Raking in the Green: How going green is going from trendy to profitable

Earth Day 2009 was a couple of weeks ago now, but the buzz around "going green" is still alive and well. Last week I counted that, during a commercial break from "˜My Name is Earl,’ 4 of the 5 ads I saw contained a green message or promotion.

In online advertising too, we at Compete have seen companies embrace green advertising across the board. All four major wireless carriers are currently heavily promoting paperless billing initiatives (my personal favorite: att-satisfaction.com). Motorola took going green one step further this year by introducing the Renew, a new cell phone made of recycled materials that uses sustainable manufacturing practices. When it launched, the Renew captured 6% of T-Mobile’s total handset interest, which is more than double that of the average T-Mobile handset at its price point. Still, most corporations have historically claimed that changing materials, manufacturing routines and shipping practices is too expensive and doesn’t add value for consumers. So what is changing? Why are companies starting to embrace going green?

It turns out that companies may not have to make a choice between helping the environment and increasing profits after all. As part of our quarterly Online Channel Effectiveness product, Compete surveyed over 900 wireless shoppers and asked them about their shopping and buying patterns. With regards to green products, we asked survey takers if they would be willing to pay more for consumer electronics products that were "green."

As you can see, 59% of shoppers told us that they would be willing to pay extra for green CE products, and 10% offered to pay 50%+ more. Moreover, this survey was conducted during Q1, when most respondents were likely weighing the weak economy and their own economic circumstances in their answer to this question. You might be thinking, "but wait, everyone says they want to be green, but nobody actually pays for it". Well, even if half of this 59% spends just an extra $1 on their next cell phone, companies would generate an extra $32M annually (roughly 30B cell phones are sold in the US every quarter).

So how can companies capitalize on this desire to go green? Appealing to consumers’ desire to be environmentally-friendly and save money are not necessarily mutually exclusive. Marketers have been successful at getting shoppers to pay more for environmentally-friendly products by clearly articulating what other savings the customer gets that should offset the higher purchase price. For example, high-rated Energy Star appliances typically cost a premium over comparable items but earn that money back in reduced utility usage. Similarly, replacing household light bulbs with compact fluorescent ones saves both electricity and having to replace the bulbs every year or so.

And that’s not just good for the environment — that’s good for business!