Role Of Celebrity Endorsements in Branding

Celebrities have been involved in endorsement activities since the late nineteenth century. The advent of celebrity endorsements in advertising in India began way back in the 1960s when Hindi film and TV stars as well as sportspersons began encroaching upon a domain that was, until then, exclusively occupied by models. Till then, for both companies and celebrities alike, brand endorsements by eminent personalities represented a completely uncharted territory. One of the first sports endorsements in India was when Farookh Engineer became the first Indian cricketer to model for BrylCreem. Today, the Indian cricket team collectively earns around Rs. 100 crore through endorsements. In the 1980s, there was a sudden spurt of advertising, featuring stars like Tabassum (Prestige Pressure Cookers), Jalal Agha (Pan Parag), Kapil Dev (Palmolive Shaving Cream) and Sunil Gavaskar (Dinesh Suitings).

Today, the topic of celebrity endorsements has attracted intense debate on whether it really contributes to the brand building process or whether it is just another shortcut to making the brand more visible in the minds of the consumers. Although it has been observed that the presence of a well-known personality helps in solving the problem of over-communication that is becoming more prominent these days, there can be a few undesirable impacts of this practice on the brand. The theories like 'Source Credibility Theory, Source Attractiveness Theory and Meaning Transfer Theory' provide a compelling basis on which the methodology of celebrity endorsement works and also explains how the process of the celebrity endorsement influences the minds of the consumers. Firms invest huge amounts as advertising expenditure for hiring the right celebrity and this school of thought goes quite some way towards justifying such actions. However, there lies uncertainty with respect to the returns that the company might be able to garner for the brand. Which leads us to ask ourselves the question, do celebrity endorsements actually work?

First, let’s take a look at all the possible benefits of these endorsements:

·                     Builds brand equity:
Prior to Michael Jordan, Nike primarily sponsored tennis and track and field athletes. Nike wanted to expand into new markets. Who better to sign than one the most electrifying young athletes in sports? But it wasn’t an easy decision by any means. Back then in 1984, a contract worth $150,000 a year was completely unheard of and something most companies would balk at. But as the newly drafted rookie went on to shatter record after record on his way to stardom, the Nike-Jordan partnership, over the course of 3 decades, blossomed into its own multi-billion dollar subsidiary company, Air Jordan. 30 years on, the brand grew at a rate of 14% in 2015 to command 58% market share in the $4.2 billion U.S. basketball shoe market with sales of $2.4 billion, an unwavering cash cow for Nike and the basketball legend.

·                     Helps consumers remember ads:
Celebrity endorsements significantly improve ad recall, according to researchers Jagdish Agrawal and Wagner Kamakura. When people would see or hear Dennis Haysbert on the show “24,” they associate his voice with Allstate. Similar is the case with Old Spice, who have established a strong connect with their target audiences through their smart use of Milind Soman’s raw masculinity in their ads.

·                   Makes people believe the product contributes to superstar status:
Mobil 1 uses NASCAR superstar Tony Stewart to endorse its brand, which leads consumers to believe that Motor One oil contributes greatly to the performance of his car—and his success. Similar is the case with Puma, who used Usain Bolt to great effect in their “Forever Faster” campaign.

·                     Stand out:
Research from Charles Atkin and Martin Block suggests that “celebrities may help advertising stand out from the surrounding clutter.” People like watching a Madhuri Dixit or a Hrithik Roshan more than local dentists and attorneys.

Now that we have an idea of the pros of celebrity advertisements, the next important step is to select the right personality to represent the brand:

Brands are important company assets. Advertisers need to select celebrities who represent the image and promise of their brands. Needless to say, not all celebrities will fit with any brand.

For example, at the height of her career, Britney Spears signed a highly publicized $8 million deal with Pepsi in 2001. During her contract with the beverage company, the pop star filmed many commercials that appeared in top slots on television including major sports events such as the World Cup. Her last commercial with the beverage manufacturer was a group commercial along with fellow pop stars Pink, Beyoncé and Enrique Iglesias. Spears’ tenure with Pepsi was followed by a slew of other pop stars that worked with the company, including Christina Aguilera, Beyoncé and Nicki Minaj.

In India, a good example is Shah Rukh Khan and Hyundai Motors India. When SRK signed on as the brand ambassador of Hyundai, his son Aryan was still a toddler. Today, the younger Khan is old enough to drive a car and his father says he will learn to do so in a Santro. Coming from a man who owns numerous cars, SRK’s assertion would have sounded outlandish if not for the fact that his association with Hyundai is one of the longest surviving celebrity endorsements ever — 18 years and kicking.  Within a few months of launching the Santro in 1998, HMIL went on to become the 2nd largest automobile manufacturer in India and SRK’s popularity and screen presence definitely played a role. Over the years, this relationship has grown to be extremely beneficial to the company with the launch of each new car by Hyundai.

We must understand that it takes time to form associations and get the desired results. Celebrity endorsements are not short-term tactics. When a company decides to make a celebrity the face of its brand, it is for the long haul and only because the celebrity possesses characteristics which resonate strongly with the target audience of that brand.

Having seen some of the pros of celebrity advertisements, now let’s have a look at some of the cons.

The Risks of Celebrity Endorsements
Yet even if a celebrity is a good fit for the brand, using one for endorsements has its own set of possible risks:

·                     Images change:

Celebrities are also human; hence they do make mistakes. And when they do, they can affect the brands they endorse. In 2009, Tiger Woods’ public image crumbled after his infidelity with a number of women, including pornography actresses, hit the news. As a result General Motors, Gillette, Accenture, and Gatorade were forced to drop Tiger to avoid negative perception. Nike stuck around and lost customers. And the golf industry as a whole saw a major revenue slow-down with no Tiger on the prowl.

The same happened with Lance Armstrong and Maria Sharapova after they got embroiled in doping controversy. In case of the former, the ace cyclist lost eight sponsors in a single day after his misdemeanors came to light, causing him to lose out on $150 million in future earnings.

In case of the latter, the incident was widely accepted as a ‘mistake’ for which she was only partly responsible. That notwithstanding, the world’s highest paid female athlete lost 3 major brands in one day after her first bad drug test. Although, it has to be said that the damage was limited as Nike and Head eventually stuck by her after the verdict, while Tag Heuer and Avon severed their ties with the tennis superstar.

We have to remember that, it can go the other way as well. Celebrities also end up facing rough weather if the brand they are associated with gets a bad image. Case in point being, Amitabh Bachhan, Preity Zinta and Madhuri Dixit for Nestle’s top noodles brand Maggi.

Even M.S. Dhoni severed ties with realty firm Amrapali as a result of Twitter outrage over the Indian Captain’s association with the company that had left its projects incomplete in Noida.

So, the relationship which brands establish with celebrities can be a very powerful one, yet as seen above, a very brittle one. This is because sometimes it becomes difficult to separate one from the other.

·                     Celebrities become overexposed:
 At the height of Tiger Woods’ popularity, he endorsed over ten companies at once. When a celebrity works with so many companies, the celebrity’s credibility may suffer. People may feel that the celebrity will endorse anything to make a buck.

In India, the best example by far is Virat Kohli. Even at this young age, such is the popularity of the Indian captain that he is currently endorsing 15 top brands. His personality, passion and vocal attitude makes him a favorite with the youth of the country and hence, a darling with the advertisers as well.

·                     Celebrities can overshadow brands:
Consumers may focus on the celebrity, not the product. This is a particular danger when celebrities endorse multiple products at a time. David Beckham endorses a number of companies, which feature him prominently in print advertising. However, his image as the focal point of advertising devalues many products. The question is, do consumers remember the brand or do they just remember David Beckham?

·                     Celebrities cause exorbitant expenses:
This spending on the advertising might or might not be justified. In some cases, the gamble pays off. For example, Shah Rukh Khan was paid 20 crores for endorsing Pan Vilas, a pan masala brand.

In some cases, it does come to naught. As per Livemint, Pan Bahar paid Pierce Brosnan $2 million for 2 years for the 1 minute advert. The ad sent social media into a tizzy and fetched Pan Bahar the desired attention and ‘visibility’ it desired. But the question to be asked here is, would the public attention eventually translate into greater sales? For all we know, Pan Bahar’s core customer is the average auto driver or roadside tea-seller in rurban India. For such a person, he could very well wonder who the new brand ambassador for his favorite pan masala is and might even feel put off. Thus, there could be a gross disconnect with the target audience as far as the brand is concerned.

Given such situations, a lot of marketers might feel that, even though they can have a big impact, it is neither worth the money nor the risk.

The usage of celebrities by the Indian advertising agencies has experienced a phenomenal increase in the last five years. Effective communication between the marketer and the consumers is the need of the hour and celebrity endorsement is a strategy that is perceived as making full use of this opportunity. Most of the countries have adopted this strategy as an effective marketing tool and even India is carving out space for itself in this arena.

Today, the top movie stars and sportspersons in the country earn around 5 crores per day for each brand they endorse. Recently, E-commerce player Snapdeal paid Aamir Khan a whopping Rs 30 crore, making him the most expensive celebrity brand endorser in India.

So, the message to advertisers would be:

“Thinking about using a celebrity for endorsement? Not a bad idea. But you might want to think twice—it’s a possible minefield, which has to be negotiated with care. Only the brave and crafty in the world of marketing are able to do so."

Soumalya Sarkar
IIM Raipur

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