Red Campaign Turns On Business Model, Consumer Choice

by Karl Greenberg, Apr 17, 2007, 5:00 AM

• Comment
• Recommend (1)
• Tweet
• 

The Red campaign's strategy is simple, according to Julie Cordua, its vice president/marketing and a speaker at the Advertising Research Foundation (ARF) annual convention in New York this week. It costs 40 cents per day, or $10 per month to provide AIDS medication to an HIV sufferer in Africa, she said. But getting corporations to participate in funding that goal for the long haul, for the 25 million AIDS patients in Africa, is unrealistic unless it includes a compelling business model.

Cordua said Red, the marketing venture created by U2 singer Bono as a way to vastly increase corporate funding for The Global Fund to fight AIDS, tuberculosis and malaria, has solved that problem. She said products within the Red program create a "halo" brand for companies like Apple, Converse and Armani, giving them an incentive through Red-associated retail activity to contribute a big chunk of money from sales of Red products.

Although the Red logo has garnered wide awareness among consumers via marketing by partner brands, "we don't spend a dime on advertising," said Cordua. Red spent nothing on a Google takeover page last year, or a cross-media promotion with VH1 properties. "Our job is to build both the partner brand and the Red marquee. Our partners use design teams to create specific lines for Red--products that must drive demand through their intrinsic value, not just because of an ethical belief. The strategy was based on not compelling consumers to choose a product they wouldn't buy anyway, but to upgrade their choice to a Red product," she said.

The marketing logic of Red relies on the fact that corporate partners will not be interested in devoting long-term investment in product development, advertising and marketing costs for a charity. "Red has to be less a campaign, more a business, less a charity and more a consumer choice," Cordua said. Corporate partners channel funds from the sale of Red products directly.

The genesis of Red was a weakness, in one aspect, of The Global Fund, which had been intended to be a public/private partnership when founded in 2002. But Bono and his partners realized "business was not engaged in any of these issues. In the first four years, they had raised over $5 billion from governments and only $5 million from businesses," said Cordua, who added that Bono and his cohort were trying to find ways of bringing in business funding while also getting consumers involved on a daily basis.

The structure of Red's marketing, which launched in the U.S. last October with several major sponsors like The Gap, Apple and American Express, is to rely on marketing budgets of brand partners. "We know these companies have big marketing budgets," said Cordua. "We convince them to spend a part of their existing marketing budget on Red and we ask them to donate 40-50 percent of their revenue on the product to Red."

She said the program has paid off for partners. Per Cordua, Apple's Nano Red has been one of the fastest-selling iPod Nanos and Converse, which allows consumers to design their own Red-product shoes, reports that 50% of its online sales now come from people buying "Red" sneakers.

Cordua said Gap's Red-branded T-shirt has become its highest-selling T-shirt ever, and that in the first six months of the campaign, Red has generated $25 million, versus the $5 million in four years under The Global Fund's direct corporate solicitation model.

Research for Red has been handled by OTX. Alice Gold, vice president/marketing insight, said one in five people were aware of the Red in January, four months after launch, with one in three of the campaign's core target audience aware of the brand.

Gold said the Red brand has helped partner brands. "Since pre-launch last year, at least twice as many people know which brands are associated with Red," she said, adding that 75% of consumers support the initiative. "Consumers believe Red as well as partner brands share their values."

Editor's note: This article has been edited since publication to correct the amount it costs per day to provide medication to an HIV sufferer in Africa.