Posted: March 18th, 2023

Â Celebrity Endorsement Strategy: An Investigation

Celebrity Endorsement Strategy: An Investigation

Using Nike’s relationship with Federer as an example, the paper analyzes the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy. Many industries promote their products by hiring the services of influential celebrities who advertise the products in question. The celebrity has to have various characteristics in order to be seriously considered as endorser. The company also has to take various steps to protect itself. The whole process of considering, finding, and finally hiring a celebrity is one that is done incrementally and thoughtfully with the whole, actually, occurring in four stages. Celebrity and brand are closely intertwined. Just as celebrity may profit the brand, the brand also effects the reputation of the celebrity. The company-endorser relationship, in other words, can provide potential benefits to both with both brand and endorser receiving increased attention and both benefitting from deal in various other ways. On the other hand, potential hazards include the fact that the endorser may overshadow the brand, may become involved in public controversy hence tarnishing the brand, and may be too expensive. Ultimately, research shows that the product has to be good to begin with and that

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The trend seems to be that celebrities are losing the appeal in marketing. A worthwhile product and ad will always attract notice regardless of endorsement. A poor one will fail for the same reason. Nonetheless, given the appeal of celebrities, it is likely that celebrity endorsement will always be around with their accompanying benefits and risks.

Part 1: Introduction: An example of celebrity marketing

Legendary art director, George Lois, mused that “enlisting a celebrity to sell cat food, an airline, off-track betting, an analgesic, or a lube job would seem to be a delusionary strategy fraught with irrationality. But let’s face it, it’s a star-struck world.” (The Finch Post. A Blog http://www.thefinchpost.com/2012/01/celebrity-endorsements1.html)

“Marketing” is generally thought of as a generic term, but, in reality, as Gilligan (2004) points out, “Marketing strategies are different for different cultures.” Marketing depends on many factors such as cultural aspects, religious aspects, living conditions of the individuals or the overall trends in society that exist during a particular time. In fact, marketing, by definition, means to ‘market’ a certain product — make it as attractive as possible, in order to persuade a certain target audience to buy it. Many industries, therefore, promote their products by hiring the services of influential celebrities who advertise the products in question.

A case in point is Nike’s employment of services of the famous tennis player Roger Federer in order to market their products in Switzerland. Federer is an internationally renowned personality name due not only because of his tennis achievements but also due to his overall involvement in many different charitable efforts and community efforts. Nike, too, is a famous organization and it hoped to leverage its branding by associating its image with that of Federer.

My aim in this essay in a general sense is to assess whether companies, like Nike, profit from hiring celebrities to brand their products. Nike’s hiring of Federer will be used as one of the recurring instances throughout in order to serve as touchstone for analyzing the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy.

Nike is a U.S. based multinational firm which deals in sportswear equipments. It is one of the world’s largest supplier of athletic footwear as well as a major manufacturer of different other sports equipment and apparel. Its total revenue is estimated to be around $19 billion, total operating income is more than $2.5 billion, its total net income is estimated at $1.9 billion, total assets are around $14.4 billion and total equity is more than $9.5 billion. Nike also has a total employee workforce of more than 34000 worldwide.

Nike is an example of one company out of many that hit for celebrities in order to market its products. It is arguable whether or not the trend is dying today, but either way, companies go to exorbitant expense and research to match just the right celebrity to their product or service and to ensure math the outcome is profitable.

The three questions that the company essentially asks are the following:

Do the celebrity endorsements programs increase the sales?

How to use the value generated by the celebrity endorsements

Are customers connecting the brand with the celebrity?

The following essay explores those points and intends to analyze the use of celebrity endorsement strategy of the brands beginning from choosing the right celebrity figures until the final results of the strategy.

Part II: Definition of the endorsement strategy

Marketing and Industry

The American marketing Association (AMA) has defined marketing as the “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.” (/Community/ARC/Pages/Additional/Definition/default.aspx. )

It can also be defined as “the process by which companies create value for customers and build strong customer relationships, in order to capture value from customers in return” (ibid.). In this way, marketing is seen as a concept where the organization seeks to maximize value for customers and shareholders so that it generates profit.

Industries generally spend millions of dollars in order to research customers’ desires and the predicted state of the market (Brown, 2010). In a related sense, they also spend millions of dollars in attracting clients to buy their products — in other words, in ‘marketing’ their products to companies. One of the ways that they do this is through celebrities since it is considered that celebrities will have more credibility.

Nike for instance wanted its Swiss clientele to buy their footwear. Organizations usually advertise their products / services through ‘branding’ which is repeated association of the name of their company with a certain desirable image. The image that Nike decided to associate its footwear with was celebrity. Switzerland is a very sports loving nation which is proud of its soccer team, and athletics team. Federer is a well-known tennis player, but to the Swiss he is particularly renowned not only for his sport but also for his philanthropic interests. The Swiss are generally keen to buy those products which are endorsed by him.

Nike took advantage of that fact.

The lure of celebrity marketing

Of all the markets that are attracted to celebrities none are more so than teens. To teens, celebrities are far more than ‘mere’ pop singers, fashion models, musicians, athletes, actresses, and so forth. They are icons, heroes, and role models. Celebrities can determine trends or destroy them and they can become the voice of the teen in a big way, becoming an important tool for teen-oriented marketing. As much as America is attracted to celebrities, teens are lured to them even more. Adolescent-based marketing therefore leverages celebrities in a big way (Zollo, 1999). In fact, the ones most caught up in celebrities, particularly in athletes are boys aged 12 to 15. Zollo (1999) discovered this when he tested a Nintendo TV spot for the company’s “Ken Griffey Jr. presents major League Baseball.” The company’s intent was to see whether the execution interested the boys. What they discovered instead was that the boys were hooked by the celebrity’s association. It was this, more than anything else that attracted the boys to the game even though Griffey Jr. did not even appear in the commercial; his father did.

Michael Jordan is an all-time favorite that has become indelibly linked with Nikes. Other products associated with Jordan include Gatorade, McDonald’s, Coca-Cola, Wilson, Wheaties, and Hanes. Regarding Basketball ball, you have Grant Hill, Penny Hardaway, and Kobe Bryant.

Music and sports as well as perhaps fashion gourmet, are the fields that attract the greatest amount of celebrity marketing. Of all celebrities, athletes and musicians are the preferred ones by teens followed by supermodel (preferred by girls). This is succeeded by TV and movie stars (Zollo, 1999). Nonetheless, sports stars, music stars, and models remain adolescents’ top choice and since celebrity marketing, generally, succeeds best in the adolescent sphere, these, generally, remain endorser’s best choice too.

III. Overview of the four stages in finding and hiring an endorser and evaluating the outcome

The whole process of considering, finding, and finally hiring a celebrity is one that is done incrementally and thoughtfully with the whole, actually, occurring in four stages as Figure * indicates.

Fig. 4. Four stages in finding and hiring an endorser and evaluating the outcome

DIMENSION

STAGE 1

STAGE 2

STAGE 3

Align celebrity endorsement with business objective

The first step is to cautiously test celebrity match

Create buzz

Objectives are cautiously formed

Some parameters / measurements are constructed for these objectives

Celebrity characteristics and business objectives are carefully aligned

Objectives and measurements are put into place

Measure and qualify performance

No measurement methodology

No benchmarks are set when selecting celebrity

Limited use of measurement methodologies

There is no feedback mechanism for measuring results

Company constructs methodology to measure effectiveness of celebrity endorsements

Feedback is communicated to stakeholder

Select and renew contract with celebrity

There is no selection process

No analysis done for contract renewal

Ad hoc negotiations

– minimal selection process

There is a well-defined selection process

Negotiation strategy is in place.

(Source: http://www.scribd.com/doc/37402292/BE-TP)

What you have here than in short is the first stage where no definite action is taken and the company cursorily becomes acquainted with the celebrity and decides whether or not to move forward. Frequently, the process tops just where it is with company and endorser parting on friendly, but non- businesslike terms.

In the second stage, the company cautiously proceeds to test whether celebrity may be a good fit, whether celebrity is interested; negotiations are casually mentioned; and objectives and measurements are tentatively formulated.

The last stage is the most serious of all, when the company actually hires the celebrity and conducts serious and drawn out negotiations regarding goal objectives, the contract, measurements to assess outcome, and results are conveyed to stakeholders.

The seriousness and deliberateness of the program is due to the significance of the decision. An exorbitant amount of money is placed in this — more than one celebrity has become a millionaire as an exclusive result of such deals. Aside form this, the company’s reputation rests on the celebrity’s reputation. The company takes various risks in selecting a celebrity as we will see later. This is no minor decision, and so the company assesses various factors before making its final selections.

Stage 1 -2: The Company’s cautious appraisal of Celebrity: Case History, Nike / Federer

Perusal of Nike’s project with Federer gives us an insight into how companies choose their particular celebrities that they will use to market their products. Nike has been interested in Switzerland as a prospective base of clients for the following reasons. Firstly, Switzerland has one of the highest household income levels in the world measuring around $42,600 per capita. It has a population of more than 7.5 million. More than two-thirds of its population lives in urban areas, and finally ts terrain includes mostly mountainous regions which would make it a great consumer of shoes / boots / skiing footwear that would be equipped to travel these regions.

When reviewing these mentioned facts, Nike usually points out that it Switzerland is a promising market for any firm to invest in since the overall consumer has more cash to spend as compared to most of the world.

Switzerland is also a sports loving nation which is proud of its soccer team and athletics team amongst which their key sports idol is the tennis player Roger Federer. Federe is so beloved by the Swiss that they are generally keen to buy any products that are endorsed by him. Finally, since Switzerland’s terrain is filled with mountainous regions the common Swiss prefers to have footwear which is more durable, something which Nike is well-known in providing.

These facts and other figures are enough to tempt any sportswear firm like Nike to invest in Switzerland and take advantage of its wealthy consumer market. Federer was born in Switzerland. He was a sports player and a beloved icon of the country. Nike and he seemed a perfect match. Nike went for him.

IV. Endorser Attributes

Each sector and product has different qualities. As we see form Nikes, Nikes chose someone who represented their values and facade.. They also selected someone who was attractive to their target population and was associated with the product that they intended to sell. Federer was the perfect match.

When selling to adolescents, advertisers generally choose a celebrity who is on the way up rather than someone who has already peaked his popularity due to the fact that teens are, generally attracted to someone who is new (Zollo, 1999). In 1998, for instance, the sports stars who were most popular with teens were, in order of ranking:

1. Jerry Rice

1. Kobe Bryant

1. Terrel Davis

1. Warrick Dunn.

The musicians most popular with teens were, in order of ranking:

1. Usher

1. Mase

1. Driu Hill

1. Missy Elliot (TRU Teenage marketing and Lifestyle Study, 179)

of all the sports fields, basketball is the most popular with teens, and celebrities there are particularly fawned over, Michael Jackson being a specific favorite. All-star running follows close behind as well as golf with Tiger Woods.

Individual sports such as tennis, track and field, ice-skating, boxing, and auto racing lack that appeal.

As regards acting, favorite celebrities seem to be comedians, as well as top-rated TV celebrities such as Will Smith who starred in “the fresh prince of Bel-Air.” Actors also have an added advantage for advertisers as compared to that of musicians and athletes: they can truly act.

Celebrity Selection

Nike went to great lengths to choose their celebrity. Federer seemed to have many appealing prospects. Not only was he Swiss, but he also was a celebrated tennis star — important for the Nike sneaker, and he was a Swiss icon. Federer too beamed the Nike vision, mission, and goals. He was a hero. He looked like a Superman. He was outgoing and courageous. And he had all the social values that Nike identified itself with.

Roger Federer, a swiss professional tennis player, has a string of merits to his name including the fact that he has held the ATP No. 1 position for a record 237 consecutive weeks from 2 February 2004 to 18 August 2008. He has also been ranked number 1 for a total of 285 weeks, and as of 19 March 2012, was ranked World No. 3 by the Association of Tennis Professionals (ATP). (CNN. 6 July 2009. )

He has captured 16 grand slam singles title, one of 7 males to win the career Grand slam, and one of 3 players to do so whilst playing on three different surfaces (BBC Sport. 7 June 2009. ).

He is the only male player in tennis history to have reached the title match of each Grand Slam tournament at least five times and to have made the final at each of the nine ATP Masters 1000 Tournaments.

It is not only the Swiss who idolize him. Many sports analysts and tennis critics rate Federer to be the best tennis player of all times (e.g. Jago, Richard (5 June 2009); Barnes, Simon (8 June 2009). )

He has appeared in an unprecedented 23 career Grand Slam tournament finals . Other records of his amazing career include the fact that he has also won the highest record six ATP World Tour Finals and a record 19 ATP World Tour Masters 1000 tournaments. (. BBC Sport. 4 July 2009. )

During that same period that he advertised for Nikes, Federere won the Olympic gold medal in doubles at the 2008 Summer Olympic Games. He has won various awards and was named the Laureus World Sportsman of the Year for a record four consecutive years (2005-2008). His tennis prowess has led to him being called the FedExpress of tennis.

Federer also epitomizes the sustainability and social activism that Nike attempts to become associated with. By linking itself to Federer’s name, Nike beamed a halo of philanthropy and good will around its own name.

Roger’s philanthropic activities are renowned and commended. In 2006, he won the Arthur Ashe Humanitarian of the Year Award, and in 2011, he was voted the second most trusted and respected person in the world, second only to Nelson Mandela ( Times LIVE South Africa. 21 September 2011. )

Federer established the Roger Federer Foundation in 2003 to help disadvantaged people and to promote sports, (“Roger Federer Official Website. 28 May 2004 ) whilst in 2005 he auctioned his racquet to aid victims of Hurricane Katrina. UNICEF appointed him a Goodwill Ambassador in 2006, and Federer has also visited tsunami-torn, famine-ravaged, and war-scarred lands. He has also spoken out about AIDS and established Hit for Haiti in 2010 where proceeds from playing went to earthquake victims in Haiti. Similarly, Federer established Rally for Relief on 16 January 2011, to help victims from the Queensland floods ( Tennis Australia. 16 January 2010. ).

Federer is number 25 on Forbes top 100 celebrities

The Four main qualities of a celebrity

Brands before they sign onto a celebrity generally consider four main qualities:

1. Attractiveness of a celebrity – The more attractive the celebrity is to the target audience, the more his attractiveness will wipe onto the brand. The endorser should be attractive to the target market in characteristics that include physical appearance, intellectual capabilities, athletic competence, and lifestyle.

2. Credibility of the celebrity: the target market has to trust the celebrity particularly since the field is so cluttered with celebrities whose credibility is disputable. Credibly here implies perceived expertise and trustworthiness.

3. Meaning transfer between the celebrity and the brand: There has to be compatibility between he brand and the celebrity, as instanced between Nike and Federer. Match has to exist in terms of identity, personality, positioning in the market vis-a-vis competitors, and lifestyle.

4. Popularity of the celebrity: And particularly popularity to the specific age and population that the company is targeting. Madonna, for instance, may not be as popular to a 12-year-old boy interested in sports as Tiger Woods may be. Generally, as we will see later, it is those who are at the start of their career (the up-and-coming) who are more appealing.

Analyzing these four characteristics with the following image of Jackson and Pepsi we see how Jackson image: Pepsi’s failure?

Firstly, Jackson, as up and coming, was popular with his audience. Secondly, at the time, Jackson had credibility. Jackson was also attractive and charismatic. And fourth and most important, Jackson mirrored Pepsi’s originality, innovation, wildness, and sparkle. Unfortunately, Pepsi was not aware of Jackson’s future. Throughout Jacksons’ 10-year commitment with Pepsi, he became eth richest pitchman ever. Pepsi earned $7.7 billion in sales as a result of Jackson’s assisting with the Pop whilst Jackson earned tens of millions of dollars. When allegations of child abuse however surfaced, Pepsi instantly sundered their contract with Jackson and both celebrity and drink lost its fizz.

In short, it is not always easy to find a celebrity who fits all three components. Nike was lucky in terms of Federer. Most times, companies have to settle for one component in preference to the others.

In short, the celebrity — Federer in this case, has to possess the four key characteristics mentioned below in Figure *. Possession of them and completion of negotiations that are acceptable to both parties’ results in the finale: celebrity is chosen by company as endorser.

Fig. *

(*http://www.isrj.net/August/2011/Commerce_IMPACT_OF_CELEBRITY_ENDORSEMENTS.html)

Stage 4: The contract and benchmarks: The 10 commandments of the Selection Process

Celebrities may become so huge that they may swamp the product and, like Dracula, consume the company. The company, therefore, has to protect itself with following ten precautions:

1. Consistency and long-term commitment: celebrity should maintain a devotion to the brand and should become associated with it in viewer’/s mind. It is, therefore, important that the company sign up a long-term commitment with the b endorser. Nike, for instance, signed up with Federer for more than a decade.

2. Three prerequisites to selecting celebrities: Celebrities before being signed up need to have, to as optimum as possible, the following three qualities:

a. The endorser should be attractive,

b. have a positive image in the society, and

c. Be perceived as having the necessary knowledge

3. Celebrity — brand match: Celebrities should provide as much as possible a match between the brand characteristics (mission, vision, and goals) and between their own personality in order that the their identity should reinforce desired impression of vaunted characteristics of the brand

4. Constant monitoring: companies should constantly monitor possible negative actions, public image, and behavior of celebrity so that they not are unpleasantly surprised and that their image should not be tarnished. One of the ways that they can do this is by carefully and thoroughly crafting their contract with endorser keeping possible negative behavior in mind and creating clauses that can deal with this.

5. Selecting unique endorsers: Companies should try to bring on board endorsers who do not endorse competitors’ products or any product of another company so that endorser is lined in viewers’ mind as unique to this product. It may be that the company may have to pay endorser a magnanimous amount of money to do so, but for some companies such as Nike, it is worth their while.

6. Timing: The celebrities in their formative years are the most appealing for companies. Companies should be constantly on the lookout for such celebrities and jump on them before others do.

7. Brand over endorser: it may well be that the celebrities’ reputation can overshadow that of the brand resulting in thwarted outcome for brand. The company can prevent this by formulating advertising collaterals and other communications.

8. Celebrity endorsement is just a channel: Companies should realize that celebrity marketing is not the end all of the marketing, rather it is one spoke of the communication mix that falls under the broader category of sponsorship marketing.

9. Celebrity ROI: it may be difficult to measure the celebrity’s impact on the profit outcome of product. Companies can, however, attempt to do so by synthesizing quantitative with qualitative marketing. They should do so in order to assess whether hiring of celebrity was profitable and whether it should or should not be repeated.

10. Trademark and legal contracts: Companies should ensure that celebrities are hired on proper legal terms

Most importantly, celebrity marketing is but one mix of the marketing and branding process as a whole. When companies realize that there is just one channel of many and that all must be polished to the maximum and used in synthesis, then the 100 commandments may be feasibly followed and companies may achieve the same cutting edge success with celebrity endorsements that Nike did.

The 10 commandments can be presented in a visual and condensed form in the image below:

(Source: Branding Strategy Celebrity Endorsement Guide http://www.brandingstrategyinsider.com/2010/10/celebrity-endorsement-guide.html)

Celebrity endorsement runs through the middle. Tagging of on it on either side are the conditions of the contract. Both celebrity / endorser’s popularity and, consequently, marketing of the product’s success depends on the extent to which celebrity manages to meet these 10 conditions.

Brand-Celebrity Attribute Suitability matrix

Not every company evidences success with its endorser. In fact, as the following figure shows, companies can adopt one of four stances with their endorsers. They can:

1. Monitor and evaluate — namely take a cautious stance and assess outcome of buzz to see whether they should retain endorser.

2. Grow and partner endorser — train him and make him a part of their company

3. Keep and enhance endorser — a reinforced level of the attitude of # 2,or — to the opposite extreme

4. Eliminate or avoid endorser — Generally occurring when endorser embarrasses them with some disreputable behavior on his part or when endorser fails to keep contract (for instance).

Fig. The Four Company-Endorser Attitudes

The consumers have to make the fit between the brand and the celebrity at all times. If the fit between product and celebrity is slow, the company voids the endorser.

When the celebrity’s match with brand is high, but his other characteristics are somewhat questionable, the company adopts the “Keep and enhance” stance where the company identifies opportunities that up — and -coming celebrity can best step in to promote them and it enhances his characteristics in order to do so.

If the reverse situation, however, exists where company is unsure of celebrity’s compatibility to their product or service, they adopt a “Monitor and evaluate” stance.

Finally, when the celebrity has both characteristics, namely he is a perfect match of company and has the other 3 required qualities, company then adopts the “Grow and partner” stance as in the case of Federer and Nike where Federer was retained for 10 years.

The Case History of Nike and Federer: the result of the Partnership

Analysis of Nike’s incoming profit during the years that it hired Federer seems to indicate that Nike may have benefited by hiring the tennis star. By the end of 2007, business analysts widely remarked that Nike seemed to have expanded their global reach. 60% of its sales came from outside the U.S. And unlike most companies, Nike seemed to have benefited from the weaknesses in the U.S. dollar.

Nike seemed to have acted wisely in focusing on Switzerland, for a s Bloomberg Businessweek (2007) noted, “Nike Inc.’s (NKE) earnings release after the market close on Sept. 20 demonstrated the currency-translation benefits that come from having wide geographic reach.”(http://www.businessweek.com/investor/content/sep2007/pi20070921_088651.htm).

In 2008, Nike was able to post a 51% gain in profit as well as reported net income of $1.12 a share, vs. 74 cents a share in the prior-year period on an 11% rise in revenue.

Although Nike’s revenues were larger in some other regions than in Europe (such s a 22% jump in Asia whilst in Europe it only gained 16%), nonetheless the 16% profit of Europe was large in comparison to the 2% gained that same time from the U.S.

Nike was apparently correct in its marketing approach to focus on Switzerland and then to appeal to Swiss tastes and interests by hiring their celebrity, Federer, as icon. Nike’s European channeling distribution had become more globalized than ever before and it was this that allowed it to float whilst others failed

In 2008, Nike bought four key subsidiaries: Cole Haan, Hurley International, Converse Inc. And Umbro. It had made its first sale in 1988, but between then and the 2000s it had lapsed in sales. In 2002, the Roger era it acquired the surf apparel company Hurley International from founder Bob Hurley (Partlow, Joshua (July, 2003) and in July 2003, Nike paid U.S.$309 million to acquire Converse Inc., makers of the iconic Chuck Taylor All Stars sneakers ( Surfline. 2002-02-22 ). On March 3, 2008, at the end of its Roger’s run, Nike made the biggest purchase yet spending U.S.$600 million on the sports apparel supplier Umbro, renowned as the manufacturers of the England national football team’s kit (Portland.bizjournals.com. 2007-10-23. )

Nike, apparently, obviously profited from its association with Roger’s name. It certainty did not seem to lose.

Analysis of the outcome of celebrity endorsement

Celebrity and brand are closely intertwined. Just as celebrity may profit the brand, the brand also wipes off on the celebrity. Meaning and value can transfer in their direction, making this an alliance that has to be closely watched out. When the celebrity has a positive reputation -as happened in Federer’s case, the company becomes associated with that reputation too and sales can soar. Nike started off with an enviable reputation. Their associate with Federer only enhanced that in the consumer’s perspective. Since the Swiss consumer now associated Nike with their beloved athlete. Wanting to wear the same shoes as he did, and wanting to identify themselves with Federer, many adolescents, accordingly bought the Nike banrd.

This relationship can be seen in the following image:

Source: ‘Elina Halonen-Knight, Leila Hurmerinta, (2010) “Who endorses whom? Meanings transfer in celebrity endorsement,” Journal of Product & Brand Management, Vol. 19 Iss: 6, pp.452-460

The brand and endorser become so closely intertwined — and this is deliberate on the company’s part — that both brand and endorser partake of the other’s reputation. Both parts of the partnership therefore have to be careful with whom they pair yup with, since the mergence can affect both in positive and negative ways.

Benefits and risks of Celebrity endorsements

Benefits of celebrity endorsements

The benefits that accrue from the partnership include the following:

A celebrity can help rejuvenate the tarnished image of a company

Celebrities can provide an edge to the clutter of advertisements by making a certain brand stand out

A celebrity can have a particularly strong appeal for a certain demographic audience hence persuading their dedicated fans to buy more (or a quantity) of a certain product

Celebrities can impart a psychological appeal to the product. Their own appeal can transfer to fantasy appeal of product.

Risks of celebrity endorsements

On the other hand, the risks can be just as great with the celebrity destroying the reputation of the brand and leading to decline of sales.

Risks include the following:

Negative publicity: the celebrity tarnishes the reputation of the brand through a public misdemeanor of his own

Overshadowing — the celebrity is bigger than the brand and, consequently, deflects attention form brand to himself

Overexposure — the celebrity endorses various products simultaneously confusing consumers

Overuse — the company employs various celebrities for the same product. Although their intention may be to appeal to various market sectors, the consumer remains confused

Extinction – once celebrity departs form brand, the brand may lose its former appeal since client no longer associates it with celebrity

Financial risk — the celebrity may simply be too expensive. Poor profit accrues and the venture falls plunging company, at worst into bankruptcy.

As we will see, all these risks can be offset by certain precautions.

Case History of a risk: Tiger Woods

Federer was a successful choice of Nike, but not all celebrities prove as good a choice. Some can be risks. OJ Simpson may be just such an example of such a type. A product sign him will forever be remembered by his exploits, and these exploits may become synonymous in people’s minds with the brand itself, permanently, perhaps, casting the brand, in a negative light.

Michael Jackson and Tonya Harding are two other examples of celebrities who impacted their brands in a negative way. Other examples are Juwan Howard, Allen Iverson, Latreel Sprewell, and Dennis Rodman. In terms of adolescent marketing (in which the above largely figured) it only caused teens to transfer their cynicism of the figure to cynicism of the product (Zollo, 1999).

When the celebrity tarnishes the company, the company may have a tough time deciding how to act. Accenture acted instinctively and harshly by distancing itself form Tiger Woods when their endorser disgraced himself. The following image shows how they did so. They tagged him as failed, and by doing so distanced him graphically from their brand.

(Source: Marketing. Celebrity Endorsement — a sustainable marketing strategy-http://blogs.ubc.ca/rajanvir/2012/02/06/celebrity-endorsement-a-sustainable-marketing-strategy/)

However, because the brand has become indelibly associated with the celebrity as shown by the image in Section *, brands can take a lashing down when their celebrity misbehaves. The peak of this drop is best epitomized in the following image:

Tiger Wood’s sex scandal rocked the world in December, 2009. At that time, Woods was associated with Nike, Accenture, and Tag Heuer. All three brands were so closely associated with Woods that they were impacted by the scandal as shown by the simultaneous correlations of the huge peaks aroused by popular Internet research that was conducted on all three brands in 2009 at around the time that Woods scandal broke loose. The three companies reacted in different ways. Accenture was built exclusively around Woods and therefore had no choice but to drop him and distance them as far as they could form him as evidenced in the striking image above. Tag Heuer removed Tiger Woods placards form their stores and waited out the situation. Nike decided to stand by Woods (although golf was only 4% of their business). The correlation between endorsers and their brand can have an impact both ways. When celebrities fall, brands fall too (Overt collusion http://www.overtcollusion.com/iadvertising/2012/3/23/tiger-woods-and-sponsorship.html)

Summary and assessment of risks and benefits of celebrity endorsement

The company-endorser relationship can provide potential benefits to both with both brand and endorser receiving increased attention and both benefitting from deal in various other ways.

On the other hand, potential hazards include the fact that the endorser may overshadow the brand, may become involved in public controversy hence tarnishing the brand, and may be too expensive.

The Company can prevent risks from occurring by steps that include the following: careful pre-testing of celebrity; by buying insurance and careful wording of contract, deliberate and prudent negations, and focusing on match between celebrity and target audience.

Each of these factors is delineated in the Table below:

Source: Ulun Akturan, (2011) “Celebrity advertising in the case of negative associations: discourse analysis of weblogs,” Management Research Review, Vol. 34 Iss: 12, pp.1280-1295

Ultimately, research by Katherine Eckel (2006) shows that the product has to be good to begin with. Celebrities can persuade people to make the buy, but if the product were dissatisfactory or if people were disinclined to buy in the first place, no celebrity, whosoever he were would be able to persuade the person to buy.

The future of celebrity endorsements

Whilst celebrity endorsement is still a big thing particularly with adolescents, some observers think it to be dying. The contemporary trend seems to be to prefer to identify with people similar to one who possess similar characteristics. In this way, Hollister, for instance, hires young people to wear their fashions and conduct word of mouth advertising.

Celebrity ads seem to have lost their pizazz according to Daboll:

We set out to understand whether celebrities today are really worth the significant investment that brands were making. We studied every nationally televised ad for the first 11 months of 2010 and found that celebrity ads performed either below average or merely equaled it. Specifically, our study, 2010 Celebrity Advertisements: Exposing a Myth of Advertising Effectiveness,(2010), showed that fewer than 12% of ads using celebrities exceeded a 10% lift, and one-fifth of celebrity ads had a negative impact on advertising effectiveness.

Whilst celebrity ads were a big thing about five years ago, the consumer of today seems to be more impacted by the way his contemporaries dress, act, and eat (and so forth). Today’s folk don’t want products pushed at them, and may have lost trust their celebrities. Good ads, as the figures show, often stand on their own and celebrities cannot help poor ads enhance their image. Non-celebrity ads, if innovative, smart and attractive, often outrace poor ads featuring celebrities, particularly when the celebrity out shadows the ad and make its message ambiguous. (Dabool, P Celebrities in Advertising Are Almost Always a Big Waste of Money. Ad Age. http://adage.com/article/cmo-strategy/celebrities-ads-lead-greater-sales/148174/)

In the end, therefore, celebrities can help the business profit from the relationship but their success hinges on various factors, not least the advantages of the product itself. A good advertisement that is backed by an appealing product will always sell regardless of the endorser.

It is arguable whether or not, the tendency to use a celebrity today is waning, but either way, a celebrity endorsing a poor product has no appeal. For companies to profit, they need to steward attractive advertisement that is backed by worthwhile products. Only then may they be able to show some sort of return on their investment.

Conclusion

The whole process of considering, finding, and finally hiring a celebrity is one that is done incrementally and thoughtfully with the whole, actually, occurring in four stages. The seriousness and deliberateness of the selection process is due to the significance of the decision. An exorbitant amount of money is placed in this — more than one celebrity has become a millionaire as an exclusive result of such deals. Aside form this, the company’s reputation rests on the celebrity’s reputation. The company takes various risks in selecting a celebrity as we will see later. This is no minor decision, and so the company assesses various factors before making its final selections.

Celebrity and brand are closely intertwined. Just as celebrity may profit the brand, the brand also wipes off on the celebrity. The company-endorser relationship, in other words, can provide potential benefits to both with both brand and endorser receiving increased attention and both benefitting from deal in various other ways.

On the other hand, potential hazards include the fact that the endorser may overshadow the brand, may become involved in public controversy hence tarnishing the brand, and may be too expensive.

Ultimately, research shows that the product has to be good to begin with. Celebrities can persuade people to make the buy, but if the product were dissatisfactory or if people were disinclined to buy in the first place, no celebrity, whosoever he were would be able to persuade the person to buy.

Ultimately, therefore, people are more rational than legendary art director, George Lois, takes them to be. It may be a star-struck world, but the trend seems to be that celebrities are losing the pace in marketing. A worthwhile product and ad will always attract regardless of endorsement. A poor one will fail for the same reason. Nonetheless, given the appeal of celebrities, it is likely that celebrity endorsement will always be around helping companies such as Nike profit.

References

Ace, C. (2001). Successful Marketing Communications. Boston: Butterworth-Heinemann.

Applbaum, K. (2004). The Marketing Era. New York: Routledge.

Barnes, Simon (8 June 2009). “Roger Federer, greatest of all time, ensures statistics back up unrivaled artistry.” The Times (UK).

BBC Sport. (4 July 2009.) “Is Roger Federer the greatest?.”

Brown, S. (2000). Imagining Marketing. London: Routledge.

Browne, K (2010) Trolley psychology: choice unlocks the psychological secrets of the supermarket and shows you how to avoid spending more than you mean to, Choice, Australasian Consumers’ Association, Chippendale, NSW, Australia, no. 4, pp. 60-64

Bloomberg Businessweek (September 21, 2007,)Nike Gains On Global Reach

http://www.businessweek.com/investor/content/sep2007/pi20070921_088651.htm

Chansarkar, B. (2002). Introducing Marketing Research. New York: John Wiley & Sons.

Dennis, C. (2002). Marketing the E-Business. London: Routledge.

Roger Federer Official Website. (28 May 2004) Roger Federer Foundation To Support Children And Young People In South Africa.”

Gilligan, C. (2004). Strategic Marketing Management. Oxford, U.K: Butterworth-Heinemann.

Goldberg, M. (1997). Social Marketing. Mahwah, NJ: Lawrence Erlbaum Associates.

Hardaker, G. (2001). Wired Marketing. New York: Wiley.

Herbig, P. (1995). Marketing Japanese Style. Westport, CT: Quorum Books.

Houston, F. (1994). Marketing Exchange Relationships, Westport, CT: Quorum Books.

Jago, Richard (5 June 2009). “Roger Federer is the greatest’ says Pete Sampras after record broken.” The Guardian. London Kasper, H. (1999). Services Marketing Management. New York: John Wiley & Sons.

Lacobucci, D. (2001). Kellogg on Marketing. New York: John Wiley & Sons.

Lazer, W. (1971). Marketing Management. New York: John Wiley & Sons.

Lewis, B. (2000). Internal Marketing. London: Routledge.

Maddock, R. (1996). Marketing to the Mind. Westport, CT: Quorum Books.

McCalley, R. (1992). Marketing Channel Development and Management. Westport, CT: Quorum Books.

McCalley, R. (1996). Marketing Channel Management. Westport, CT: Praeger.

Nwankwo, S. (2002). Dynamics of Marketing in African Nations. Westport, CT: Quorum Books.

Partlow, Joshua (July, 2003). “Nike Drafts An All Star.” The Washington Post.

Portland.bizjournals.com. (2007-10-23).Nike to buy Umbro — Portland Business Journal:.”

Pelsmacker, P. (2004). Integrated Marketing Communications. London: Routledge.

Rogers, S. (2001). Marketing Strategies, Tactics and Techniques. Westport, CT: Quorum Books.

Tennis Australia. (16 January 2010.) “Stars rally for a common cause.”

Surfline. (2002-02-22.) Daily Grind — Nike buys Hurley.”

Times LIVE South Africa. (21 September 2011.) “Mandela pips Federer.”

Varey, R. (2002). Marketing Communication. London: Routledge.

*Appendices

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