In the competitive world of marketing, brands are always looking for ways to stand out. One strategy that has been used for decades is the employment of celebrity ambassadors to endorse products. The big question, however, is whether these celebrity endorsements truly boost brand value. Let’s delve into the facts, data, and examples to uncover the truth behind the glitz and glamour of celebrity endorsements.
Successful Case Studies
Under Armour and Stephen Curry
According to Forbes, Under Armour’s footwear segment grew by a significant 57% year-on-year in 2015, with its revenues increasing at a rate of 95% in the last quarter. This remarkable growth was largely driven by the launch of Curry’s signature basketball shoes, Curry One and Curry Two, in 2015.
To give some context, Curry is a four-time NBA All-Star and was named the Most Valuable Player of the Year in 2015. Before collaboration with Stephen Curry, Under Armour’s footwear struggled to compete with the already established footwear brands like Nike and Adidas. (Under Armour entered the footwear space in 2006) This collaboration has significantly elevated Under Armour’s brand presence in the athletic market and contributed to its financial success.
Info source: https://www.forbes.com/sites/greatspeculations/2016/02/18/under-armor-how-stephen-curry-helped-sell-shoes/
Nike and LeBron James
Nike’s partnership with LeBron James stands as another monumental success in the world of celebrity endorsements. Since signing with Nike in 2003, LeBron has become one of the most influential athletes globally, with his deal with Nike reportedly worth $1 billion. It is said that LeBron James brought in sales of $32 million from his Nike line. LeBron’s endorsement has helped Nike appeal to younger demographics and expand its influence in both sports and lifestyle markets, illustrating the profound impact of a well-aligned celebrity partnership.
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McDonald’s and BTS
In 2021, McDonald’s launched the ‘BTS Meal,’ a collaboration with the South Korean boy band BTS, across six continents and 50 countries. McDonald’s reportedly paid BTS over $8 million for this endorsement, even changing its signature red colour to purple, BTS’s theme colour. The campaign resulted in a significant sales boost worldwide and was hailed as an “earning surprise,” showcasing the power of well-executed celebrity partnerships.
Info source: https://www.sciencedirect.com/science/article/pii/S0148296323003090
Big Money for Celebrity Endorsements
Brands are willing to spend big bucks to get celebrities on board. For instance, the K-drama leading actress Song Hye Kyo, with 1.2 million followers, commands $480,000 per IG post and is estimated to make $3.2 million in 2021 from endorsements. Nigel Ng, the Malaysian stand-up comedian and content producer residing in the United Kingdom, is rumoured to charge around $25,000-$39,999 in the starting range for an event. Supermodel Amber Chia commands a brand endorsement fee of about RM80,000 to RM200,000 as per 2014 data. Meanwhile, our No. 1 badminton player Lee Zii Jia, allegedly made $400,000 a year with a 7-year contract with VICTOR. These hefty sums highlight the high stakes and potential rewards of celebrity endorsements.
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Factors to Consider in Celebrity Endorsement
While the benefits of celebrity endorsements are clear, there are several factors brands must consider:
- Attractiveness of the Celebrity: Celebrities who are widely admired can positively influence consumer perception.
- Credibility of the Celebrity: The perceived authenticity and trustworthiness of the celebrity play a crucial role.
- Value Matching: The alignment of the celebrity’s values with those of the brand ensures a coherent and believable endorsement.
Info source: https://brandingstrategyinsider.com/celebrity-endorsement-guide/
Controversial Aspects of Celebrity Endorsements
However, not all celebrity endorsements lead to success. Some can backfire due to various reasons:
Scandals and Negative Press
Celebrities are public figures, and their actions are often scrutinised. Scandals can tarnish their image and, by extension, the brand they endorse. For example, Kobe Bryant’s legal issues and Tiger Woods’ moral scandals negatively impacted their endorsed brands. Similarly, Kanye West’s controversial remarks led to the collapse of his deals, including the lucrative Yeezy line with Adidas.
Info source: https://core.ac.uk/download/pdf/10630752.pdf | https://hbr.org/2024/05/what-makes-a-successful-celebrity-brand
Credibility Issues
There have been instances where celebrities have lost credibility for not using the products they endorse. David Beckham faced backlash for not using the Motorola Aura phone he promoted. Additionally, over-endorsement by celebrities, such as Indian cricket team captain Dhoni endorsing too many brands, can dilute the effectiveness of their endorsements.
Info source: https://core.ac.uk/download/pdf/10630752.pdf
The Rise of Influencers
A new trend in the endorsement space is the rise of social media influencers. Unlike traditional celebrities, influencers often have a closer, more personal connection with their followers. While this trend is still maturing, it offers brands a different avenue for endorsements, often at a lower cost than traditional celebrity endorsements.
Risks of AI-Generated Fake Endorsements
The advent of AI technology has introduced the possibility of fake celebrity endorsements, created without the celebrity’s knowledge. This poses a new challenge for brands in maintaining authenticity and trust with their audience.
Misleading Claims and Ethical Considerations
There have been cases where celebrities endorse products with misleading claims. Advertisers, agencies, and endorsers need to take responsibility for ensuring that advertisements do not exploit consumer trust through false information. In markets like India, guidelines have been established to hold these parties accountable for misleading advertisements, particularly those targeting children.
Info source: https://www.business-standard.com/industry/news/sc-states-celebrities-influencers-equally-accountable-for-misleading-ads-124050701424_1.html
Conclusion
Celebrity endorsements can significantly boost brand value when executed well, as seen in the success stories of Nike and McDonald’s. However, the strategy is not without its risks and challenges, including potential scandals and the rise of fake endorsements. Brands must carefully select celebrities who align with their values and maintain credibility while also exploring new trends like influencer marketing. Ultimately, while the glitz of celebrity endorsements is appealing, brands must navigate this strategy with caution to truly reap its benefits.