Birds Eye View

The (unintended) impact of purpose-led brands

By Rebecca Bedding, Senior Account Manager 

As part of this series looking at opportunities and learning between the commercial and charity sectors, we couldn’t let the chance go by to focus in on the brilliantly disruptive growth in purpose-led brands in the commercial sectors. In the past 10/15 years we’ve started to see a tremendous 180-degree turnaround from mostly 100% profit-driven brands to a renewed focus on how companies can balance profit with purpose.

If you’re wondering what I’m talking about – take a wander round your house right now. Who Gives a Crap loo roll in the bathroom? Tony’s Chocolate in the kitchen cupboard? Or perhaps you have some TOMS shoes waiting to slip on at the front door? These brands all have ESG goals (environmental, social and governance) baked into their company mission and strategies. Alongside profit there is always a higher mission – a purposeful goal whether it be sustainability, ethical supply chains, mental health. These companies all list ‘impact’ on their website as highly as charities do.

The growth we’re seeing is incredible; between 2019 and 2020, new companies led by ESG missions more than doubled (Bain). Not only that, they’re actually succeeding; brands scoring highest on sustainability have up to 10 times higher revenue growth than traditional brands and 7% of purpose-led brands are reaching more than $50mill in revenue, compared to 4% for consumer packaged goods overall (Bain).

I worked in the charity sector for almost 10 years and, having had such a passion for movements for change, this growth in true purpose and mission is wonderful to see. How can companies wanting to do better be a bad thing? But on each charity marketing strategy SWOT, you wouldn’t be surprised to see ‘rise of purpose-led brands’ sitting firmly under ‘T’ (threat). In the charity/commercial Venn diagram, it’s easy to predict a continued increase in overlap between the two, until we reach a stage where there isn’t much distinction between the two. And, although wonderful, it’s understandable that charities may be asking themselves how they can ‘complete’ with these encroaching commercial budgets and levels of awareness.

The reality is that it’s frequently charities that purpose-led brands are partnering with and channelling funds through – charities at the heart of fixing societal problems, with the expertise and experience to make true impact. It makes sense, it’s a great way of working and purpose-led brands provide a great route for consumers to these causes. But these companies also have a brand to promote. As we see this merging of sectors, is there a risk that charity share of voice declines and we see those at the very heart of solutions drowned out?

In addition to this, consumer insight shows us that younger audiences are often looking for greater value exchange when interacting with brands. Purpose-led companies provide consumers with an opportunity to bake ‘doing good’ into their everyday behaviour. I can buy a really nice Patagonia jacket and know it’s ethically made and know they’re helping to change the traditional retail model and 1% of my money goes to environmental causes. This value exchange conundrum is one that has been the subject of charity product strategies for many years now – there’s a risk of losing relevance if charities don’t diversify their product offering to meet the expectations of new audiences.

Not-for-profits do exactly what they say on the tin – typically 85/90% of a donation will go directly to a cause, with the remainder being invested in the staff, overheads and fundraising that will go on to raise the next 85/90%. It’s 100% impact, no profit. Their place in the market is unique and it’s valuable. But it’s clear that the innovative operating models of purpose-led brands, ones that will provide ways to make long-last and meaningful change, mean that they are (and should be) here to stay. A little competition never hurt anybody – even in a sector where we’re all striving for social change. So returning to that SWOT, let us talk about a couple of things that will lie in that ‘O’ column…

Purpose-led growth brings with it a chance for charities to develop partnerships beyond the current CSR model. It’s a chance to move beyond employee giving and ‘charity of the year’, towards shared value partnerships that create lasting impact. That unique expertise that exists in the not-for-profit sector, that in-depth knowledge of audiences and causes – this is unique value that purpose-led brands can benefit from. A great example of this is Macmillan’s partnership with Boots, one that allows them to share their cancer care expertise with in-store Boots employees – and at the same time, brings the Macmillan brand into Boots’ 2000+ stores. Strategic partnerships that are identified based on mutual, shared value means that organisations can work together to increase effectiveness – with the added value of increased awareness that charity partnerships often bring.

I mentioned earlier the need for not-for-profit product diversification, an objective that has spawned numerous innovation teams across the sector. This innovation drive has, in part, been triggered by an awareness of having to appeal to younger audiences as time goes on – the audiences mentioned earlier as seeking that ‘value exchange’. Having worked as part of these innovation teams, I’ve seen how much of an inspiration the commercial sector has become – over the years ‘market scoping’ became an activity that was no longer limited to looking at the third sector, but at commercial brands too. Competition encourages us to challenge what we already know, push boundaries and seek new solutions – I really hope we see this inspiration from both sides of the divide push organisations forward. It’s important that charities continue to carve their own space in the market, emphasizing their independent value – and it’s innovative thinking that will help them on this path.