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Why It's No Time to Neglect Cause Efforts

Ad Age, October 13, 2008

P&G, Others Emphasize 'Purpose Branding' in Midst of Economic Crisis

By Natalie Zmuda

BATAVIA, Ohio ( -- You might expect that cause marketing would be the kind of intangible, feel-good advertising to get axed in a recession. Instead, quite the opposite is true, as major marketers, from retailers such as Sears, Target and OfficeMax to package-goods players such as General Mills and P&G, find that cause efforts actually help persuade weary consumers to spend.

Speaking on the subject last Friday, Procter & Gamble's Jim Stengel said "purpose branding," or building brand propositions around emotionally laden missions often backed by cause-marketing efforts, "is more important than ever" amid turmoil in financial markets and growing consumer fear.

Mr. Stengel is on special assignment for the marketer pending his scheduled departure Oct. 31. But he said his successor, Marc Pritchard, concurs that the "purpose brands" approach Mr. Stengel spearheaded at P&G needs to continue. "I was talking about this yesterday with my successor, Marc, and I think now these concepts should resonate even stronger," Mr. Stengel said. "I would argue maybe we wouldn't be in such a mess if we were more purpose-centered in more organizations around the world."

Therein lies part of what interests marketers such as P&G in cause programs right now: There is a sense that consumers are waking up to the need for some social responsibility. Marketers say they believe cause initiatives help them stand out. Some also say cause marketing adds another layer of value for customers, who get the product they want and make the charitable donation they want, in a sort of two-for-one deal.

"It's easy when things are tough for [marketers] to just fold up their tents [when it comes to cause marketing] and go home. I've got to look after my stocks, my company, and that's understandable," said Bob Thacker, chief marketer at OfficeMax, which this fall increased 30% the number of schools helped and supplies donated as part of its "A Day Made Better" program that aids teachers. "These times demand even more of a focus on contributing and giving and saying thank you. ... Cause marketing, I think, will become even more important."

Doing good

Consumers seem to agree. In the 2008 Cone Cause Evolution Study released this month, 26% of consumers expect companies to give more support to causes and nonprofits in an economic downturn, while 52% expect companies to maintain existing programs. Another 79% of consumers said if price and quality were similar, they would switch to a brand associated with a good cause.

"Consumers are absolutely looking for value, meaning that it's a quality product and fairly priced," said Carol Cone, founder and chairman. "If they can also have an easy and inexpensive way to help with a cause that's relevant to them, it adds value to the shopping experience."

Tellingly, this fall and holiday season, marketers will be evolving their cause programs as they look to capture their share of consumer spending. Sears, for example, is making Heroes at Home, its cause campaign, one of only two major holiday initiatives this year. And Target is expanding an October promotion in which a portion of sales from certain products benefit St. Jude Children's Research Hospital. Nine manufacturers will take part this year, up from just one partner, Procter & Gamble, last year.

Sears' inaugural Heroes at Home Wish Registry is meant to provide consumers an easy way to give back -- and urge them to take a closer look at the retailer this holiday season. "We had to take stock and think about what was going to be compelling and differentiating and just really help us to stand out," said Tom Aiello, divisional VP-public relations at Sears Holdings. The Heroes at Home Wish Registry "is not only breaking through, it's refreshing. And it's [a campaign] that hopefully will not only bring good marketing results but will account for some long-term brand loyalty."

The registry works much like a wedding registry; military families sign up for items, and consumers make donations toward the purchase of those items. It launches Nov. 2 and is an extension of existing military efforts. A multipronged campaign that includes TV, digital elements and print ads in Hearst Magazines titles will support the program. A Fox NFL special and a special on MyNetworkTV are also planned.

Rewards of giving

But some of the most popular programs could be those that donate a percentage of sales to charities or add on dollars at the cash register. Those programs, say cause-marketing experts, are relatively inexpensive for marketers, enable consumers to be charitable while watching their budgets and, in some cases, boost sales.

Clark Sweat, senior-VP corporate alliances at St. Jude Children's Research Hospital, said companies do continue to give when times get tough, whether because of a difficult economy or a downturn in a specific business. But, instead of writing a check, they will offer access to customers through promotions.

Those types of promotions also tend to be popular with shoppers. The addition of the Susan G. Komen for the Cure logo to products, especially consumer package goods, is a hugely successful initiative, said Margo K. Lucero, director-corporate communications.

"The programs that perform extremely well for us are those where the consumer sees that a percentage of the retail price comes back to Komen," she said. "If everything remains equal, the type of product and the price, if there is one of our logos on the product, the consumer would typically go for that product. We're still seeing that even today."

Similarly, Brian Peters, promotions marketing director of General Mills' Box Tops for Education, expects that program to raise more money this year than last, when it raked in $39 million. The initiative has raised $250 million for public schools since it started 12 years ago and has grown every year. When the economy is down, he said, cause marketing lets consumers "give back by doing something they were always doing: [buying] cereal."

Stretching a dollar

When consumers engage in cause marketing, Mr. Peters said, it can ease the burden of charitable giving. "They [think], 'I can write a check, but I don't have to,'" he said, because their cereal purchase diverts funds to public schools so they don't have to open their wallet twice. "They can make their dollars go further, and that's important for the consumer to be engaged."

Still, despite varied promotions, charities often see a downturn in tough economic times. In five recessions since 1973, donations declined an average of 1.3%, adjusted for inflation, said Sandra Miniutti, VP-marketing at Charity Navigator, an independent charity evaluator.

"We're starting to hear from charities that they're really concerned. They're particularly anxious because much of their donations come in toward the end of the year," Ms. Miniutti said. "It's a tough time to be fundraising."

Indeed, a survey of about 500 consumers conducted by Omnicon Group's Grizzard Communications found that just 44% of respondents plan to donate the same amount this year as last year. A full 26% said they planned to stop giving altogether, while 29% said they planned to give less.

According to the IEG Sponsorship Report, cause-marketing spend is expected to reach $1.5 billion this year, a 4% increase over last year. But that was before the economic turmoil of late.

Still viable

William Chipps, senior editor of IEG's sponsorship report, said the company won't be revising 2008 projections until December. He did say, however, that the growth seen in cause marketing and nonprofit sponsorships in the past few years could slow. The crisis among financial-services firms and automakers is particularly troubling given their status as the "low-hanging fruit" for sponsorship sellers.

"After the dot-com fallout there was a blip, where overall spending continued to grow but not as quickly as in years past," he said. "I'm sure there will be a decrease in growth. ... But overall, cause marketing is still a viable marketing platform."