Date of publication: January 25, 2006
Source: Financial Times
By Gary Silverman
American Express, Converse {NIKE! -- jb], Gap and Giorgio Armani are joining with Bono, the rock star, to sell products under a new brand, called "Red", which will dedicate some of its revenues to fight Aids in Africa.
The effort will include the creation of an AmexCo Red credit card that will be marketed first in the UK, targeting an estimated 1.5m British "conscience consumers" who are seen as more likely to buy products associated with a social benefit. AmexCo believes this figure will rise to 4m within three years.
Other Red products available this spring will include Converse sports shoes made with African mud-cloth; a new line of Gap vintage-style T-shirts, in red and other colours and wraparound Emporio Armani sunglasses embossed with a Red logo.
"Red is a 21st century idea," said Bono, the owner of the brand. "I think doing the Red thing, doing good, will turn out to be good business for them."
The venture, scheduled to be announced on Thursday at the World Economic Forum in Davos, Switzerland, is the latest in a series of marketing experiments being conducted by big companies worried that television advertising is losing its punch. Many of these efforts, such as Procter & Gamble's Pampers.com informational website, are based on the idea of using good works or services as a way to gain consumer attention - a notion some are calling "corporate social opportunity".
John Hayes, chief marketing officer of AmexCo, said Bono "came to us" with the idea for a card that would benefit Africa about 18 months ago. AmexCo decided the rock star's idea would help it "create pull", attracting educated, affluent consumers without spending much on direct mail or television advertising.
He said AmexCo and the other partners hoped the Red products could be marketed mainly through public relations and word-of-mouth advertising campaigns, generating advertising savings that would help cover the cost of their contributions for African aid. "We are not going to fill your mailbox with Red mailings," Mr Hayes said.
The money from Red will go to the Global Fund, a public-private partnership that has committed $4.5bn for Aids, tuberculosis and malaria programmes since it was created in 2002. The focus of the Red donations will be on Aids programmes for women and children. AmexCo has agreed to contribute 1 per cent of Red card transactions, plus 1.25 per cent of any spending above £5,000 a year. The card will be available in March.
Bobby Shriver, chief executive of Product Red, said he and Bono insisted their partners see it as a money-making opportunity. "We said you had to make money, because if you don't make money, you won't want to invest," he said. Mr Shriver said the partners had all signed up for at least five years.