Green, (Red), and a new tipping point.

Why good works may need to be an integral part of your marketing mix

A few weeks ago, Time published an essay by Bill Gates on “Creative Capitalism,” in which he argued that the time has come to apply the principles of capitalism to world problems such as hunger and disease. Gates points out that more than one billion people live on less than a dollar a day, and that “creative” capitalism might offer some solutions.

Wait a minute. THAT Bill Gates? The robber baron capitalist that was called out by governments all over the world for creating a monopoly with Microsoft software? The guy who forced Clippy down our throats?

That’s the one. Gates is officially retired from Microsoft and focused on the Bill and Melinda
Gates Foundation, a charity with more than $35 billion in assets and projects going on around the world (Warren Buffett, nobody’s fool with money, turned over a large part of his fortune to the foundation and serves as a trustee). So instead of figuring out ways to make Microsoft Word more complicated, Gates now tinkers with the world’s problems.

And what’s even more fascinating is that he might have a point.

Gates thinks that creative capitalism offers a “win-win” situation: significant social issues get addressed, and companies find new ways to generate profits, either by discovering markets that they didn’t realize existed or by drawing attention to their good works and drawing customers who want to support the programs and the company.

For the former, he cites the example of Vodafone investing in a Kenyan cell phone company, thinking that the market would max out at about 400,000 subscribers. But by changing its rate structure so that it could reach more low-income people, it now has more than 10 million users, who’ve embraced the technology to do such things as check crop prices before going to market or use their phones to transfer funds electronically, rather than risk being robbed by carrying money into remote areas. Both Safaricom (Vodaphone’s Kenyan partner) and millions on Kenyans are benefitting.

An example of people supporting companies and a cause is (
RED), a program created by U2 frontman Bono and Bobby Shriver where key brands offer an exclusive (RED) version of their products at a premium, with the extra money going to support AIDS relief efforts in Africa. The participating companies get a new marketing message with their (RED) product (and through the (RED) organization’s own marketing efforts, generate profits through sales of (RED) products, and get recognition for being involved with an important effort. Companies who offer (RED) products include Apple, Converse, Dell, Microsoft, American Express, Hallmark, and The Gap. One hundred percent of the money raised through (RED) goes to AIDS relief through The Global Fund.

In two years, (RED) has generated more than $60 million.

So Gates may be onto something. And for marketers, that could have some significant implications. Because if you look around, you’ll see that a lot of companies have changed the way they market--by not just highlighting their products, but also by calling attention to their good deeds.

One of the most visible techniques is green. Green marketing has been embraced by scores of companies, who showcase their environmental and sustainability efforts and, in some cases, products. Even Wal-Mart is getting into the act, spending a lot to promote how its green initiatives are changing its company (though research suggests that consumers aren’t quite buying the idea of Wal-Mart as a “green” company yet).

But is green really working? A Harris Interactive poll done in May 2008 says that, even in a recession, consumers say they are still willing to pay more for green products—including hybrid cars, locally sources or fair trade food, green cleaning supplies, or products made from recycled materials. Green product introductions since 2000 have gone from virtually none to hundreds. Acquisitions of green companies by major corporations are also on the rise, with Burt’s Bees, Tom’s, Stonyfield Farms, and other green brands being snapped up.

GE was one of the first major corporations to take a green approach to marketing with its Ecoimagination campaign, which showed not just what its products could do, but how they could benefit the world, with wind energy, cleaner water, and better human and animal environments. The campaign won a Gold Effie Award this year in the Green Category (new), and research indicates it has changed consumer perceptions of GE.

What does this mean for marketers? One thing that’s clear is that it’s not only OK for a company to talk about its good works, but it’s becoming important to do so.

As more people jump onto the green bandwagon, it’s true that people will become desensitized to the environmental message (some studies say that’s already happening). But something that is still on the upswing is that customers are not just evaluating a product anymore, but they are looking more closely at the policies and practices of the company.

In fact, one study found that found that greater than 80% of respondents believed firms should engage in social initiatives and 76% felt those initiatives would provide benefits. Another study found that 52% of respondents would boycott irresponsible firms if reasonable alternatives were available.

With more high-profile marketing efforts like green products, (RED), and countless other good works being touted by companies large and small, we do seem to be at tipping point where companies will be held accountable for more than just their products, and will be required to at least share (if not promote) their contributions.

You'll be judged not just for your products or services, but for your social contributions.

How do you make this work? We hit some key details on our Good Deeds Done Well posting from a few months back. But here are some guidelines:

There should be a logical fit between the organization and any cause it supports. People believe (rightly or wrongly) that companies only contribute if they’re something in it for them, but they don’t mind this if it’s out in the open.

You can’t go overboard. A $100 contribution to Ducks Unlimited doesn’t mean you’ve changed the global environmental makeup. Report your efforts realistically.

Put your efforts where they really matter. Showcasing your good deeds to the world is great, but the people who care most are your employees and stockholders. Your employees may be your most important audience, because they’ll feel better about your company and they’ll help spread the world. Also, more and more good employees are evaluating potential employers by their social responsibility. If you want good people, they have to feel good about working for you.

See if creative capitalism fits you. Can you make money by supporting a cause?

Gates’ idea is being debated hotly online as you read this, and it probably will continue to be for a long time. But maybe Bill should be given credit for starting an interesting conversation. And we should all be aware of how this new creativity could change how we will bring ideas to market in the future.