Red's not dead baby, its a $500 million brand

There has been a lot of slagging of (product) Red's first year's results: $25 million raised after many high profile campaigns by Motorolla, Amex, Gap and others. This is the brand launched by Bono where brands selling Red products donate a part of the profit to the Global Fund to fight AIDs. Jon at Living Brands went as far as posting about red being "killed by cynicism and scepticism". Grant says "The take-away for RED, take it down and start again.  This campaign is truly cooked."

Well hang on just a minute...to mis-quote Bruce Willis in Pulp Fiction, "red's not dead baby". (I do have a vested interest here, as I gave it my vote as hottest brand of 2006.) What the critics miss, as co-founder Bobby Shriver points out, is that Red is not a charity. Its a product range which creates revenue for brand partners, and charity.

Here's a different way of looking at it. A $500 million brand who gives 5% of sales to charity. That sounds much better. And would probably get less slagging off.

How did I get this figure? Well, I admit its very back-of-the-envelope. If you use Gap as an example, they donate 1/2 the profit from the Red stuff they sell. From my days on marketing Hanes t-shirts and male undies, I think the profit margin was 20%. Which means the Gap donation is, say, 10% of the revenue they make. But retail sales would be roughly double their revenue when you add in trade mark-up...so that's 5% of consumer sales. Motorolla donate 5% of their Red customers' bills.

If we go with the 5%, this would mean retail sales of Red products of $500million.

So. What do you think. Expensive flop? Or worthy brand with a social mission?

Comments

[Elena]

Ola, tudo bem?gosto muito do site porem, sempre qundao entro nesta pagina, o avast alerta : uma ameae7a foi detectada .gostaria que vissem o que esta ocorrendo na pagina.Mesmo assim, o site continua otimo parabens pelo trabalho, e continue postando PS: gostaria de ver os episodios do seriado que passava na tv Witchblade passava cedo domingo eu acho Obrigado ^^

[David Taylor (from Where'sTheSausage)]

Start of a great coversation, eh...and one that will run and run I guess?!

I must admit that my figures are back-of-the-fag-packet estimates... but the point about quoting total brand sales, not just the money given to charity is sound. You do wonder why the Red people have not quoted these total sales figures as well, as it makes a much better story. After all, innocent smoothies and the like have less sales than this, and give about the same to charity, but get great press!

[Jon Howard (Living Brands)]

Very much like where you're coming from.

In the absence of the facts, I was remaining agnostic. Although I must say I felt the arguments of the nay sayers came across as rather smug, and definitely on the look out for failure.

I thought Grant's arguments about cynicism were probably right though, and I'm sure it's had a negative impact for many, whether directly or indirectly.

But your numbers do make a compelling case for an alternative point of view