Pros and cons of celebrity endorsement

Companies have been using the rich and famous to promote their products ever since Josiah Wedgwood and Sons used royal endorsements to market their pottery in the 1760s. Effective celebrity branding can reap huge rewards. However, this marketing strategy is not without its pitfalls. Here are some of the pros and cons of celebrity endorsement.

Benefits

Increases brand recognition – With social media fan pages generating hundreds of thousands of hits every day, a single tweet from a celebrity endorsing a specific product can be extremely lucrative for a company. Studies have found that people are more likely to recall adverts that feature celebrities and are more likely to watch an advert if it features their favourite celebrity or television personality. Using a well-known face to endorse a brand also attracts a whole new target audience of people who may not previously have cared about a product but will try it because their favourite actor or sports personality uses it.

Builds brand personality and credibility – Over time, the attributes of a celebrity become affiliated with the brand they are endorsing. Bottled water is typically not an exciting product, but Jennifer Aniston has been adding an element of glamour to Smartwater since 2010, helping to make it the top-selling premium-priced water brand in the United States. Seeing a celebrity attach their name to a product assures customers that the product is trustworthy and of a high quality.

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Boosts company profits – Having a well-known celebrity endorse a product can be a huge financial boost: when Chanel signed Nicole Kidman in 2003, global sales of its promoted perfume reportedly increased by 30%. Jamie Lee Curtis helped previously unremarkable Activia become the number-one-selling yogurt brand in the United States, and Jamie Oliver’s partnership with Sainsbury reportedly added an extra £1.2bn in sales over a two-year period.

Disadvantages

Celebrities are only human – Since the attributes of a celebrity are absorbed into a brand, celebrity scandals can have a disastrous impact on the companies they endorse. Tiger Woods’ highly publicised infidelity in 2009 reportedly cost Nike $1.7 million in sales and 105,000 customers.

Celebrity endorsements are expensive – Having a well-known face promote a brand can be eye-wateringly expensive. Beyonce’s 10-year Pepsi contract earned her a whopping $50 million. However, this is pocket change compared to Michael Jordan’s estimated $80-90 million annual income from various corporate partners, including Nike, Hanes, and Gatorade. Jordan’s current net worth is estimated at $1.65 billion.

Celebrities may become overexposed – Given that endorsements are so lucrative, it’s not unusual for celebrities to endorse multiple brands at once, which can cause their credibility to suffer. If public opinion is that a celebrity will promote anything to make a quick profit, the trust factor that previously worked in their favour is lost.

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