Exactly like how seeing global politics playing a big role when a tragedy like Beirut’s happens, it’s very common to see individuals and brands standing for or supporting a cause. Not too long ago, the Black Lives Matter movement took over the internet after George Floyd was brutally killed in the USA, and we’ve seen a lot of involvement from everyone in different forms and capacities.
Everyone of us as individuals has their own ways to support a cause, and we also have our intentions that lead us to do so; some of us are angry and just reacting, some are genuine about a cause, some have a personal story, and some are just trying to ride the wave for personal interest (i.e. look good, gain social media followers… etc.).
The Beirut explosion happened 9 days ago, it’s an unprecedented humanitarian crisis and the story is too personal to me for many reasons, that’s why I have decided to put a lot of energy to support in all possible ways, like many others who can’t do much from distance beyond collecting donations and creating awareness.
This time, due to my involvement in the Lebanese crisis, I’m naturally giving more attention to what’s happening around and closely watching the behavior of people, and more importantly, brands. During the first 3 days we saw a natural reaction from a lot of small businesses around the region, trying to help. A few days later, brands started to make their move, and I assume that it took them longer because there’s a process to launch an initiative in a structured environment.
As much as I’m not very interested in analyzing the behavior and intentions of individuals, I’m watching closely how brands are reacting, and how some of them took advantage of the mixture of the tragedy, people’s lack of awareness, and the emotional state of everyone. Before I continue with this, I have to say that I’m not against any form of help and I believe that any amounts will make a difference, but I’m against taking advantage of people’s misery and do the bare minimum to gain instant business wins.
Let’s start with the simplest example of the random apparel ads popping up on social media with a “Beirut”, “Lebanon”, or anything related to the cause printed on them. A business like this is encouraging people to buy stuff they don’t need for a certain price, which can be a premium sometimes, to make them feel good when they see that the proceeds are going to the Lebanese people. Transparency here is just the easiest question one can ask, as if Lebanon needed more corruption; but what’s the definition of proceeds? And why would a brand want me to buy their apparel to donate? Is this a marketing campaign or a humanitarian cause? If I pay 20$ of a t-shirt I’m just adding yet another useless piece of clothing to my closet thinking that I did well, but a few people understand that barely 2$ of the 20$ made it to the people I wanted to donate to? That if they made it.
Let alone the fact that these brands are spending money on social media ads to gain traction and get people to buy their stuff.
Unfortunately, the majority of people don’t understand that profit is not revenue, and that when a brand say “profit” it means a very small amount of money, it’s the number calculated after all the cost of running the business is subtracted from the company’s revenue. The term “proceeds” is even more confusing, especially that it could either mean profit or revenue.
Here comes my second set of examples, which triggered me to write this post.
A few days ago, a startup company posted about their “profit” being donated to Lebanon, it’s a very small tech company, and in the Bible of tech startups that company can’t be profitable. People who don’t understand financial terms will feel good about ordering their service and spreading the word about it, they don’t know that profit isn’t the order value. What did that startup gain out of this? Things like free marketing, new customers, and looking good as a brand. How much did they donate? No one will ever know, because profit is a confidential item in a company’s profit and loss statement, but it’s safe to say that it might be 0.
Yesterday, we saw 2 delivery companies launching a similar campaign, but this time they’re big companies. The question marks I raise about this campaign are very similar to the previous example in addition to the following; when 2 companies with the same owners launch such a campaign on the same day and at the same time, they’re basically sharing the market. Instead of spreading the campaign over 2 days, they achieved the look good goal by minimizing the effort.
Let me get more technical and question the way profit is calculated in this case; I believe that 4 hours of profit will not be calculated separately, because the overheads of these hours are just part of the overall running cost of the business, which also includes the average customer acquisition cost. Naturally the customer acquisition cost drops significantly in the case of a campaign like the one launched for Lebanon, given the virility of it, is this taken into consideration when the profit of these hours is calculated?
There are no accurate announced numbers about the percentages taken from restaurants by delivery companies, these are also confidential, but the average is around 20% in addition to USD 2-3 for delivery fees. For a 10$ orders the customer is paying 13$, of which only 5$ go to the delivery company and then the overheads are calculated. During my conversations with a lot of my friends yesterday, they didn’t know what profit meant. Let alone someone like me who cooks his own food, I would’ve donated these 13$ directly to the people in need instead of being fooled by such a campaign.
Too many wrongs in such campaigns, and the right is way too small to highlight. Our behavior as consumers should change and we have to start looking beyond our emotions to realize how we are being used.