Yes, There Is an ROI for Doing Good

The following excerpt is from a great article by Jack Neff from Advertising Age a few months back. The article is a bit long, but certainly worth a read. Click here to visit the article.

Yes, There Is an ROI for Doing Good - But Numbers Are Hard to Come by for Efforts by McD's, Sears and Others
By Jack Neff
Published: May 26, 2008

Surely all the companies investing in cause marketing must be earning points in afterlife. Unfortunately, under both Delaware law and the tenets of most major religions, corporations technically don't have souls and hence aren't eligible for heaven.

And so the question remains, are they making any money at this?

It seems impolite to ask. But make no mistake: Though you might not always glean this by looking at the home pages of the consumer-products giants touting their latest philanthropic or earth-saving gestures, these are for-profit entities.

While the cynical outlook, repeated endlessly across the blogosphere, is that cause marketing is all about making money, perhaps the more mature, post-cynical outlook is, yes, of course it is, and, well, it should be.

Mike Hess, director-global research and consumer insights for Omnicom Group's OMD, New York, has spent his career quantifying the return on marketing investment for several firms and argues that not only should cause marketing have a positive ROI, it should actually generate a better return than other outlays.

Lacking numbers
After all, if cause marketing doesn't pay off at least as well as other approaches why not pour all that time and money into conventional pitches, avoid the complexity of roping a nonprofit into your brand planning, and just earmark some of the proceeds for donations?

Mr. Hess doesn't really know how well these programs stack up to others, because in nearly two decades working with marketing-mix models, no one's ever actually had him crunch the numbers.

But he suspects cause programs may pay off considerably better than most ad campaigns. Having worked on two major meta-research projects on advertising effectiveness, he said the "coefficient" of cause marketing (i.e., the multiplier effect of the first year's sales lift) may well be higher for cause marketing than your ordinary TV ad because consumers' emotional connections in equating a cause with a brand may be stronger than the connections forged by other advertising.

Gregg Ambach, managing director of Analytics Partners, Cincinnati, hasn't run a model on a cause-marketing program, either, though he's a veteran of both Kraft Foods and Campbell Soup Co., where they have plenty of cause-marketing efforts and love of analytics.

But Mr. Ambach's gut (yes, even analysts have those) tells him some of these programs must pay off handsomely.

Fat payout
He recalled Campbell's Labels for Education program, which years ago would give a van to the school that collected the most labels. One school in Louisville, Ky., won three years running with more than a million labels each year, he said.

If even 5% of those labels represented incremental purchases because of the program, factored against the (likely discounted) cost of the van and tax write-off considerations, the program likely paid out without even counting all the schools that didn't win but still collected labels, Mr. Ambach said.

Running a marketing-mix model on that or General Mills' "Box Tops for Education" (also syndicated to marketers such as SC Johnson and Kimberly-Clark Corp.) is difficult, considering they've been around for decades, take place year-round and rely largely on entirely untrackable unpaid media, such as PTA meetings and letters home in book bags. But Mr. Ambach said such programs almost certainly pay out, especially considering the low investment.

P&G, whose decades-long commitment to the Special Olympics has helped move a lot of soap each January when the related consumer and retail promotions kick in, has in recent years been layering on a number of similar efforts.

These include shipping cases of Dawn to clean up birds slimed by oil slicks, starting with the Exxon Valdez spill in the late 1980s; the Crest Health Smiles 2010 program that provides dental care for urban youth, launched in 2000; and providing clean drinking water, tetanus shots for expectant moms and feminine products for schoolgirls (through Pur, Pampers, and Always and Tampax, respectively).

Continued success
Does P&G track the ROI for these programs? Certainly, according to people familiar with them. Is it divulging the details? No way.

"It would be difficult to say whether 'cause' marketing provides a higher ROI, because every brand is different," a spokeswoman said in an e-mail.

But it's unlikely that P&G, which measures everything, would keep reapplying the model across ever more brands if it didn't make money at least as well as other efforts.

To read the rest of this article, please visit Advertising Age at: http://adage.com/article?article_id=127277