Strategy

14th September 2016

The Ins and Out of Celebrity Endorsement

by Howard Birch, Project Manager

David Beckham and Adidas. Keira Knightley and Chanel. George Clooney and Nespresso. Ozzy Osbourne and I Can’t Believe It’s Not Butter.

Certain brands are almost synonymous with their celebrity endorsers and in these cases (apart from I Can’t Believe It’s Not Butter, sorry Ozzy), are to the immense benefit of the brand.

Having a celebrity promote your product or service has become an almost certain way to build brand awareness, generate buzz and increase sales.

Sounds great.

However, whilst the potential gains are huge, brands need to be strategic when selecting with whom exactly to associate themselves with. As the celebrity’s image is a direct reflection of the brand, this can be a potentially risky game.

The positive impact of a celebrity endorsement has been demonstrated by research from Marketwatch which indicates that a simple announcement that a celebrity is coming on board can lead to stocks rising and sales increasing by 4%. This is just from the announcement, before the full campaign has even been rolled out. In addition, a study by Harvard Business School indicated that a big name endorser increases a company’s sales by over $10 million annually.

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The Holy Grail of celebrity endorsement has to be Nike and Michael Jordan. Prior to signing up MJ, Nike primarily sponsored tennis and track athletes but were looking to venture into further markets; so they signed up the hottest upcoming basketball player in the world sport. It turned out to be a match made in heaven as Michael Jordan completely and seamlessly embodied Nike’s core values; high performance, innovation and inspiration. It resonated massively with consumers and suddenly everyone wanted a pair of Nike Jordans. Currently the Jordan brand takes 75% of the basketball shoes market and contributes to a massive 10.8% (1 in 10!) of the overall shoe market in the States.

The Nike-Jordan partnership has now become its own multibillion-dollar subsidiary company, Air Jordan. Which is a serious amount of revenue for Nike and Jordan.

The rewards are not just financial. As the examples from the start of this piece demonstrate, they can help brands stand out from the clutter and remained engrained in our memory; we are more likely to remember Gary Linekar wolfing down a bag of Walker’s Crisps than some random punter. I would bet you a bag of Cheese & Onion that you could name a range of celebrity endorsements off the top of your head.

Celebrities can help brands boost sales, generate excitement and become front of mind for the consumer… so signing one up to endorse your product/service is surely a no brainer, right?

Well, not quite.

As mentioned above, a brand is a direct reflection of the celebrity who endorses it. I think you know where I’m going with this. Like every human, celebrities are vulnerable to mistakes and unpredictable behavior that can have a damaging impact on brand image. Whilst on one side you have the David Beckhams, Scarlett Johanssons and Michael Jordans of this world, on the other you have the Oscar Pistoriuses, Maria Sharapovas and Lance Armstrongs. If a celebrity scandal comes to public attention then this has a (sometimes hugely) negative impact on the brand. By sponsoring a celebrity, the brand will appear to be supporting this behavior and will thus be criminal by association.

This isn’t the only risk; sometimes celebrities just simply don’t fit with the brand they are supposed to represent. This makes it an unrealistic association and the credibility of the brand can be damaged. An extreme case maybe, but to demonstrate the point, you wouldn’t have Ricky Gervais as the face of Maximuscle.

An example of this is when Sarah Jessica Parker signed as the face of Gap when Sex and the City was at the height of its popularity. Instead of seeing Sarah Jessica Parker, they saw Carrie Bradshaw (her character in the show) and related her with luxury high end fashion. So, when she suddenly appeared on adverts wearing Gap style clothing, the association didn’t resonate with the audience – people saw it as unrealistic and she was consequently dropped. Since then, Gap have used celebrities that would appear to be more likely to wear their clothing range (such as Joss Stone).

Temptation and logic may suggest that when selecting a celebrity to endorse your brand, choose the celebrities with the most fans. More fans = more publicity = more consumers = more sales. However, as mentioned above, even with the most popular celebrities, there needs to be a synergy between them and the brand otherwise it may cost even more in lost revenue and PR fees, confuse/alienate customers and end up with the brand losing credibility.

So, as opposed to just jumping at the latest ‘in’ celeb, celebrity endorsements need to be approached carefully, thought out strategically and used effectively/with relevance in order to reap the full benefits.

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The key word is relevance.

Brands need to be associated with celebrities that stand for a similar meaning and share the same values. In an ideal world, the celebrity and brand will have a similar vision. Going back to the Michael Jordan example, he lived and breathed the whole Nike mantra.

A current example of a brand using relevance and synergy to make huge gains in market share is the sportswear brand Under Armour. Celebrity endorsement is a key tool in their growth strategy. Sid Jatia, Vice President at Under Armour stated “we are firm believers in athletes overcoming the odds and we only sign up stars who can fit into that messaging. They have to reflect the journey that the brand is going on. Being the underdog and growing to be the best”. This has allowed them to target athletes accordingly and has propelled them to the 2nd biggest sportswear brand in North America, ahead of Adidas. Some achievement.

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Guaranteed headlines, increased consumer interest and brand awareness means that the use of celebrity endorsement is almost irresistible to brands who can afford it. However, the choice of celebrity needs to be carefully considered and strategized – not just chasing the latest biggest name. The unpredictability of human behavior means that this will always be a risky game. However, with the correct strategic approach and sufficient financial backing, the evidence shows that this is a game worth playing.

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Howard Birch, Project Manager

The Ins and Out of Celebrity Endorsement

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