HIV-positive women and children in Africa.
"I like the product, and it's a good cause, so I might as well buy it," says Cortez, explaining how he had "two good reasons" to spend his money at The Gap (GPS, news, msgs).
What he didn't know -- and what Gap customers can't find out -- is exactly how much money per item goes to Africa.
His experience hints at both the power for good and reasons for criticism of (RED), a high-profile campaign that partners some of the world's most recognized brands such as The Gap with The Global Fund, an organization that grants money to fight diseases.
(RED), launched by rock star Bono and Bobby Shriver last year, has drawn praise for raising $25 million for AIDS medications in Africa, as well as some reservations about marketing costs and a lack of transparency.
Such tensions are not uncommon within the rapidly growing business of cause-related marketing, which puts a corporation's advertising dollars behind a nonprofit's cause.
"There's a wide variety of cause-related marketing out there, and . . . consumers need to ask the tough questions," says Mark Feldman, a Boston consultant who has worked in the field for more than a decade. "They have a right to know more of the details because the company is claiming an association with a cause."
Cause marketing is becoming a major force. Companies spent $1.34 billion on it last year in the United States alone, up 20% over 2005, according to the IEG Sponsorship Report. Part of the reason: 84% of Americans are likely to switch brands to help a cause when price and quality are equal, according to a 2002 Cone Corporate Citizenship Study, an industry-based poll.
Among the more visible campaigns are the yellow bracelets that link Nike (NKE, news, msgs) to the Lance Armstrong Foundation, which aims to fight against cancer, and Upromise, an education savings program that receives sponsorship from corporations including ExxonMobil (XOM, news, msgs).
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10 miles of Gap windows
(RED) aims to provide long-term support to The Global Fund through the sale of products carrying the (RED) logo. Apple (AAPL, news, msgs) sells a (RED) iPod, American Express (AXP, news, msgs) offers a (RED) credit card, and The Gap has a line of (RED) clothing and accessories.The companies get some of the profits and the chance to be tied to a cause as well as the celebrities behind it, including Oprah Winfrey, director Steven Spielberg and photographer Annie Leibovitz. In exchange, (RED) gets these companies to market the cause and the products, and wins a share of the proceeds for The Global Fund.
"We hijacked marketing budgets that would normally have gone for good products, but now they're going for good products that will also bring money into Africa," says Tamsin Smith, the president of (RED). "There are 10 miles of Gap windows in the United States. And for many weeks (those displays) were talking about AIDS in Africa."
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Splashy advertising in top cities and publications has added to the campaign's impact -- and raised some eyebrows. Earlier this month, an Advertising Age article unfavorably contrasted the amount of money raised for Africa against "estimates as high as $100 million" spent by the companies on marketing.
(RED) says no dollar figure can be placed on raising awareness about the 5,500 people dying of AIDS each day in Africa. It also rejects the $100 million figure as too high by tens of millions of dollars.
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