Celebrity Endorsement - Through the Ages

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Celebrity Endorsement – Through the Ages

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In the late 1990s, Companies took endorsements to a new level by holding press conferences to announce deals with celebrities. Celebrities were no longer just endorsers. They had become spokespersons for the brand. In the case of sit-coms (Friends) and movies, the celebrities' characters promoted the brands. In 1998, it was estimated that companies in the US spent $800 million on acquiring celebrities for advertisements, promotions and PR campaigns. The total estimated endorsement commitments for 2004, for one company, Nike totaled $338.6 million. Multiple endorsements - both the company signing on several celebrities to promote a brand and one celebrity endorsing various brands, sometimes switching between competitors had become de rigueur. In 1999, one in five advertisements on TV featured a celebrity. An AdAge study of the 20 most effective television ads of 2002 , celebrities like Britney Spears featured in two-thirds of the ads. The fact that more and more celebrities were willing to lend themselves to endorsement deals, contributed to the increase in the number and value of the deals . While the money involved was considered as one of the main reasons for signing deals, there have been cases of endorsements that were based on pure altruistic motives -like Pierce Brosnan's appeal on behalf of Down's syndrome in Ireland18.

Companies have openly admitted the direct influence of celebrities on the sales of their products. Since the company signed Woods in 1996, Nike golf balls saw a $50 million revenue growth by 2002 to reach $250 million. "He's definitely influenced sales. There was a great deal of speculation, with Nike getting into the golf business. Some thought that it wasn't going to be authentic, but think we've proven people wrong and Tiger has definitely been the foil for us to do that, "said Kel Devlin, director of sports marketing for Nike Golf. Woods' first contract with Nike was worth $40 million. In 2000, it was renegotiated to create a five-year contract estimated at $125 million¹⁹.Woods was rated the top most influential celebrity player of 2002

Risks Involved

One of the biggest risks for the brand is the celebrity getting into a controversy. Companies were reported to have suffered the negative consequences of controversies involving OJ Simpson, Mike Tyson, Michael Irvin and Kobe Bryant. In a survey done in late 2003, by Knowledge networks and Advertising Age on 848 adults nationwide, 62% of the respondents said that when it came to earning their trust as an endorser, an athlete’s “private actions are just as important as his/her professional accomplishments. Not only does the brand lose out on the investment already made on the endorser, it has to incur additional costs on replacing the celebrity. Another risk encountered is that of the celebrity overshadowing the brand where people often tend to remember the commercial and the celebrity, but not the product.

In the past, brands signed on celebrities with proven talent and were already considered the best in their field. But companies like Nike began the trend of spotting young, talented athletes and signing them on, even before they enter major league games. Nike signed on 19-year-old LeBron James for a $90 million seven-year endorsement deal even before he started playing for the NBA. It has already paid $1 million to a 13-year old player, Freddy Adu who now endorses its products. Reebok's youngest endorser is a three-year-old basketball prodigy, Mark Walker, who features

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18]O'Shea, Geraldine, "Resorting to celebrity acts", http://www.marketing.ie
19]op cit "The celebrity sell: advertisers use black celebrity endorsers to pump up sales"