Celebrity endorsement: are we up to the challenge?

It was 2009, and this internationally acclaimed sports person was in the limelight for all wrong reasons. Just about recovering from an injury, no major title wins since 2004, and admission of extra-marital transgressions and charges of reckless driving. Tiger Woods, one of the most talked-about sports celebrities, had squandered his glorious career. Numerous brands and Millions of advertising dollars were riding on him. Most of his $100 million annual earnings used to come from brand endorsements. 

Soon companies that had signed him to endorse their brands, AT&T, Accenture, Gatorade, Gillette, and General Motors, dropped him to avoid embarrassment and disrepute. One brand believed once the scandal blows over, the gains will wipe out the dark past. Nike did just this and had to wait for a decade for fortunes to turnaround. Last year, Woods won the Masters. It provided a fresh impetus to Nike’s golf business. The win handed Nike a $4 billion gain in market valuation on the day of his win and $22.5 million in brand exposure as viewers watched the final with Woods sporting Nike logo from hat to shoes. 

Double-edged sword

In an intense social media world, celebrity endorsement is a double-edged sword strategy. Brands need to do a lot of homework before choosing a celebrity. It is no longer just about ticking investment and authenticity boxes. It is also about behaviour. Social media is unforgiving, and bad behaviour becomes a trending topic.

Brands tie-up with celebrities as it is one of the easy ways to cut the clutter. Celebrity endorsements have existed since the 19th century. It is believed that Queen Victoria was associated with Cadbury’s Cocoa. Celebrity endorsements are used time and again with the objective of cashing-in their fan base. When they are hit by a scandal, it can be disastrous for the brand. Nike did lose its customer base in the initial phase of Woods Scandal. Recovery was a long haul. 

In India, celebrity endorsements work at an even higher level due to the large population and the culture of placing them on a pedestal. It is akin to idolising. A research paper published in the International Journal of Commerce, Business and Management some years ago, points out, “celebrity endorsements in India results in huge returns largely due to the products being perceived as the celebrities weapons of choice and also has to do with improving the consumer’s self-image.”

Hedging bets

When a celebrity gets caught in a controversy triggered by bad behaviour, most brands tend to distance fearing loss of customers and sales. They stick to the popular path of not tampering with public faith and confidence in their brand. It requires a tectonic shift in thinking by marketers backed by high confidence and risk-taking ability to persist with controversial celebrities. It necessitates tremendous effort to make customers resonate with the brand’s belief in persisting with a controversial celebrity.

It is an uphill task to keep the brand trustworthy, attractive, and respectful. Nike has successfully done this (a couple of times) with gusto. In India, keeping the size and opportunity of the market into consideration, brands view it as risky bet.

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Radha Radhakrishnan

Radha Radhakrishnan has over 25 years of experience in corporate communications and marketing across different industries and geographies. She has built a reputation as a storyteller and a creative thinker. She has mentored social entrepreneurial startups and has been a visiting faculty at premier communications institutes in India. She is currently the global head of corporate communications at Wipro Enterprises. She anchors the weekly PR and Communication podcast, Mrigashira.