Last October marked the American launch of (Product)RED, a seemingly well-intentioned plan to raise money for fighting AIDS in Africa. Rock star Bono, who helped create (RED), dubbed it punk capitalism: The campaign enlisted the likes of Gap, Apple, Motorola, Converse, Armani and American Express to make exclusive (RED) products to be sold principally in the United States and Great Britain. Part of the proceeds were tagged to benefit the Global Fund to Fight AIDS, Tuberculosis and Malaria. (RED) raised more than $25 million in six months; the fund had previously raised just $5 million from private donations since its 2002 inception. This spring, however, it was (RED)—not HIV—that got punked.
The issue? Participant companies, critics alleged, spent up to $100 million—(RED) says $50 million—on marketing the concept to raise the $25 million it pulled in. Hyping the disparity, a parody of (Product)RED, BuyLessCrap.org, hit the Internet. The site, which has had thousands of hits to date, encouraged people to donate directly to the Global Fund rather than traffic their money through, say, Apple or Armani. Then several articles in the mainstream media, including one in Advertising Age and one on MSNBC.com, questioned what they called (RED)’s excessive overhead, covert materialism and mysterious profit margins. Tamsin Smith, president of (RED), defended the notion of spending money to raise money: “We could not have generated that $25 million without the billboard and magazine ads and the brilliance of [the participants’] products and marketing.”
While there’s no question that (Product)RED sells, another question has arisen: Does buying rose-colored (RED) Armani sunglasses—just like Bono’s—generate more corporate profit than it does assistance for people with AIDS? Or are the naysayers cynically knocking a new way of generating massive philanthropic funds that people would never dole out unless they got a hot product in return? Social-cause marketing is a billion-dollar industry that gives companies a chance to bolster their image and increase sales. That’s why critics have questioned (RED) participant companies’ motives: Corporate giving once meant donating a fraction of preexisting profits to charities, not using price hikes to generate the funds.
As for revenues, Apple says that it directly donates $10 from every $200 (RED) iPod Nano sold in the name of the Global Fund; and Motorola claims it gives $17 from every $270 (RED) Motorazr phone sold. Gap, Armani and Converse will release only percentages of the total (RED) gross profits they contribute: 50%, 40% and 5% to 15% of sales, respectively. Many critics want the retailers to detail the amount that gets to people with AIDS. The companies, however, say that for-profit corporations rarely reveal exact figures or make their profits public. The (RED) parent organization is nonprofit.
Smith stresses that (RED) is not a charity by design, but a new kind of self-sustaining, profit-oriented business model that allows companies to make money and boost their image. Consumers get cool products they like, while people with HIV in Africa—but none in the United States—benefit.
(RED) also aims to raise awareness about AIDS. “Someone told [Bono] that if you want the hearts and minds of America, you have to get them where they shop,” says Smith. However, Jesse Miller, a New York City shopper, told POZ that she had no idea the crimson campaign had a cause, because many of the (RED) glossy-magazine ads do not specifically mention AIDS or the Global Fund. “I thought [the Gap ads] were just something bold and bright after the Madonna and Missy [Elliott] ads and all that khaki,” she says.
If Miller had used the (RED) site’s (www.joinred.com) calculator, however, she could have discovered that by buying one Gap (RED) shirt and one (RED) iPod Nano, she could have provided a month’s worth of ARVs for one HIV-positive African. We’ll wait and see if it really adds up.