Should Social Responsibility be Selfless?

Should Social Responsibility be Selfless?

by David Hagenbuch – professor of Marketing at Messiah University –
​author of Honorable Influence – founder of Mindful Marketing

While people gave gifts to loved ones last month, the world’s largest pizza chain was providing presents to some very surprised recipients—other restaurants.  True, “it is more blessed to give than to receive,” but was Domino’s philanthropy actually aimed at putting itself on the receiving side?

As you may have seen in the 60-second spot from its feel-good campaign, Domino’s bought over $100,000 in gift cards from local restaurants and gave them to its own customers.

It doesn’t take much business background to know that the goal of an enterprise is to build market share for itself, not competitors.  Even Vickie Corder, one of the restaurant owners who appeared in Domino’s commercial, was astonished by the action: “I can’t believe one restaurant is buying another restaurant’s gift certificates.”

Why would Domino’s want to support its competitors’ sales by buying their gift cards, and even worse, giving them to its own customers, making them less likely to buy Domino’s pizza?  Some of the ad text suggests an altruistic reason:  “Domino’s wants to help the people and restaurants in our local communities.”

One might take that explanation at face value.  After all, the firm did fork over $100,000.  However, for a company with annual revenues of $4.37 billion and operating income of $801 million, $100,000 is immaterial.  There’s also some understandable skepticism–Why haven’t we heard before of Domino’s feelings of responsibility for other restaurants?

Instead, some of the chain’s social responsibility has looked more like ‘marketing gimmicks,’ such as its “Paving for Pizza” program, aimed at filling potential pizza-delivery-wrecking potholes, and its “carryout insurance,” guaranteeing free replacements for customers who inadvertently fumbled their pies.

The vast majority of people probably never had a poor pizza experience resulting from either of those issues and never will, so it’s realistic to suggest that in both instances Domino’s was making much ado about nothing, positioning for the free publicity that each unconventional campaign elicited.  So, is gifting other restaurant’s gift cards just another attempt to gain exposure through oddity?

The gift card campaign certainly seems like it could be another gimmick; yet, there are some notable differences, namely that COVID has put unprecedented pressure on restaurants, causing many to shutter their doors permanently.  In fact, Domino’s commercial mentions that “over 110,000 U.S. restaurants have closed since March 2020.”

That to say, unlike the exaggerated ideas of potholes pummeling delivery vehicles and consumers carelessly dropping carryout orders, the pandemic’s negative impact on restaurants has, unfortunately, been very real.

The ad also mentions a related phenomenon that COVID didn’t cause but did increase:  the use of third-party delivery companies.  During the height of the pandemic when most restaurants’ sit-down dining was paused, more and more people started getting restaurant food delivered to their homes and offices by providers like Grubhub, Uber Eats, and DoorDash.

grubhub uber eats doordash

Although selling food, whether for dine-in or delivery, seems like a good thing for restaurants, apparently the math doesn’t work well when third-party delivery companies are involved.  Irene Li, another restaurant owner interviewed in Domino’s ad, affirms the profit predicament: “[Third-party delivery fees] take a huge chunk of our bottom line; all of that comes out of our pocket and goes to them.”

Others have echoed her concern, including NPR, which reported that apps often charge commissions of 17% or more, in addition to delivery fees.  Likewise, the LA Times found that one local restaurant paid $35,000, or roughly a third of its annual rent, in delivery fees, which led the Times to recommend, “The next time you order takeout, call the restaurant [directly].”

Domino’s suggestion that delivery apps wreak havoc on restaurants’ bottom-lines is on-point; however, the pizza chain is also very well-known for doing its own deliveries.  Does that mean that Domino’s is selflessly looking out for others?  Not exactly.

Apparently, some of the many people who have grown accustomed to the third-party apps for food delivery have also used them to place orders for pizza, doing to Domino’s the same fiscal damage described above. In fact, another Domino’s ad has suggested such delivery difficulties, warning consumers that third party delivery firms charge “surprise fees,” but it will reward certain loyal customers who use its app with “surprise frees,” or, free food.”

Likewise, during an interview on CNBC’s Mad Money, Domino’s President and CEO Ritch Allision suggested that third-party delivery apps have, to some extent, stunted the company’s growth.

All this to say, by buying and giving away other restaurants’ gift cards, Domino’s has brought added attention to an issue that doesn’t just hurt its local restaurant competitors.  It also  bruises Domino’s own bottom line.

The question, then, becomes, Is it right for Domino’s to help itself while helping others?

Before considering the ethics of this query, it’s worth noting that Domino’s strategy does seem to be effective marketing.  The unconventional approach gains attention, and the corporate social responsibility builds goodwill.

What’s more, because delivery is both the focus of the ad and a key component of the company’s value proposition, the promotion is more meaningful and memorable.  When people consider Domino’s brand, the company wants them to think of food delivery, which the commercial accomplishes.

So, what about the marketing’s morality?  One consideration could be the amount Domino’s spent on the gift cards ($100K+) versus how much it’s paid for the ads.  Excluding  production expenses, U.S. television broadcasting costs alone, average about $115,000 per 30-second spot, which means the campaign’s promotional budget certainly far exceeded the value of the gift cards.

The extreme imbalance may make some rightly question the company’s motives.  Although Domino’s franchisees did assume some risk by giving other restaurant’s gift cards to their own customers, most people who eat out probably patronize multiple restaurants, making it unlikely that Domino’s lost business.  In fact, free gift cards may have led some of their recipients to reciprocate by buying more pizza.

All said, it’ hard to paint Domino’s promotion as selfless:  The company benefited from the tactics as did the other restaurants and those who scored the free gift cards.  So, is such mutual benefit problematic?

Most business exchanges result in win-win outcomes.  From the clothes we wear to the computers on which we type, we’re usually very glad we have those products and not the money we paid for them.  Meanwhile, the marketers are grateful for our money and don’t want back their products.

Mutually beneficial exchange, in commercial and noncommercial contexts, is a very good thing. Some may argue that such a philosophy shouldn’t extend to corporate social responsibility, but why not?

Several years ago, two colleagues and I conducted research in which we identified three unique types of corporate social responsibility: donation, volunteerism, and operational integration.  In the study we affirmed that helping others was very good, but implementing philanthropic acts that simultaneously furthered the economic goals of the organization was even better.  The positive response to this article and another like it suggests that many others share the same viewpoint.

The reality outside business isn’t much different.  When individuals give of their time, money, etc., benevolence in some form usually comes back to them.  The stories found in the Go Giver artfully describe that phenomenon.

Domino’s did a good thing by buying and giving away other restaurants’ gift cards.  Although it wasn’t a major act of corporate social responsibility, it was a meaningful one.  The fact that the philanthropy also benefited the pizza chain, doesn’t stop the strategy from being “Mindful Marketing.”


Marketing as Altruistic Problem Solving for Clients

Marketing as Altruistic Problem Solving for Clients

There’s a phrase I like that summarizes the way I think about advertising in regards to generating sales and solving business problems: The best way to kill a bad business is good advertising. It may seem counterintuitive but it’s true: what we do as advertisers never provides a single silver bullet or cure-all that can fix the problems that may be inherent to a company’s product or services. Advertising is often a major ingredient, but not necessarily the total solution because if effective advertising drives people to your business and the experience is not what they were promised, those leads are very likely to dry up and eventually disappear. 

When looking at a sales funnel, it’s important to take a step back as a business owner and be hyper-focused on filling the holes that are inevitably there, whether they be in the product itself, customer service, the customer experience, website, sales strategy, or anywhere else. Your sales funnel doesn’t have to be perfect, but the more holes you can plug within the funnel the better your results will be.  Advertising’s main purpose is to fill the funnel (yes, it helps the funnel in other ways, but awareness is its primary objective.) When you combine a more “watertight” funnel with a good method of filling it, you always end up with better results. 

Marketing and advertising are critical resources no matter what the business is. But they will only be one part of a reason that a company has success and never the sole reason. Think of it this way: the sales funnel is the engine in a car. Marketing & advertising are just one piece and if one piece is broken, the rest of the engine won’t function properly.

If there are issues within the sales funnel, spending more on advertising won’t solve a client’s problem. In fact, any good advertiser should refuse to increase ad budget if that money could be used to address costly holes in a company’s product, service, or process. Advertisers should be invested in the long game: if the money that would have gone to ad spend can be used instead to increase the client’s overall revenue, the client’s expenses won’t go up and they’ll solve critical problems. Once the problem is solved, additional attention may then be paid to advertising. 

Bottom line: advertising and marketing give you opportunities but it does not create success on their own. What you do for other people is baked into the fabric of your company and when you approach issues from a problem-solving perspective and develop products & services of a certain quality, marketing, and advertising open doors.

As advertising professionals, it’s morally right for us to share ideas and be frank with our clients about the issues that we see within the other components of the sales funnel. I refer to this as kind boldness. Even if those ideas don’t see an immediate profit for the advertising agency, everything works holistically. Sometimes, it’s about problem-solving alone. It’s also more enjoyable and easier to keep clients that you have these organic relationships with because insights and well-executed strategy make clients happy and feel like you are in their corner. 

At Ethic Advertising Agency, we believe that what we do is a vital, important service. We make trust and relationships the center of our approach to our partnership. We like to serve as an extension of our clients’ teams because when we are collaborating, we’re matching the DNA of the organization and that drives better results.  This often means, talking about solutions we don’t provide, and guiding companies to make what we believe is the best business decision even if it means they don’t use our services..yet…

This approach is inherent to our company’s identity. Often, we will take the time to do initial conversations without a fee because, while there isn’t always a financial benefit, there is a lot of value in helping and creating relationships. This is part of our culture and our own marketing strategy. We view our work not just as profitable but also as purposeful. It turns out, there are a lot of opportunities out there when you don’t expect anything in return.

When you put yourself out there as a giving thought leader, you make yourself a magnet and the more magnetized you are, the more opportunities you may have. The agency and its team have to open themselves up to those possibilities because it strengthens the business. This only works if you truly expect nothing in return and treat those situations as a pure gift, because the potential clients are giving you their time, and time is the most precious thing that we have. 

The time that you invest in these relationships may not be immediately profitable, but people are very willing to revisit your organization when they finally do have the budget and structure for advertising or if they can refer you to someone they know looking for the services that you provide. When you have that giving mentality and can provide the work and results to back up your altruistic attitude, success will come in one form or another. 

About Jeff Swartz

Jeff Swartz
Jeff Swartz

Jeff Swartz is the CEO and founder of Ethic Advertising Agency in Pittsburgh, Pennsylvania. Ethic is a hyper-targeted digital advertising and creative agency that specializes in video, animation, graphic design, and audio production. Digitally, Ethic also specializes in hyper-targeted programmatic (display, OTT, video pre-roll, digital audio), search engine marketing/pay per click, paid social media advertising, Google Grants, and native. 

Ethic’s mission is to be a catalyst for happy, profitable partnerships through advertising and creative solutions. They also bring a holistic strategic approach to the table and still recommend and buy traditional advertising mediums when appropriate. It’s all about doing the right thing for their clients.

Follow Ethic on LinkedIn here.