Zen and the art of cause-related marketing - Panel Discussion

Chief Executive, The, Oct, 1998 by J.P. Donlon

Desperate to pierce the clutter of multiple messages, companies are taking a page from the sports marketers playbook - advancing their messages in the form of sponsorship of the arts, museum, and all manner of social and community causes. Does cause-related or "intellectual" marketing work? Since hard measures are nonexistent, much depends on one's expectations. CE gathered CEOs in both the profit and nonprofit world to compare notes.

From frequent flier programs to affinity credit cards, loyalty programs are now a staple of business. It appears reassuringly simple: attract customers through their private interests and passions and build a relationship to bring them into your orbit.

But reaching out to customers to build loyalty and entice them to return amid the noise and clutter of information overload is not so straightforward. Hence marketers have attempted to affiliate themselves with professional sports, the arts, social causes, and education. American Express, a pioneer in the field with its affinity programs, launched many imitators. The phenomenon will continue to grow, according to Robert Shulman, founder of Copernicus, a Westport, CT-based marketing strategy group. "It's the tie-goes-to-the-dolphin effect," says Shulman. Faced with a choice of identical products, such as the array of brands of tuna in a supermarket, the one that advertises itself as dolphin-safe edges out its rivals.

At a time when many nonprofit organizations are themselves strapped for cash, a link-up with a corporate sponsor looks attractive. Michael Allen, CEO of the Allen Company, a strategy group, sees these marketing alliances in brand-building proliferating. "Companies want to be associated with idea generation," he says. "It separates them from the pack, who may by comparison appear to be only interested in profit."

In the following roundtable held in cooperation with BMW and New York's Solomon R. Guggenheim Museum, CE took the discussion to where the rubber meets the road - or at least the rotunda. BMW has been a lead sponsor of a Guggenheim exhibition, "The Art of the Motorcycle," in which the Manhattan museum showcased the motorcycle as both a cultural and design phenomenon of 20th century life. The exhibit, which broke all attendance records at the Guggenheim, was judged a success by both BMW's North American CEO Henner Heitmann and museum President Tom Krens, who shrugged off The New York Times criticism, which sniffed at the museum's reaching for the "lowest common denominator."

Krens claimed that while the German auto maker's support was invaluable, it did not influence the content of the show. Of the 96 vehicles built from 1868 to the present on display, "six were manufactured by BMW, but nine are Hondas," he said. Heitmann, who sometimes refers to himself as a "car salesman," was quick to point out that BMW saw the tie-in as a chance to build the brand, not to sell product as such. "It's a question of balance and confidence," he said.

But not all cause-related arrangements are said to be balanced. Coca-Cola's support of some school districts that receive snappy athletic uniforms in exchange for exclusive "pouring rights" has been criticized for being anti-competitive. Sunbeam's American Medical Association (AMA) endorsement for its home health care products backfired when AMA physician members condemned the endorsement as unethical. Sunbeam CEO Al Dunlap responded with a $20 million lawsuit for breach of contract. Ultimately, the AMA settled for $9.9 million.

Last summer, the National Parent Teacher Association (PTA) received an undisclosed fee for signing a deal with Office Depot in which the retail chain promotes itself as a "proud sponsor" of the PTA in newspaper and TV ads that feature the PTA name and logo. The promotion led to complaints about excessive commercialism from some of the PTA's 6.5 million members, as well as media attention. The PTA countered that the program does not advertise to students, nor market in the schools.

According to the Washington-based Capital Research Center (CRC), which tracks corporate ties with nonprofits, many firms support groups that paradoxically work against their sponsors' interests. Each year, CRC records Exxon's support of the Environmental Law Institute, the same organization that did the legal groundwork for holding Exxon criminally responsible for the Valdez oil spill. Atlantic Richfield and Chevron support the National Audubon Society, which strongly opposes legislation that would open the Arctic National Wildlife Refuge to oil exploration. "Increasingly it appears that U.S. corporations are funding nonprofit organizations that may be working against their best interests - and against the free enterprise system," observes Robert Malott, former CEO of FMC Corp. Clearly the balance and confidence to which Heitmann refers is a standard not all CEOs have attempted to meet.

Despite such pitfalls, United Way president Betty Beene says corporate sponsorship and cause-related marketing have been successful for a wide variety of organizations, including the Statue of Liberty campaign, World Wildlife Fund, and Share Our Strength anti-hunger organization. "The days of writing a check and receiving a handshake in return are over," says James Gregory, CEO of Westport, CT-based Corporate Branding, who points to Avon's link-up with breast cancer research as an outstanding example of a sound long-term commitment. "Companies should be inventive enough to find worthwhile synergies provided they don't overlook the fact that the marketing in cause-related marketing must make sense."