Naturalpath Media Blog

The economic downturn has the potential to hurt both large and small green companies.  Often considered a luxury market, green goods producers may see their sales fall like other up-market items.  However, companies that 'go green' by focusing on energy savings, sustainable sourcing, and packaging redesign, may both save money and still appeal to cash-strapped, eco-minded consumers.  

According to a new Forbes report, a variety of companies have invested in CSR initiatives that are only marginally costly but serve to bring in big business.  For example, Grossman Marketing Group recently started purchasing renewable energy credits from two California wind farms.  While the credits increased Grossman's energy bill by 5%, the move attracted such eco-friendly, public-facing corporations as Google and Green Mountain Coffee.  As a result, Grossman's sales rose 20% in 2007.

With analysts predicting some consumer goods companies to lose as much as half of their revenues within the next ten years, a new report from the World Resources Institute (WRI) and A.T. Kearney offers some poignant predictions and advice (write-up from Sustainable Life Media).  The report explains the possibility of 'ecoflation' scenarios in which a combination of environmental trends and policy developments drive commodities prices either drastically up or down.  For CPG companies dependent on world commodities such as natural gas, grains, soy, sugar, oil, etc., a delicate long-term strategy is the best defense against economic instability.  

In the face of economic hardship, however, lie opportunities for profitable eco-innovation.  For example, companies currently dependent on input commodities can look to re-design products, integrate their supply chains, and prioritize local - over global - sourcing.    

The newly formed Business for Innovative Climate and Energy Policy brings together five major US companies in promoting congressional action on climate change and clean energy.  Inaugural participants include Nike, levi Strauss, Starbucks, Sun Microsystems, and Timberland and the group hopes to work both within the business community and with members of congress to creae and pass legislation according to pre-defined standards.

While BICEP certainly isn't the first corporate climate change push in congress, it is interesting in that it draws members from across different industries - bringing together food and beverage, apparel, and technology.  While some might argue that all businesses face similar Greenhouse Gas (GHG) reduction challenges, in reality the nature of different businesses dictates a different approach to environmental stewardship.  While Starbucks works on securing cost-effective, fairly-produced coffee, Sun Microsystems must ensure that its products neither end up in a poorly-managed electronics landfill abroad, nor decompose and taint public waterways.  

From our point of view at NaturalPath Media, collaboration at this level of industry creates novel opportunities in advertising.  While it's not uncommon to see ad campaigns formed around a partnership between a for-profit corporation and a non-profit, I've yet to see the successful collaborative CSR and marketing efforts of two for-profits.  BICEP gives consumers - and its members - the opportunity to evaluate GHG emissions plans and climate change legislation from the varied points of view of its constituent brands.  

For more details, including BICEP's eight operating principles, visit Environmental Leader.

I attended OMMA’s AdNets conference in NY on November 6th. The conference invited leading so-called horizontal and vertical ad networks as well as a host of luminaries from the agency and client marketing side. Here are a few notes and observations from the first half of the day:

Part 1: Morning Sessions

Samir Arora, CEO of Glam Media, spoke to the “media paradox of the Internet” to explain the rationale behind the growth of vertical media and advertising networks. Arora indicated that the Internet is the only media where there is no control over distribution. Even a major online portal such as Yahoo – with 74% reach among Web users – commands only 7% of overall Internet usage. By contrast, if you look at the top three TV networks, you’ll find they command a much larger percentage of usage.

Arora also argued that even if the Internet is not the most authoritative medium it is the most influential one, particularly for younger adults who spend more time online than watching TV. Reaching those key audience segments across the fragmented online media space, creates the need for aggregators such as vertical networks to combine audience reach in targeted categories.

Havas’ Digital Chief, Don Epperson, outlined a new “virtual brand network” that would allow the agency to plan, buy, manage and even reallocate online inventory. The virtual brand network will be powered by its Artemis system, a database management and reporting system that claims to have profiled more than a third of the world’s online user population. Epperson stressed that the system is still formative and that ‘we still have a lot to learn, but envisioned that it might evolve into a “futures” marketplace for upfront buys.

The next panel billed as a “smackdown” between horizontal and vertical ad networks suggested that media buysers are not necessarily choosing one at the expense of the other. Jocyelyn Griffing from Icon International said that higher-end marketers want more targeted busy in vertical categories while those looking for “tonnage” in impressions seek horizontal networks. In recessionary times, the panel agreed that marketers are increasingly turning to performance-related buys that focus on accountability and return on investment. Vertical networks such as Good Health Advertising and the Travel Ad Network emphasized their differences and value adds in contrast to traditional (horizontal) ad networks. For example, both vertical networks focused on the fact that because they are managing far few sites, they are able to achieve a level of custom integration and reach that was previously possible on large portals and publishers.

Next: Part Two: Afternoon Session and Commentary on the Major Themes

Links:

 OMMA AdNet

According to a recent report from the Boston College Carroll School of Management Center for Corporate Citizenship, a company’s investment in social responsibility is strongly correlated with its level of consumer support.  In its ranking of the top 50 US companies that the public distinguishes for corporate social responsibility, top spots went to Google, Campbell Soup Co., Johnson & Johnson, Walt Disney, and Kraft Foods Inc.

Corporations earning top spots were distinguished by their high social responsibility index (SRI) scores, which include criteria such as Citizenship, Governance, and Workplace.  Interestingly, nearly all of the top 25 spots went to consumer-oriented companies, with Berkshire Hathaway as the only top-tier business-to-business focused company.

In a time in which ‘word of mouth’ recommendations drive business success, companies – especially those with a consumer focus – should seek to improve their corporate social responsibility profile.  65.7% of the survey’s respondents would recommend the top 20 socially responsible companies to others, compared to only 25.9% who would recommend the bottom 20 companies.   Importantly, over one-fourth of respondents would expressly not recommend companies that are not perceived as socially responsible.

In the consumer products segment, the consumer is, well, king.  The study’s finding of a strong correlation between a company’s corporate social responsibility and both consumer support and reputation speak to the continued – and growing – importance of sincere initiatives and marketing efforts for corporate social responsibility.

Cause-related marketing can increase sales as much as 74 percent in certain consumer-goods categories, according to a recent study by Cone and Duke University's Fuqua School of Business. In particular the study found a:

•  74 percent increase in actual purchases of a shampoo brand after it had been associated with a cause. Nearly half (47 percent) of participants who saw the cause-related message chose the brand, while only 27 percent of those who saw the generic corporate ad chose the brand.
• 28 percent increase in actual purchase for a toothpaste brand when associated with a cause. More than two-thirds (64 percent) who saw the cause message chose the target brand vs. 50 percent who viewed the generic corporate ad.

Researchers exposed participants to either a cause-related or a generic corporate ad for one of four focus brands in the toothpaste, shampoo, chips and light-bulb categories. The participants then entered a mock convenience store with nearly 150 SKUs and were given real money to purchase a product of each type.

To validate these sales increases for shampoo and toothpaste, Cone and Duke then replicated the study online among a sample of more than 1,000 adults, finding:

• Participants spent nearly twice as long reviewing cause-related ads vs. general corporate ads.
• This resulted in a sales increase (19 percent) similar to the lab study for the target toothpaste brand.
• Though the shampoo brand increased only by a modest 5 percent, sales among its target audience of women increased by nearly 14 percent.

Thus, the study revealed higher sales in two of the four categories (toothpaste and shampoo), and modest increases in the other two categories (chips and light bulbs) because of the cause-related ads.

Consumer responses demonstrated that the issue, the nonprofit organization involved with the brand, and the inherent nature of products were key factors in cause-related purchasing.

Sources & Links:

Marketing Charts

Cone

Marketers have long fawned over Gen Y, a demographic that both responds well to advertising and is often quick to part with its cash .  In particular, green brands have used younger shoppers' idealism to their advantage - focusing marketing for sustainable products directly to the 25-34 age group.  However, a new study from ICOM Information & Communications, a Toronto-based target marketing company, suggests that older shoppers are more committed to buying green products than their younger counterparts.  The report drew its conclusions from a pool of 6,000 respondents and found that both male and female groups 55 years and older are above-average users of environmentally-friendly home goods.  

Interestingly, the 25-34 cohort fell into the "least likely to buy" category when compared to the national average.  Peter Meyers, marketing VP at ICOM, contends that older shoppers spend more time considering the pros and cons of products in the store - a tendency that could likely result in them purchasing products with which they identify on a personal and ethical level.  Is it possible that Gen Y is becoming more cynical with the bombardment of green messaging?  Meyers told Environmental Leader he thinks so, a fact which underlines the importance of authentic and trust-building marketing campaigns for both traditional and green products.

With the current economic downturn, it might be expected that shoppers would pull back on their spending - which could harm the often-pricier green products category.  However, over half (61.9%) of respondents indicate that they are still buying and using green goods.  Their main motivation?  Such products "make me feel good about myself."

We recently attended Branding for Sustainability, a workshop presented by branding firm BBMG, online news provider CSRWire, and strategy consultancy SustainAbility.  Hosted by NaturalPath Media partner Ode Magazine, the conference focused on developing successful corporate social responsibility (CSR) branding strategies.  Moderator and Ode Magazine Editor-in-Chief Jurriaan Kamp introduced a dynamic panel that included UC Berkeley Haas School of Business Professor Kellie McElhane, BBMG Founders and Principals Raphael Bemporad and Mitch Baranowski, and SustainAbility representative Chris Guenther.

For many companies, the branding and marketing of CSR programs are as valuable as the concrete CSR initiatives.  The panelists discussed a recent shift from consumer-driven CSR marketing to "branding as being," a strategy that recognizes the needs and aspirations of a values-driven human being, rather than of a consumption-driven consumer.  Responding to questions about the economic downturn's effect on corporate sustainability departments, panelists agreed that the economic incentives attached to practical CSR will help ensure its continued growth.

The success of a CSR branding campaign is largely influenced by its timing and scale.  Discussing Gap's CSR initiatives, Gap Senior Director of Strategic Planning and Environmental Affairs, Kindley Walsh Lawlor, cited the company's incremental steps towards social and environmental sustainability.  Interestingly, Gap subsidiary Banana Republic has quietly been insituting major changes to its product line, transitioning to fair labor practices and organic fibers.  When asked why Banana Republic has lacked a green marketing push, Walsh Lawlor iterated a theme echoed by other panelists and attendees - that CSR branding is far from an overnight process.  

Gap and others who prioritize the development and maintenance of a CSR strategy before the debut of glitzy marketing campaigns usually garner greater public support from a growing pool of conscious consumers.  As evidenced by the panelists' experiences, it makes sound business sense to mix lofty aspirations with concrete goals.  Such an approach allows companies to reimagine their performace metrics by applying the triple bottom line, while building social community around a branded product.  

In sum, CSR branding campaigns should serve as platforms and vehicles for advancing social and environmental best practices and products, and not as substitues for real corporate sustainability.  With a growing number of stakeholders in the CSR branding arena, it is likely that responsible branding will move closer to functioning as a business imperative.

According to a recent study from the Journal of American Medical Association (JAMA), higher levels or urinary BPA (Bisphenol-A) are linked to cardiovascular disease and type 2 diabetes.  BPA, by volume one of the world's highest production chemicals, is a toxic compound used in plastic packaging for food and beverages. Although BPA exposure may also occur via drinking water, dental sealants, and dermal absorption, plastic packaging accounts for the majority of BPA use.

The JAMA study cites that global demand for BPA is growing 6-10% yearly, an astonishingly high rate considering the availability of non-toxic and effective alternatives.  In an ideal world, we'd move away from excessive plastic packaging altogether.  Packaging reduction isn't as much of an imperative yet in the US as it is in countries like Germany, where consumers can return packaging materials to the store after purchase.  Regardless, a recent surge in the development of bio-plastics has led to a number of high-quality BPA-free products on the market.  

Online resources such as zrecs.com and bispenolafree.org help consumers identify BPA in common household products and offer a slew of non-toxic alternatives.  Big plastics manufacturers, including the North American Metal Packaging Alliance (NAMPA), have thus far hushed many critics.  BPA defenders include the FDA, the FDA's European counterpart EFSA, and - unsurprisingly - the plastics industry.

While it is up to the consumers to choose BPA-free plastics over their toxic counterparts, eco-plastic manufacturers and marketers must make their products more prominent in the marketplace.  Mainstream marketing campaigns, increased production, and more shelf space will help give safer products a crucial edge - so long as consumers know what, where, and how to buy BPA-free.  

Related: Environmental Leader

Recently-launched WorldofGood.com by eBay is a new and unique e-commerce site dedicated to eco-conscious and ethically sourced products.  With more consumers considering environmental and social impacts before making purchases, WorldofGood.com offers shoppers a multitude of information about each product.  Items are rated with a nutrition label-like system - showing the social and environmental impact each purchase makes.  

The products are certified by third parties such as Oakland, CA-based TransFair USA, which guarantees both that producers (farmers, artisans, etc.) are compensated farily and equitably for their work, and that environmental standards are satisfied.  Products range from foods and beverages to handicrafts, allowing socially- and environmentally-aware shoppers a wealth of items.

WorldofGood.com debuts at a time of serious growth for the $209 billion LOHAS industry.  According to the Natural Marketing Institute (NMI), the LOHAS products market will likely exceed the $400 billion mark by 2010.  In a recent report, NMI and Nielsen found that 81% of LOHAS consumers purchase producs labeled 'organic,' and may spend up to four times as much on eco-conscious products as non-green consumers.  

Robert Chatwani, WorldofGood.com general manager, adds that the site enables shoppers to "purchase socially responsible products with confidence."  The ability to tailor one's purchases according to specific environmental and social criteria will likely be popular with the values-driven LOHAS segment - and provide a new opportunity for online green marketing.

With 7.4 billion greeting cards sold in America last year, the greeting card industry is responsible for enormous paper use.  Although e-cards represent a growing niche within the greeting card industry, traditions and personal preferences will likely insure the continuation of a sizable market for paper cards.  Environmental concerns and growing consumer interest in green products have prompted an increase in eco-friendly greeting cards and card recycling/reuse programs.

Texas-based CardsDirect offers recycled content greeting cards, and last year pioneered a card recycling/reuse program.  CardsDirect requested used and unused greeting cards from its corporate clients, and subsequently refashioned the cards for future use.  After receiving positive feedback from customers, the company plans to continue and grow its recycling/reuse program over the next few years.  Additionally, they plan to expand their inventory of recycled-content greeting cards.

Large greeting card companies, such as Papyrus and Hallmark, offer customers many green card options.  Hallmark recently partnered with Wal-Mart to unveil a line of low-cost, eco-friendly greeting cards.  Sold under its Connections brand, Hallmark’s new cards are comprised of fifty percent sugar cane pulp and fifty percent recycled paper content.  At 94 cents each, customers can indulge in a variety of eco-conscious greetings.

As in many industries, both large corporations and niche players in the greeting card industry are paving the way towards a larger selection of green greeting cards.  With high rates of deforestation worldwide – not to mention a growing number of concerned potential customers – it is likely that interest will continue to grow in environmentally-conscious paper greeting cards.