Do Celebrity Endorsements Outweigh The Risks?

“Everybody lives by selling something,” wrote Robert Louis Stevenson, author of “Treasure Island.” Agents, CMOs and deal-makers will always get starry-eyed by the big names
of “celebrity” because brands love endorsements, and consumers buy into “celebrity.” Questions remain as to whether the international obloquy related to the Michael Phelps DUI crisis has dealt another devastating blow to celebrity endorsement. In light of the risks, is the celebrity endorsement deal still worth it?

Companies know there’s risk when they choose a celebrity-endorsement approach. Many have learned the hard way that it becomes a reflection of themselves; just ask Nivea, with its speedy capitulation of its Rihanna sponsorship in 2012 for being too wild and sexy, “Rihanna is a no go… I do not understand how to bring the core brand of Nivea in conjunction with Rihanna” according to Nivea’s CEO, Stefan Heidenreich. If you put a face to a name, the more likely you’ll remember it, and marketers know the same goes with hitching celebrities to their brands.

Recent studies of hundreds of endorsements have indicated that sales for some brands increased up to 20% upon commencing an endorsement deal. According
to Anita Elberse, associate professor at Harvard Business School, some companies have seen their stock increase by .25% on the day the deal was announced.

There is the issue of overexposure to consider. We receive more than 3,000 commercial images a day; our subconscious absorbs more than 150 images and roughly 30 reach our conscious mind. Therefore, practice has it that if you use
a celebrity-endorsement strategy, you dramatically accelerate the potential for your brand to reach the conscious mind of the consumer, especially given research from Weber Shandwick that finds peer endorsement trumps advertising.

So if word-of-mouth is the No. 1 purchase decision-maker, why are some CMOs displaying recalcitrance toward big names that can create so much brand buzz and peer recommendation? Are we witnessing the decline and fall of “celebrity”? It’s true that not every brand needs a celebrity — it has to be relevant to the brand and the consumer. More important, if there were a face for every brand out there, it would be a calamity.

On the upside, celebrity endorsement has the power to instigate and inspire, enlighten and enrage, entertain and edify the consumer. Its inherent benefits
are that it can be leveraged across multiple channel experiences (and potentially services), cuts through advertising clutter, creates a brand narrative and allows
for channel-specific optimization. Ultimately, celebrity endorsement is always worth investing in if you have the right person. It’s an expensive but easy option for companies, but it should be treated like a marriage with added creature comforts that make the partnership invaluable:

The opportunity to create new markets and/or tap into an activation base of fans: Such was the strategy behind Patrick Dempsey’s Unscripted men’s perfume for Avon.

The ability to spark sales by enticing consumers to learn more about the brand: LeBron James is one of the top paid athletes in the world and generates a brand halo.

The means to promote a unique, relevant and sustainable brand attribute that might be hard to attain otherwise: Nike’s rapid success in the golf category was chiefly because golfers wanted to lay claim to Tiger Woods when he was the number-one golfer in the world.

The option to build reciprocity into the partnership by supporting the celebrity endorser’s brand: David Beckham knows how to sell, and business publications praise his business smarts as he masters social media and expands his brand beyond music.

The grounds for innovating the product/service offering: Rihanna’s “Umbrella” song hit big at the Grammys a few years back, and her designs for Totes’ umbrellas hit big at the retailer.

timThe challenge to a preconceived notion: Recently Timberlake hosted the Wal-Mart annual shareholders meeting endorsing “I buy a lot from Wal-mart”.

The collaboration that can impact the business model of the partnership: 50 Cent’s ownership
of Vitamin Water sold to Coca Cola netting him over $200M.

All are sound criteria for a celebrity endorsement strategy, but the brewing split over the Michael Phelps DUI affair conflicts with an otherwise inviolable marketing convention: using celebrities to market the offer instead of featuring the product
or service’s value for consumers and the value that underpins their manufacture.

And what about the role and risks of social media? Celebrity endorsement is often stymied by constraints and contractual limitations; does leveraging social media represent the next evolution for celebrity endorsement and brand advocacy? 95%
of social-media users believe a company should have a presence in social media, which can get the brand into the conversation because social media enables consumers to adopt new behaviors.

CMOs need to incorporate these new behaviors into celebrity-endorsement strategies because social networks make up marketing’s most powerful media: recommendation. Though fraught with danger, social media’s potential for making celebrity endorsement a multi-platform juggernaut rests not with what happens inside it, but what it makes occur outside of it.

Horror and probes over the last few years demonstrate that celebrity-endorsement Moneystrategies are a scary, inherently unstable but essential marketing activity, as brand share is too strong an incentive to keep celebrity endorsement down. An estimated $50 billion is invested globally on corporate sponsorships and endorsements. While a majority of that is spent on sports marketing, “celebrity” plays a dynamic role.

The machinations over value and values are the debate of the industry. The bottom line: The more problematic high-profile celebrity endorsers, the better bargaining power for CMOs. CMOs understand the value of owning celebrity endorsement and using it to bolster the customer relationship. CMOs know that few brand-building strategies can deliver on the bottom line as much as celebrities, simply because the product will sell better. Newer forces are also fortuitously propping up the celebrity endorsement boom with B-, C- and reality-TV-listers constantly seeking new ways to blur the lines between commercial and entertainment worlds. Even C-listers like Nicole “Snooki” Polizzi
of “Jersey Shore” can lead to marketing triumphs.

U.S. celebrities show up in more than 15% of advertisements, according to Millward Brown, and the number is far higher in markets such as India (24%) and Taiwan (45%). So before we drown celebrity endorsements, let’s recognize that they’ve never gone out of vogue nor will they, because the rewards of relying on an endorser can far outweigh the risks.

What we search for in celebrities is not so far from what we search for in our friends.
The secret is to never trust an animal no matter how many legs it has.



Author: Dean Crutchfield

Builds Brands and Fixes Them When Broken

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