Cause Marketing: Is Good Karma Good for Business?

Brands big and small alike seem to be investing more money to support good causes. HÄagen-Dazs rallies for honey bees in its social cause campaign; Hanes sought out people on Facebook to share the word for its pledge to donate 100,000 pairs of socks to people in need.

Pepsi got attention when it said it would sit on the sidelines of the 2010 Super Bowl next month, breaking its 23-year tradition of running a spot in one of television’s most-watched sporting events. Instead, Pepsi committed $20 million from its ad budget to provide grants of $5,000 to $250,000 to fund community projects such as retraining laid off workers or providing a free health clinic.

Shrewd? Yes. Smart? Maybe. It will depend on how Pepsi executes the campaign.

Pepsi’s move is eons away from its 2009 Super Bowl ad, I’m Good, promoting Pepsi Max, a diet cola, that featured stunts À la MTV Networks’ Jackass.

“There’s more and more expected of corporations and more scrutiny, and they want to get their messages out to thought leaders,” Diane Rinaldo, VP of sales at news site Talking Points Memo, told my colleague, ClickZ Senior Editor Kate Kaye, this week. Although Rinaldo said cause marketers didn’t have their budgets for 2010 together before the holiday break, she expects them to begin inquiring about running cause-related campaigns on the site soon.

Pepsi plans to tap social networks — Facebook, YouTube, and Twitter — to promote the Refresh Everything initiative and rely on people to vote for their favorite projects. Voting will end at the end of each month and awards will be made to the highest vote getters.

Still, there are potential pot holes on the road to altruism.

Alicia Staley, a three-time cancer survivor who established the Staley Foundation, sees at least two shortcomings to awarding grants based on a popularity contest.

“Grants are being offered by total votes and not necessarily on the merits of the programs they [nonprofits] are proposing,” said Staley, who has raised $80,000 since she founded her nonprofit in 2007 to help cancer survivor programs buy equipment and supplies. What’s more, smaller organizations like hers are at a disadvantage because they typically have smaller databases compared to large national nonprofits that can blast out e-mails to tens or hundreds of thousands of supporters, asking them to vote for their causes.

Beth Kanter, a professional blogger who writes about how nonprofits can tap social media for social change, questions in this post whether Pepsi will learn any lessons from the Chase Community Giving campaign on Facebook.

In that initiative, Chase awarded $25,000 to 100 organizations such as Big Cat Rescue in Tampa, FL, and Seeds of Peace in New York City. At least three nonprofits, including the Marijuana Policy Project, complained about the rules, telling the NYTimes.com they believe they were unfairly disqualified because Chase didn’t want to be associated with their missions. They said they appeared to be among the top 100 vote getters until Chase changed contest rules; Chase’s contest rules appear to give it an out. “Sponsor retains the right at its sole discretion to determine eligibility and reserves the right to disqualify any Charity for any reason whatsoever,” the rules state.

What’s more, Pepsi will be walking another fine line that comes with participating in any cause-related activity. “Is Pepsi really committed to solving social problems in its communities or does it think that redirecting its SuperBowl advertising budget and using social media to promote its generosity can sell more soda?” Kanter wrote. She added in a follow up e-mail: “I think smart companies can do both — if they are authentic, strategic, have a good theory of change and execute well.”

Tonya Iles, interactive manager for HÄagen-Dazs, emphasizes that a brand must select a cause it believes in. “It has to be authentic. It has to make sense for a brand. For us, honey bees made sense when we found out that if honey bees die out, 50 percent of our flavor lineup would have to go away,” she said.