PRODUCT(RED): Philanthropy or Exploitation?

Product(RED)



An earlier installment of this podcast from a year ago called attention to the launch of PRODUCT(RED) in the United States. Since the brand’s introduction, (RED) watches, sunglasses, t-shirts, cell phones, and iPods have been extensively marketed and sold, with some of the revenues going to support the fight against AIDS in Africa. Nevertheless, the (RED) brand has been a target of criticism for its commercial approach to a philanthropic endeavor. In this installment, I intend to take a close look at PRODUCT(RED) and its impact on the AIDS pandemic.

(RED)’s business model embodies the strategy of cause marketing, where for-profit companies and non-profit organizations collaborate in a joint initiative for their mutual benefit. (RED) currently has partnerships with several distinctive consumer goods companies, including Motorola, The Gap, Converse, Apple, and Emporio Armani. PRODUCT(RED) gives its partners permission to brand certain products as (RED), and in return the partners send a share of their profits from those products to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. Hip, humanitarian, and business-savvy, PRODUCT(RED) panders simultaneously to Americans’ munificence and to their conspicuous consumption.

According to the PRODUCT(RED) website, as of September 2007 the sale of (RED) products has generated more than $45 million for the Global Fund. This money has been directed toward AIDS treatment and prevention programs for women and children in Ghana, Swaziland, and Rwanda. (RED) points out that its contribution to the Global Fund will be a steady, constant stream of revenue rather than a one-time lump sum donation, ensuring that the brand will have a sustained impact on its beneficiaries.

Most criticism against the brand has centered on the belief that its partners are taking advantage of the AIDS problem in order to turn a profit. Early detractors of the brand encouraged consumers to donate their money directly to charity and thereby bypass the middle-men (RED) partners siphoning off most of the revenues. Later, a particularly scathing article in the magazine Advertising Age cited the disproportionately large amount of money spent by the brand’s partners promoting their (RED) products compared to the amount the partners actually raised for the Global Fund from the product sales. More recently, Ben Davis, creator of a parody campaign called BUY(LESS), has written an open letter to (RED) CEO Bobby Shriver requesting both more transparency in the distribution of profits from (RED) products and a more direct way for consumers to contribute directly to the Global Fund without having to buy (RED)-branded products.

In the end, it is important to consider what PRODUCT(RED) really is. It is not a charity, but “an economic initiative”, according to its website. Accordingly, its partners’ financial interest in the (RED) brand gives them an incentive to ensure its continued success. So what if the amount of money spent by the partners promoting their (RED) products exceeds the amount they turn over to the Global Fund? The money is already designated for their advertising budgets and would be spent anyway. This way, it at least goes toward publicizing a good cause. And besides, strictly fiscal measurements of PRODUCT(RED)’s impact (in terms of dollars alone) understate the heightened general awareness that the brand engenders among consumers.

Debating whether (RED) is more philanthropic or exploitative in nature misses the point. Even its most ardent critics would agree that the brand is making a positive contribution to the fight against AIDS. The question is, could PRODUCT(RED) do more to achieve its stated goal to “expand opportunities for the people of Africa”? I think it could.

Thanks for listening. I’m Bill Stokes.


References:
Bennett, J. Does Shopping for a Good Cause Really Help?. Newsweek. 14 March 2007.
Davis, B. Buy (Less), Give More. accessed 09 October 2007.
Kim, R. Africa’s Poor Had the Best Week Ever. The Nation. 15 October 2006.
The Persuaders, LLC. 2006. (RED). accessed 09 October 2007.
Vallely, P. The Big Question: Does the RED campaign help big Western brands more than Africa?. The Independent. 09 March 2007.