News & Views

Ethics. Inc


Doing good has become a fundamental part of good business practice by brands. But can you really put a price on 'purpose'?

I don't know about you, but I chose a career in advertising  because I wanted to give back to society. Forget the Peace Corps or the United Nations. What better way to add value to people's lives than by making ads, eh? 

If you have one sceptical eyebrow raised, I don't blame you. Adland is, after all, better known for its profligate award  ceremonies than its philanthropy. But all that is changing.  Doing good is no longer seen as incompatible with doing  good business, and, as the importance of 'purposeful', 'meaningful' brands entrenches itself in business philosophy and practice, the marketing world is adapting accordingly. 

Before getting into how marketing is adapting, however, a few statistics. First, the bad news: according to Havas' 2013 Meaningful Brands survey, most people around the world wouldn't care if 73% of brands disappeared overnight. 

Across the US and Europe that proportion is a massive 92%. So how does one get to be part of the small percentage of brands people do give a damn about? For a start, be as accountable to the community as you are your shareholders. 

Nielsen data from 2012 shows that 66% of consumers prefer to buy from companies that have implemented programmes to give back to society. 

Give back and, it appears, ye shall receive. Indeed, ye may even receive a Grand Prix. At this year's Cannes Lions, an extraordinary 12 Grand Prix, across 17 categories, were awarded to executions with a societal or environmental cause. 

While a bunch of Lions may result in agency pride, shareholders tend to look past trophy results and zero in on cold, hard, non-animal-shaped numbers. Luckily, I have a few of those for you as well. According to the Ethisphere Institute, the World's Most Ethical Companies, as decided by a proprietary rating system called the Ethics Quotient, outperformed the S&P 500 (a broad index of stocks designed to be a leading indicator of the US economy) by 7.3% each year from 2007 to 2011.

A 2012 study by Millward Brown and former Procter & Gamble global marketing officer Jim Stengel on the world's 50 fastest-growing brands also found a relationship between a brand's ability to serve a higher purpose and its financial performance. Investment in these companies - humbly dubbed the 'Stengel 50' - over the past decade would, apparently, have been 400% more profitable than an investment in the S&P 500.

My own statistical analysis, which I call the Arwa Index™, demonstrates that by this point about 87% of you will be somewhat befuddled. You may, for example, be wondering  how Havas' meaningfulness methodology differs from the Ethisphere Institute's Ethics Quotient and how these compare with the variables that decide which companies make the Stengel 50. You might, at this point, also be percentaged out and feeling somewhat sceptical. After all, as we know, there are lies, there are damned lies, and then there are 'advertistics'.

But I don't mean to be dismissive of the surveys, statistics and hypothetical financial forecasts I have just cited. While one may quibble with the veracity of individual figures, together they add up to compelling evidence that standing for a higher purpose than the bottom line has become a competitive advantage for brands. And by 'standing for a  purpose', I mean standing for it across every facet of your business, incorporating a sense of purpose into your overall business strategy. 

The importance of taking a holistic approach to social good can be seen in the controversy that brewed up around Starbucks last year. Starbucks has extensive community programmes and is vocally committed to ethical sourcing. It is, however, also an enormous conglomerate that avoided paying any corporation tax in the UK. Technically speaking, there was nothing wrong with this: the company avoided tax, it didn't evade it. 

However, as Starbucks was told during a parliamentary public accounts committee hearing: 'We are not accusing you of being illegal, we are accusing you of being immoral.' Those accusations were not just levelled in governmental buildings. A Starbucks Twitter campaign to 'spread the cheer' of Christmas spectacularly backfired when it was bashtagged with suggestions such as: 'Hey #Starbucks, PAY YOUR FUCKING TAX #SpreadTheCheer.'

One company that has significantly invested in a holistic embrace of purpose is Unilever, which launched its Sustainable Living Plan in 2010, embedding social  purpose into its brands and committing the company to a ten-year journey towards sustainable growth (see case study, Contagious 35). This commitment appears to be paying off. 

The Titanium Lion-winning Dove Real Beauty Sketches campaign tackled women's self-esteem problems in an elegant, on-brand way and is the most-watched online video  ad to date. Meanwhile, Unilever's Lifebuoy soap brand is aiming to change the hygiene behaviour of 1 billion consumers across Asia, Africa and Latin America by promoting the benefits of hand-washing with soap. Much of that handwashing, the company is betting, will be with Lifebuoy. Indeed, the soap has already achieved double-digit growth between 2010 and 2012. Unilever is, quite literally, cleaning up. 

It is no longer enough to tack on a bit of do-gooding alongside your core business objectives; today's companies must go a lot further. But this doesn't mean brands need to start becoming a new United Nations either. Rather, if a business is going to make 'purpose' profitable and 'meaningfulness' mean anything, it has to understand what elements of its brand positioning naturally align to a wider societal cause, in the same way that Unilever has. Brands must now, as Gandhi didn't quite say, be the change they wish to sell in the world.

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Arwa Mahdawi is strategy director, Contagious North America