What Is Cause-Related Marketing?

Cause-related marketing has exploded in recent years even though it is a relatively young concept.

Cause marketing began, on a national scale, in the early 1980s when American Express partnered with the nonprofit group that was raising funds to restore the Statue of Liberty.

American Express gave a portion of every purchase through its credit card to the cause plus an additional donation for every new application resulting in a new credit card customer.

The company also launched a huge, for its time, advertising campaign.

The results are now legendary: the Restoration Fund raised over $1.7 million, and American Express card use rose 27 percent. New card applications increased 45 percent over the previous year. All this was accomplished with a three-month campaign.

Everyone involved was a winner. The charitable cause received needed funds, American Express increased sales of its product and achieved a reputation for social responsibility. American Express even trademarked the term "cause-related marketing."

Now, companies have fully embraced what is called "doing well while doing good." Cause-related marketing may eventually become the primary way that businesses express their social responsibility.

The growth of cause marketing grew from a $120 million industry in 1990 to more than $2 billion in 2016. Plus consumers seem to like it. Research shows that more than 84 percent of global consumers want to buy socially or environmentally responsible services and products.

How Does It Work?

There are many versions of cause-related marketing. It is an agreement between a business and a nonprofit to raise money for a particular cause. The company expects to profit from this arrangement by selling more products and by enjoying the "halo" effect of being associated with a respected nonprofit or cause.

A cause-related marketing program is not an anonymous or low-key donation to a nonprofit, but one that lets the public know that this corporation is socially responsible and interested in the same causes as its customers. The nonprofit benefits both financially and through a higher public profile as a result of its partner's marketing efforts.

Cause-related marketing campaigns have blossomed over the last few years and can appear in a variety of forms. Jocelyne Daw, in her book Cause Marketing for Nonprofits, lists some of the most popular:

Product sales. Think of the (Red) campaign, which brought together many companies to sell specially branded products (a red Gap T-shirt or a red iPod for instance) with a portion of the selling price going to the Global Fund for HIV/AIDS prevention.

Purchase Plus. Also called "point-of-purchase, this popular campaign takes place at the checkout lines of grocery stores or other retail stores. Customers add a donation to their bill. The store processes the money and gives it to a partner nonprofit. Promotion is pretty low-key, but that makes these programs easy to set up. "Checkout for charity" campaigns raised more than $388 million in 2014 and $3.88 billion over the past three decades.

Licensing of the nonprofit's logo, brand, and assets. Licensing runs the gamut from products that are extensions of the nonprofit's mission to using its logo on promotional items such as T-shirts, mugs, and credit cards to having the nonprofit provide a certification or commendation of particular products. An example of the latter is the American Heart Association that endorses products that meet its standards for heart health.

Cobranded events and programs. Probably the best-known example of a cobranded event is the Susan G. Komen "Race for the Cure." But these are not always runs or walks. For instance, the London Children's Museum teamed up with the 3M company to build and outfit a science gallery for children. Scientists from the company helped with the exhibits while its employees served as volunteers.

Social or public service marketing programs. Social marketing involves the use of marketing principles and techniques to encourage behavior change in a particular audience. An example is the partnership of the American Cancer Society with several companies over the years, for the Great American Smokeout.

Is Cause-Related Marketing Different from Corporate Philanthropy and Corporate Sponsorships?

There are differences in these categories of cause marketing although they might not be that apparent to consumers.

For instance, corporate philanthropy consists of direct monetary gifts to a nonprofit. Those donations often come from the corporation's foundation. These donations likely support a particular program that the nonprofit runs and can be of short or long duration.

Corporate sponsorship is a bit closer to cause marketing since the corporation gives the nonprofit money to hold an event, run an art exhibit, or other time-limited activity. The funds may come from the community relations budget of the corporation, or the marketing budget and the company expects a certain amount of publicity in the way of signage, PSAs, and promotional materials.

What Are the Advantages of Cause-Related Marketing?

Both nonprofit and business enjoy many benefits. For a business, cause-related marketing proves that it is socially responsible and provides great public awareness of its values and willingness to support good causes.

For the nonprofit, the contributions from a cause-related marketing project can be significant, and those funds are usually unrestricted so even overhead costs can be covered. Besides actual monetary benefit, a charity enjoys the expanded publicity and advertising that often accompanies a cause-related marketing program. That marketing and PR may come from the corporation's public relations and marketing departments in partnership with the nonprofit's marketing.

Are There Disadvantages of Cause-Related Marketing?

There is always the possibility that one of the parties involved (nonprofit or corporation) does something that hurts its reputation. In that case, the other party may be perceived negatively as well. For that reason, companies and nonprofits should choose their partners wisely.

Besides, there has been considerable concern about nonprofits lending their good names to for-profit activities. Does it weaken the trustworthiness of a nonprofit? Does it blur the lines between business and philanthropy? Could a nonprofit "sell out" by lending its support to products that are less than benign for the public? These questions continue still hound both fundraising and marketing professionals.

Mara Einstein, a marketing professor, raised these issues in an article in the Chronicle of Philanthropy:

• Does buying products for a cause take the place of writing a check to a charity or going online and signing up for a monthly gift?
• Do large, national nonprofits that have become marketing powerhouses take attention and money away from smaller but just as worthy charities?
• Since cause-marketing is usually handled by the marketing department of participating corporations, do "product strategies" outweigh humanitarian ones?

All of these questions are legitimate. We all know of cause marketing campaigns that have gone terribly wrong. Probably the most memorable occurred when the Susan G. Komen organization teamed up with Kentucky Fried Chicken. It will be a long time before we forget those pink buckets of chicken! There was general outrage to see an unhealthy product linked to a breast cancer charity,

On the other hand, great good comes from cause marketing campaigns when all parties choose causes and businesses well.

Joe Waters, a guru of cause marketing, points out that there are unlimited possibilities for charities and businesses to do good together. And, as consumers continue to put their money where their hearts are, charities should look for opportunities to take part in the cause marketing world.

Resources for this article include:

• Cause Marketing for Nonprofits: Partner for Purpose, Passion, and Profits, Jocelyne Daw, Wiley, 2006. An extremely well-documented text about cause-related marketing.
• The Art of Cause Marketing: How to Use Advertising to Change Personal Behavior and Public Policy, Richard Earle, McGraw-Hill, 2002. Earle cites his top ten list of the best cause-marketing campaigns and why they worked.
• Engage for Good (formerly the Cause Marketing Forum) The best place to keep up with cause marketing.
• Charities Shouldn’t Let Corporate Marketers Set the Agenda, Mara Einstein, Chronicle of Philanthropy (April 29, 2012). A must-read classic.

This articles was sourced from The Balance.