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?