We’ve all seen a commercial like this: Average Joe is sad. Struggling because he’s lonely, depressed because his wants aren’t met. Enter, the movie star. He’s got the looks, the ladies love him, he’s popular and has the money to flaunt it. He picks up Average Joe and tells him to use product X. He promises it will solve all his problems because, hey, it worked for him didn’t it? Average Joe is convinced, he uses the product and is now a superstar in his own right.
This is a much hyperbolized version of what a celebrity endorsement is. Simply put, it is a concept of a company paying someone famous to conspicuously use a product. The hope is that the celebrity’s fans will see it, want it and buy it.
Ineffective waste of money
To me, celebrity endorsements make no sense. According to a list by lifestyle magazine The Richest, which chronicles some of the biggest celebrity endorsement deals, actor Brad Pitt earned $6.7 million for one ad for Chanel No. 5. Soccer player David Beckham has a lifetime deal with sporting brand Adidas worth over $150 million. In fact, Beckham earns approximately $55,000 per day for his endorsements with companies that include, but aren’t limited to: H&M;, Diet Coke, Armani and Samsung. It baffles me that companies spend millions on a method that is neither a source of credible information nor a financially efficient tactic.
For me, it is extremely understandable that celebrities would be willing to pocket a significant amount of money to use certain products in public. It’s just an easy way to make money. It’s hard for me to blame them simply because they are motivated by the same thing most other people are motivated by. With social media, it has become incredibly easy for companies to pay celebrities a few thousand dollars to tweet or post about using a product to their followers. It’s cheesy and even if celebrities lose a couple of followers for doing so, if they feel that the benefit of gaining the thousands of dollars is worth the cost of losing fans, they have the right to do so.
My point of contention lies with big companies and brands who would rather waste money on an ineffective means of reaching out to their audience than use proactive and creative means to establish a genuine connection with them.
In a three year study conducted by Ace Metrix, an advertising analytics agency, about the impact celebrities have on the effectiveness of ad campaigns, data showed that TV ads containing celebrity spokespersons consistently underperformed compared to those without them. The study concluded that, “the presence of celebrities in an advertisement in itself does nothing to improve the creative effectiveness of the advertisement. At their best, celebrities serve as incremental supplements to already solid creative copy.” Essentially, the study states that with or without the celebrities, a good, creative advertisement is enough to publicize a product or brand well.
The results of the Ace Metrix study relate strongly to the findings of a 2012 study published in the Journal of Advertising Research titled, “The Economic Value of Celebrity Endorsements.” The study, which emphasized celebrity endorsements by athletes, concluded that while celebrity endorsements do pay off, the benefit of those endorsements are overshadowed by their cost. Data from the study suggested that the average benefit of celebrity endorsements included a mere 4 percent increase in annual sales corresponding to around $10 million and a 0.25 percent increase in the stock value of the company. While $10 million sounds like a lot of money, it is insignificant compared to the $450 million Nike spends in celebrity endorsements annually. The study also found that celebrity endorsements had no effect on competing brands in the same industry, indicating no increase in market share for the company being endorsed.
Business News Daily, a business technology and research website, published an article in 2012 referencing a study conducted by the University of Colorado in Boulder that approached the issue of celebrity endorsements from a different perspective. The study researched the character traits displayed by the celebrities and which ones transferred to the brand they endorsed. Researchers concluded that marketers need to consider the good and bad traits of the spokespeople before they endorse a product.
“When the endorsed product wasn’t a good match with the celebrity, the celebrity’s positive association of sexy and fun did not transfer to the brand while her negative associations did,” said Caleb Warren, a co-author of the study, in an interview with Business News Daily.
Detriment to all involved
The findings of the University of Colorado study support the statistics of the Ace Metrix study, which indicated that the worst performing ads used celebrities that had no connections to the industry the product was a part of, such as the Samsung smartphone ad featuring rapper Jay-Z.
The findings from all three studies indicate that celebrity endorsements are not particularly effective, not financially efficient and, in some cases, end up being a detriment to the brand and company they endorse – the opposite of what they are supposed to do. Still, companies go down that route often. The money spent in endorsements could be used in a multitude of different avenues ranging from research to actually understanding and appealing to their audience, charitable partnerships and more discounts to consumers – all of which would have a similar, if not more positive effect on the company.
It is important to remember that not all celebrity endorsements are bad. There are multiple instances when celebrity endorsements have been effective and profitable. The relationship between Nike and Michael Jordan is a prime example of how celebrity endorsements can spark a cultural phenomenon that continues to rake in millions for Nike. However, these examples are few and far between. Today’s market is extremely saturated. With multiple celebrities endorsing the same product and vice versa, the value of the endorsement has depleted tremendously. The connection with the consumers, for the most part, is not a well thought out strategy but rather a competition of who can grab the most attention which ultimately makes it inefficient and ineffective.
In an October 2012 article in tech and design magazine Fast Company, writer Daniel Baylis wrote, “Blind consumerism driven by spoon-fed corporations are on its way out. We are eager to shop with values, and support brands that actually stand for something other than the product and bottom line. We’re weaning ourselves off uninspired corporate messaging. We crave honest brands.”
Changing advertising market
The market is changing and consumers are becoming smarter. They are no longer persuaded by the same means as the generations before them which include celebrity endorsements. The new consumer is more involved with the brand, more aware of the value brands give and place a greater emphasis on self-conducted research rather than being convinced by brands. Celebrity endorsements, at least in the sense that they are currently used, do not cater to these needs and therefore should be reevaluated as a marketing strategy.
In the end, as with everything, it comes down to capitalism. If a company has the funds and means to pay celebrities multiple millions of dollars to use their products and deal with the issues that go along with it, then they have the freedom to do so. Personally, I would much rather see companies be more proactive and actually seek to make a connection with their consumers based on their values and not hide behind the façade of a celebrity.
Som Kandlur is a junior in mass communications. Please send comments to [email protected]