The Real Costs of Cause Marketing


Pepsi probably thought it had its timing exactly right. In 2010, the brand skipped its traditional Superbowl ad spot. Instead of spending millions for half-a-minute of audience time, and millions more for images of can-opening and lip-smacking, the brand decided to give money away.

Its Pepsi Refresh campaign invited people to vote online for causes to which Pepsi would make financial donations. The donations ranged from $5,000 to as much as $250,000.

Not wanting to be left behind, Coca Cola ran a similar campaign. The company promised to donate a dollar to the Boys & Girls Clubs of America for each view of its Super Bowl ad on Facebook, up to $250,000.

Both companies were taking a risk, particularly Pepsi which chose to forego the Super Bowl audience in favor of people’s desire to do good.

But the companies probably thought they were onto a sure winner. Potential customers could perform an action that they believed would bring good to others at no cost to themselves. And during the process they’d be exposed to the brand, experience a positive feeling, and feel good about buying the product in the future.

Studies suggested they couldn’t lose. A survey conducted two years earlier by Cone, a brand consultancy, had found that 79 percent of consumers said that they would switch to a brand associated with a good cause. That number had risen five percentage points over the last five years.

It’s since risen even higher. In 2013, 92 percent of consumers surveyed told Cone that they’d buy a product that had a social or environmental benefit. More than two-thirds said that they had done so over the previous year.

So attaching a product to a good cause—or “cause marketing”—looks like a good idea. The brand is seen to be doing good, and customers build a positive association with the product. Shareholders win and so does society. The corporation gets to show that it cares about more than shareholder value even as it increases that shareholder value.

As a strategy, cause marketing should be at the top of every marketing department’s to do list.

The benefits, though, might not be so clear.

Cui Bono?

The first problem is deciding which cause benefits. The choice can throw up some serious pitfalls. Causes can be controversial and brands can look clumsy when they wade into a complex area without checking the issue closely enough.

In 2013, a Walmart store in Ohio ran a Thanksgiving food drive that encouraged employees to make donations to help others in need. The “others in need” turned out to be fellow employees.

Instead of looking charitable, as though the company was going out of its way to help the poor, the brand ended up looking like Scrooge. A billionaire family was failing to pay its employees a living wage while asking other low-paid employees to help them out.

Aldi, a British budget supermarket chain, tried to help the poor in 2020 by showing them how to get by on a food budget as small as $33. To mark “the poorest day of the year,” a day in January when big Christmas expenses become due, the company hired an influencer to show how she would make “wholesome family meals on a budget.”

What should have been a way of helping poor families get more out of their income, soon led to criticism that the chain was being patronizing and treating poverty as a game.

Whenever a big, rich brand picks a cause to help, they leave themselves open to criticism that they’re looking to cash in on the misery of others. Instead of being serious about trying to solve a problem, they’re looking primarily for profits. Dell’s Giving Tuesday, for example, offers to give a computer to a student in an underserved community for every old machine someone trades in.

Critics might wonder why a computer maker needs to make those donations conditional. If Dell has computers to spare, they could just give them away without making the public hand in their used machines for store credit first.

Mixed Marketing Benefits

Brands like Dell and Aldi would argue that they aren’t charities. Their first duty is to make sales and they’re under no obligation to give their goods away or help their customers get more out of their budgets. They can only afford to be charitable if those charitable acts benefit themselves.

Cause marking is always about marketing at least as much as it’s about the cause.

But even those benefits might not be as clear as they appear.

A 2019 study by Anníbal C. Sodero of The Ohio State University suggests that a good cause doesn’t always make for good business. Sodero tracked the data from a campaign run by a Fortune 500 consumer packaged goods firm. The company worked with a nonprofit combating child food insecurity in the U.S. and promised to donate an equivalent amount of food, weight for weight, for each of the 386 cause items purchased. The campaign ran for four weeks and the cause items were available in 630 US stores owned by a national retailer.

Sodero was able to compare sales data across those four weeks with figures that covered a year of retail sales. He also looked at the firm’s operations in the products’ categories.

Some of the results were positive. Cause marketing, Sondero argues, works like a traditional sales promotion. It “appears to provide a temporary incentive that induces consumers to form immediate favorable connections between the cause product and to benefit of partaking in the campaign.”

But that connection turns out to be temporary, and more importantly, it upsets planning. A consumer who was planning to buy a box of breakfast cereal anyway might choose to buy two boxes of cereal if they believe that their extra purchase will benefit a good cause. That act of “consumption philanthropy” though will lower their purchase demands in the following weeks. There’s only so much breakfast cereal that they can eat.

Rather than increase sales overall then, the Cause-Related Marking (C-RM) campaign only brought forward future sales that would have happened after the campaign ended. Or the campaign encouraged customers to switch products to support the cause but those customers switched back once the donations stopped.

The campaign produced unpredictable results without delivering a long-term boost to customer growth.

“The demand variability that C-RM induces in such short a period is troublesome,” says Sodero. “The inventory management literature shows that planners tend to react poorly to these kinds of scenarios. In particular, they over-react by changing ordering and production levels, which ultimately leads to the well-known bullwhip effect.”

In other words, a cause campaign can lead to high demand that can’t be met, followed by a glut of unsold products once the campaign ends. And the benefits of the boost in sales aren’t sustained.

Making Cause Marketing Work for You

So how can a business associate itself with a good cause and benefit long-term from the positive associations a cause campaign should bring?

The first step is to pick the right cause, and as we’ve seen, that’s much easier than it sounds. Even apparently uncontroversial topics, such as alleviating poverty, can draw criticism if they come from a brand that’s seen as rich or which could afford to pay people more.

Rather than try to avoid all criticism, choose causes that minimize criticism. A cause that matches the brand itself works best. A sportswear brand could choose a cause that promotes women’s sports for example, or provides tickets to the Special Olympics. A home repair outlet could offer matching donations for rehabilitation projects in underserved areas.

Alternatively, choose organizations that have the widest possible support, such as The American Red Cross, Doctors Without Borders or the Boys and Girls Club of America. A bland, well-known organization will deliver the least positive affect but will also draw the least criticism.

The second step is to plan carefully. Every promotional campaign hopes to increase sales but Sodero’s research suggests that one common effect is to shift those sales, creating extra demand now at the expense of reduced demand later.

That creates a new risk. Fail to meet demand during the campaign and you’ll disappoint customers. But create too much stock after the campaign and you’ll annoy wholesalers and retailers who are left with a glut of products taking up space that they can’t use.

Make sure that you have enough stock to meet demand during the campaign and that you can wind down supplies if you find that sales fall below normal levels after the campaign ends.

And that’s the biggest problem with a cause marketing campaign. The campaign might push up sales temporarily but if it doesn’t produce a long-term increase in those sales then all you’ll have done is disrupted your production, delivery, and sales schedules. And benefited a charity.

So perhaps the best thing to do before launching a cause marketing campaign is determine whether you wouldn’t be better off running a regular promotion—then announcing after the campaign that it was such a success you’ve decided to donate some of the revenue to charity.

That kind of timing might just give you all the benefits of positive associations and none of the harm.

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