The Power of Celebrities as Brands
Monday, June 23rd, 2008
As celebrities are constantly followed in the media with their every move recorded and scrutinized for a slew of gossip shows and blogs, a side effect has emerged in the form of the ‘human billboard.’ Now more than ever, celebrities themselves have morphed into lucrative brand names, hawking everything imaginable from credit cards and cars to perfume and yogurt.
The line between celebrities and the products they’re pitching has become increasingly fuzzy as the two merge to create mutual benefits. Brands are now relying on hot stars to not just stamp their name on products, but to co-design their own lines that capture the attention of their rabid fan bases.
The Power of Celebrity Endorsement
While the endorsement of products and services by celebrities is nothing new, there has been steady growth in this area over the last ten years with an estimated 14% of all U.S. advertisements including stars last year (via marketing research agency Millward Brown).
Why is this phenomenon so powerful? Why do stars sometimes earn more from advertising revenues than they do from their actual day jobs?
The truth is that companies would not be paying celebrities exorbitant fees to stand in as spokespersons for their brands if they didn’t see a positive effect on sales. People want to be a part of something bigger than themselves and if they truly believe that their idols actually use the products they are paid to pose with, sales and (website traffic) can go through the roof.
Consumers are constantly shown glimpses of a celebrity’s lifestyle and even though they may not be able to afford the cars, mansions, and private parties, they can at least buy the fragrance, t-shirt and sunglasses their idols (appear to) prefer. It’s easier to live vicariously through products and services than to look inward to the real issues.
Controversy: The Downside of Endorsements
When a company chooses a celebrity to endorse their brand, it’s all about image. To make a partnership successful, they have to decide whether a person’s image is in line with their values and further enhances their reputation. When Magic Johnson announced his HIV-positive status in the early 90s, he was swiftly dropped from endorsements, though the companies claimed it was the affair factor that sealed the deal.
Sometimes controversy can help a celebrity land even more endorsement deals after the dust has settled. Supermodel Kate Moss weathered a scandal in 2005 when she was caught snorting cocaine. Her lucrative contracts with Chanel, Burberry and H&M were dropped, yet Yves Saint Laurent and Gucci held on. Since her release from rehab, she has landed even more endorsement deals from the likes of Calvin Klein, Longchamp, Bulgari, Stella McCartney and Virgin Mobile. Amazingly, Hollywood.com claims that these deals have reportedly brought Moss’ earnings from $10.3 million before the bust to $17 million after!
Celebrity Power and Ranking
The numbers for celebrity endorsements in advertising are down this year after hitting an all-time high of 19% in 2004. In the over-saturated world of advertising, this may be the beginning of a trend. Many companies are now realizing that their roster of brands are being overshadowed by the bold-faced celebrity names they once courted. While the celebrities promoting the products are gaining increased notoriety, the company image can be lost in the shuffle. In the last few years, Pepsi has dropped Beyoncé and Britney Spears for this reason.
Companies are now looking to the two year old Davie Brown Index to see how hot a celebrity is. Ranking a total of 1,800 celebrities, the D.B.I. determines a celebrity’s ability to influence a relationship with the brand and to also encourage consumer purchases.
The Future of Advertising
The future of advertising may be in ‘friend endorsements.’ Allen Stern of Center Networks makes the case that most of us would rather have our best friend recommend a product to us over a paid celebrity. This is becoming increasingly easy since many of us are connected into tight webs of friends, family members and acquaintances with similar interests via social networking sites like Myspace and Facebook.
The reason why we value the opinions of friends over celebrities comes down to one thing: TRUST. Celebrities are instantly recognizable and even likable, but that doesn’t mean that a consumer fully trusts their endorsements when making purchases. For this reason, social networking truly is the wave of the future for advertisers.
