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The Big Question: Does the RED campaign help big Western brands more than Africa?
March 09, 2007
Why are doubts being raised?
The American advertising trade magazine Ad Age claimed in its cover story this week that the U2 front man's idea to raise money for the Global Fund to Fight AIDS in Africa by selling RED products has "raised a meagre $18m [Ł9.3m]...in a year" despite a marketing outlay by Gap, Apple and Motorola and others estimated to be as high as $100m. The ratio between the marketing money spent and the amount raised for Africa was thus very poor, it claimed.
How much has RED raised to fight Aids?
The figure is actually $25m during the six months since the RED product range was launched in the United States last October. That is five times the amount given to the Global Fund by the private sector over the previous four years. Which is a pretty significant increase by anybody's standards.
Ah, but how much has it cost to raise it?
Certainly not the $100m Ad Age claimed. The biggest spender of the big brand names that have launched RED products was the clothing company Gap. Its total advertising budget for its RED launch was $7.8m. Even adding in the money spent by the other RED firms -- Apple, Motorola, Converse sneakers and Giorgio Armani (the RED Amex card is only available in the U.K. not the U.S.) -- the total spend of advertising, RED sources suggest, was less than a third of the $100m cited in the magazine.
Ad Age, noticeably, cited no source for its $100m, which it presented with the weasel words that "some [people] estimate" without saying who, or how the figure was arrived at.
Experts in the U.S. advertising industry reckon that the magazine added together a variety of figures, such as, one insider suggested, estimates of "the value of the TV, billboard, print and interactive ads as well as a content integration play, in-store materials and a pop-up store that was employed by one of the partners." There was even a suggestion that it included an estimate of the time Bono received on prime time TV shows such as Oprah, and what it would have cost to buy that time at advertising rates.
"It was a phantom number Ad Age pulled out of thin air," a spokeswoman for RED said. "The maths just simply doesn't make sense."
Even so, is that a good rate of return?
Most businesses would think that to raise $25m in just six months on an investment of well under $40m was a staggeringly good rate of return. But to ask that question is to make a fundamental muddle. Gap, Motorola, Converse, Apple and the rest would have spent that money to market their T-shirts, phones, trainers and iPod nanos anyway. The marketing men and women wouldn't otherwise have spent less and given the balance of their budget to the Global Fund.
So what happened was that existing marketing money was used both to raise awareness of the scale of the AIDS epidemic in Africa -- something that was nowhere near as well-publicised in the US as it was in the U.K. -- and at the same time to promote RED products. Half the profits from those products were allocated to the Global Fund, which suggests that the actual rate of return was $50m total profit on less than $40m outlay.
So has big business done better out of this than poor Africans?
The idea behind Product RED was always that it would create a win-win result. The firms with RED products would do better and so would Africans with AIDS. Some charity activists in the United States have been critical of the RED initiative, arguing that it allows firms to take on the patina of philanthropy while cutting their real charitable giving.
But the facts suggest this argument is flawed. The "corporate social responsibility" budgets of most firms are dwarfed by their marketing budgets. Donations to charity tend to be given as one-off cheques. What the RED initiative has set out to do -- and with some success if $25m in six months is half the profits RED products have made -- is create a stream of revenue for the fight against AIDS in Africa which will far exceed one-off payments from corporate philanthropy budgets. It looks set to create a major source of cash for the Global Fund, and one which is sustainable. It is an entirely new model for fund-raising.
But wouldn't people be better off giving more to charity rather than buying luxury items they don't need?
If only that were the choice. But most people wouldn't give the cost of a new iPod to the Global Fund. Some idealists might hope so. The Ad Age article was inspired by a web site called www.buylesscrap.org which attacks Product RED for proposing consumption as the cure to the world's evils. "Can't we just focus on the real solution -- giving money?" it says.
This is a rather romantic, and American, notion. Private charitable giving has never offered a solution to the major structural problems in the Third World. At best, charities like aid agencies create exemplars of ideal projects, or help build a public mood that something has to be done, forcing governments to act. AIDS is too massive a problem for anyone but governments to tackle.
Bono set up RED because he thought that Make Poverty History, Live 8 and the One Campaign (a massive lobby in the United States) had successfully put on the pressure to get governmental action at the international level. But not every one wants to join such campaigns. And not everyone gives to charities. There were two areas yet untapped -- the private sector and consumers who like buying stuff, like the idea of helping others, but who are too idle or too self-centred to actually get up and do anything. RED was the attempt to draw into the wider coalition for Africa people who, if they didn't buy a RED iPod would just have bought one of another colour.
So, has RED been a success or a failure so far?
The money RED has raised means that some 160,000 Africans will be put on life-saving anti-retrovirals in the coming months, orphans are being fed and kept in school in Swaziland and a national HIV treatment and prevention programme has begun in Rwanda. Some 99 percent of funds raised go directly to life-saving schemes.
Motorola is printing the packaging for its RED phones in Africa -- a requirement agreed to by each RED brand -- to help boost African local economies.
Data collected for RED's chief executive, Bobby Shriver, shows that people who became aware of crises through Red's marketing have increased their charitable giving, rather than thinking they have done enough by buying RED.
The United States anti-AIDS strategy, with strong personal backing from President George Bush, is now funded to the tune of $15bn a year. The U.S. Congress has just agreed a record $724m donation to the Global Fund for 2007. It is all the result of concerted political pressure of which Red, with its constant advertising exposure of the message that "6,500 Africans died needlessly yesterday of a preventable and treatable disease" has been a key part.
Is RED a big flop?
It all sounds like a pretty convincing success story to me. Buy Less Crap? The only people who seem to need to take that advice are the editorial staff of an American trade magazine called Ad Age.
© The Independent, 2007.