Click and Easy

Online marketing deals can reap big benefits, but questions remain

As the holiday giving season reaches its height, the American Red Cross hopes to ring up

a $50,000 donation from Warner Brothers in exchange for the charity’s help promoting the video and DVD releases of The Perfect Storm.

The marketing deal — which began on October 31, the anniversary of the storm — is being carried out entirely online, with the Red Cross using its internal and external Web site to make employees and the public aware of the Warner Brothers site. The company site, which features howling-wind sound effects and video clips from the movie, highlights the Red Cross’s real-life efforts to provide relief to 3,000 families affected by the storm, and asks visitors to send a promotional e-mail message to their friends. In exchange, the company is donating 50 cents per message to the Red Cross.

While the promotion is small by the national charity’s standards — the Red Cross usually requires companies to pay at least $250,000 before it lends its name to an offline marketing venture — it provides Red Cross with a good test of Internet entertainment marketing.

The speed and relative ease of conducting online campaigns has prompted a growing number of charities to drop old rules and experiment with new ways to raise money through partnerships with companies.

Nonprofit groups are now “in the driver’s seat” when it comes to negotiating online marketing deals, says Alison DaSilva, vice president of Cone Inc., a marketing company that has just published a report evaluating charity fund raising on the Internet. “They’re recognizing that their logo, brand equity, and level of public trust are very valuable — so they’re more empowered to make decisions about what their role should and shouldn’t be.”

Complex Questions

Still, most charities are just beginning to sort out what questions to ask and how best to structure online partnerships, as well as how to identify and respond to the complex ethical and tax issues that can arise when promoting commercial causes.

Ms. DaSilva says charity interest in online marketing deals has picked up this year, in part because big-name bricks-and-mortar corporations have started to pursue such promotions.

The Bayer Corporation, for example, is running a promotion for the Carolinas Chapter of the Arthritis Foundation. The company is donating $1 — up to $10,000 — each time a visitor to its Web site for Aleve pain reliever clicks on a photo of a 4-year-old girl from Summerville, S.C., who has juvenile arthritis. The child’s mother is a volunteer with the local chapter of the Arthritis Foundation; her father, who works for Bayer, persuaded the company to do the promotion. In its first week, the promotion drew 7,500 clicks.

In addition to the traditional companies, charities continue to be inundated by requests from Internet-based companies.

There are “plenty of dot-coms out there hungry for the right nonprofit partner,” says Ms. DaSilva.

While some charities have been reluctant to collaborate with such companies for fear of tying their name to a business that might collapse, Ms. DaSilva says some potentially lucrative opportunities exist for charities large and small.

Inexpensive Tool

Share Our Strength believes it has found just such a deal with Freshnex, an online business that serves as a clearinghouse and delivery service for chefs who want to place orders with multiple specialty food vendors. The company donates $100 for every chef who signs up for the service and mentions Share Our Strength.

Ashley Graham, the charity’s director of online development, says the organization prefers deals, like the one signed with Freshnex, in which Share Our Strength is the sole charity beneficiary.

“We feel our brand is very valuable — we don’t want to dilute it by saying, ‘Click here, click here, click here,’” says Ms. Graham.

The charity also has online deals in which Wine.com and Omaha Steaks contribute a percentage of certain Internet purchases. These and other deals translated into $700,000 for Share Our Strength over the past three years.

“What we love about this method is that it’s one of the cheapest things we can do,” says Ms. Graham. “It’s literally the most efficient way to raise money.”

Charities involved in traditional corporate-marketing partnerships say such deals have sometimes foundered because nonprofit groups have been unable to devote the manpower or money required to get their supporters to take whatever action a company was seeking, such as using a specific credit card to make a certain type of purchase.

But with Web sites and e-mail, charities find they have an inexpensive and extremely fast way to tout a corporate marketing promotion to a large audience.

Proflowers.com says it seeks out partners that have a “robust” Web site and are willing and able to “disseminate information about us via e-mail or newsletters,” according to Karleen Wise, cause-marketing manager for the company. This year the online florist is repeating a promotion to donate 5 percent of the $49.95 purchase price of its “Touch of Home” wreath to the United Services Organization. Last year, the promotion was so popular that the company sold out of wreaths.

Still, charities are finding that simply flagging a marketing deal on their Web site isn’t enough.

The American Red Cross says it learned a valuable lesson from a Web promotion it conducted earlier this year. Venture Frogs, a venture-capital company that bankrolls Web start-ups, offered to donate a dollar to the Red Cross for every visitor who clicked the “Ribbit!” button on the company’s Web site.

The campaign brought in $756,132 for the Red Cross — but it could have made an additional $243,868 if more visitors had clicked on the site during the promotion, since the company had promised up to $1-million.

Heidi Seiffert, director of cause marketing for the national office of the Red Cross, says the charity is “getting much better at using e-mail and being creative” in reaching out to volunteers and donors to promote corporate marketing tie-ins. For The Perfect Storm, the Red Cross sent an e-mail message to all employees notifying them of the marketing campaign, following up with periodic postings on its internal Web site.

Technology Savvy

In some cases, company partnerships are prompting charities to become more savvy about technology.

TechnoServe, a Norwalk, Conn., charity that helps people in poor, rural areas around the world develop agricultural businesses, has just recently started hitting the phones to update its list of donors’ e-mail addresses so it can tell supporters how to take advantage of a promotion with Peet’s Coffee and Tea. The San Francisco company has pledged a total of $30,000 to TechnoServe and three other charities that support coffee growers and their families, and will match donations made by the company’s customers through its Web site during the Christmas season. The company will match up to $10,000 for each charity.

Mara Neville, TechnoServe’s communications officer, says that because Peet’s is highlighting each charity on its Web site, the promotion means that “we have the opportunity to reach people who’ve never heard of us.”

What’s more, the database of e-mail addresses will provide the group with “another way to stay in touch” with donors in the future, says Ms. Neville.

Too Commercial?

But the ease of online promotions has also renewed concerns among some people that charities may be getting too commercial.

Adam Corson-Finnerty, author of the book Fundraising and Friend-raising on the Web, says he is troubled by charity marketing deals such as the Red Cross’s promotion with Warner Brothers.

“When nonprofit groups start appearing to endorse commercial endeavors, I think that’s getting too far afield from their mission,” he says. “It’s nice that they can raise some money from it. But I don’t like the direction this is going.”

Mr. Corson-Finnerty says he believes donors will eventually be turned off by such promotions. His preference, he says, is for charities to simply provide a link on their Web sites to their corporate donors. “That’s about as far as I’m willing to go,” he says.

Internet-based partnerships can raise not only ethical concerns, but thorny tax questions for charities, says Catherine Livingston, a Washington lawyer. Charities that go too far in promoting a product may find that they will have to pay unrelated business income tax on money donated by companies. Not only do charities need to understand rules governing corporate sponsorships, but they also need to realize that the Internal Revenue Service hasn’t spelled out how those rules apply to the Internet, Ms. Livingston says.

One problem is that promotions that would have required a substantial investment of time and advance planning offline, can be accomplished in 10 minutes online, says Ms. Livingston. “Charities are getting offered a lot of stuff for nothing,” she says, and such offers can be hard to turn down.

Gain for Businesses

Just how prevalent online marketing deals become will ultimately depend on whether companies find them to be cost-effective. The answer to that question could soon become clear, since companies can figure out exactly how many people look at their messages just by reviewing logs maintained by their Web sites. And over time they can watch to see how often these people return to their sites, as well as how much they spend.

Ikea North America recently sponsored American Forests’ Global ReLeaf effort by promising to pay to plant a tree — up to 20,000 trees — for every 20 times a button is clicked on the charity’s Web site.

Of the 400,000 clicks on the American Forests’ Web site recorded during the month that Ikea sponsored the site, more than 22,000 people clicked on Ikea’s logo to reach its Web site.

John Zurcher, Ikea North America’s coordinator for corporate social responsibility, says the promotion provided “a very measurable way of seeing success” that he can present to managers. “I could see doing this on an annual basis,” Mr. Zurcher says. “We thought it was very positive.”