Small Business

The Trouble with Celebrity Endorsements


Celebrity spokespeople are expensive and risky, and they don't always pay off

Tiger Woods is one of the greatest athletes of all time. He's also a product-endorsement gold mine. I have no trouble believing that Tiger actually prefers to use most of the products he endorses, including his Nike (NKE) equipment, Titleist (FO) golf balls, Gatorade sports drink, Gillette razors, American Express (AXP) card and Tag Heuer (LVMH) watch. But Buick (GM)? That's a stretch. Yet GM has paid Woods millions of dollars to stand up for the brand.

Tiger may be the endorsement champ, but he's not alone. Michael Jordan—Nike, Gatorade, Hanes (HBI), McDonald's (MCD), Chevrolet—Bill Cosby (Coke (KO), Jell-O (KFT), Del Monte (DLM), Ford (F), Kodak (EK)—and Peyton Manning—Sony (SNE), MasterCard (MA), DirecTV (DTV), Gatorade—have all been at the top of the heap of celebrity endorsers. And there are hundreds of other examples of famous endorsement deals, from Karl Malden for American Express to Brooke Shields for Calvin Klein to William Shatner for Priceline (PCLN).

Most advertisers can't afford the millions of dollars it takes to ink a celebrity endorser. But if your company falls in that category, take heart. Celebrity endorsers aren't only pricey, they're risky. Before you take the plunge on an international, national, or even local celebrity, ask yourself a few tough questions.

Are you being smart, or just lazy?

"Borrowed equity" is the term used to describe the value of a celebrity spokesperson. The premise is if Endorser A wears Product B and drinks Product C, maybe consumers will want to, too. But borrowed equity is just that—borrowed. It may rub off on the brand endorsed, but in the long run it belongs to the celebrity.

In some cases the match between person and product is strategic, such as Jordan's natural tie to Nike or Cosby's comical personality for a fun product like Jell-O. That's also the case for Wilfred Brimley's grandfatherly tone for healthy Quaker Oats (PEP) and Dennis Haysbert's imposing frame and booming voice for the "Good Hands People" at Allstate (ALL). In some cases the product can be shown to demonstrably solve a celebrity's problem, such as Dan Marino and Mike Golic shedding unwanted pounds using NutriSystem (NTRI).

But Catherine Zeta Jones for T-Mobile (DT)? Emmitt Smith for Just For Men? Jason Alexander for KFC (YUM)? I suspect each of these companies can trot out research and Q-scores that justify their investments, but they're spending a lot of money for the borrowed equity of a talking head. It may be flattering for corporate leaders to rub elbows with celebrities, but unless there is a natural strategic tie it's not much more than an expensive date.

Will you be building your brand equity, or theirs?

In the 1970s, the Pittsburgh Steelers "Steel Curtain" defense was anchored by a hulk of a man nicknamed "Mean Joe" Greene. As it turned out, Greene wasn't so mean in real life, but when he roamed the gridiron he struck fear in the hearts of opposing teams. That's why Coca-Cola's idea of having Mean Joe toss his jersey to a young boy in exchange for a bottle of Coke was brilliant. The commercial made charming use of Mean Joe's image, but Coke was the star.

Fast forward 30 years or so to Paris Hilton's scantily clad, soft porn television commercials for Carl's Jr. (CKR) and sister company Hardees. The spots got a lot of attention, but not for the burgers they advertised. They became building blocks in Hilton's wall of infamy, while the sponsoring brands endured thousands of consumer complaints.

Even squeaky-clean celebrities can present problems for brands trying to retain borrowed equity. How does Tiger Woods' paid relationship with Buick affect his endorsement of Tag Heuer? How many of Peyton Manning's commercials are remembered for the logo at the end rather than the charm (and remarkably good acting skills) of the star? Would I want Woods or Manning to use and endorse any of my clients' products? You bet. But the more of them they endorse, the more diluted each endorsement becomes.

What's the risk that they may do something you regret?

Because celebrities exist in the spotlight, surrounded by paparazzi eager to turn a stolen moment into a quick buck, the risk of getting caught doing something embarrassing is much higher than for the average Joe. And they don't even have to be alive to do it. You would think that Ben Franklin is a safe bet as the face of Franklin Templeton Investments (BEN). Yet anybody who has read David McCullough's best-selling biography of John Adams might disagree. McCullough paints a picture of Franklin that is less than flattering, and since reading the book I've been given pause each time I see a Franklin Templeton ad. Once you tie your brand identity to a celebrity (living or dead), you're hostage to that person's image.

Will the borrowed equity increase over time?

The surest way to ensure long-term value from a celebrity spokesperson is to invent one. Advertising agency giant Leo Burnett pioneered this approach with Tony the Tiger, the Jolly Green Giant, and the Pillsbury Doughboy. Budweiser (BUD) made hay with frogs and a lizard a few years back, and the roly-poly Michelin Man recently made a comeback (slimmed down for a more health-conscious culture).

Geico has done a masterful job making a little green gecko and big hairy cavemen famous. Since they're not real people, the risk of them doing something illegal, immoral, or embarrassing is nil, and the company can evolve their roles and storyline over time.

Is there a better way?

The answer is almost always yes. Celebrity spokespeople are expensive and risky, and they don't always pay off. If you believe your brand is in need of additional equity, instead of borrowing it from a celebrity, develop it yourself. You may need to refocus your efforts on making your brand more appealing, more affordable, or more easily available (and perhaps all of the above). Or you may simply need to find a way to develop a more attention-getting, interesting and compelling appeal.

Take the money you would otherwise hand over to an already well-paid celebrity and invest it in developing original creative ideas that will make your brand stand out. That way, the equity you create will be nothing but your own.

In this slide show, Steve McKee evaluates celebrity endorsements from over the years, offering his take on the overall effectiveness of each match.

Business Exchange related topics:

Brand Marketing

Product Placement

Advertising in a Recession


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