How do large organisations select A-listers for brand ambassadors and celebrity endorsements?

Landing a product endorsement or brand ambassador gig can mean big money for A-list celebrities. Argentine soccer star Lionel Messi, who has spent most of his career at Barcelona, reportedly secured a lifetime deal with Adidas for over USD $1 billion, plus around USD $20 million per annum from a percentage of merchandise sales. Tiger Woods’ deal with Nike is thought to have been worth USD $200 million when it was renewed in 2013, although some estimates put his total deal over the last 28 years at closer to USD $500 million. Oscar-winning actress Charlize Theron signed a USD $55 million for a decade-long contract with perfumier Dior that was so successful it was subsequently renewed.

These are huge sums; but when you look at the science behind consumer choice and marketing, it’s little surprise that large companies are willing to spend vast sums of money to get famous faces – from sports legends to Hollywood A-listers – to appear alongside their product.

So, how do companies select these celebrities, what criteria do they have to pass, and how does it affect the business side of the equation? Can large organisations and marketing departments monitor their KPIs successfully enough to nail down an A-lister’s effect on company sales, revenue, net margins and shareholder profit?

Celebrity endorsement – art or science?

Extensive research shows that consumers are more likely to choose a product endorsed by a celebrity than one advertised by an unknown commercial actor. What’s more, the same research reveals that consumers make a decision to buy a product much faster when a celebrity is involved. That’s not to say that consumers ignore quality at the altar of star fandom; if Nespresso, for example, sold a terrible, poor-quality product on the back of George Clooney’s endorsements, the spell would quickly be broken.

Research by neuroscientists and psychologists in the field of marketing psychology reveals two important discoveries for large organisations to consider: not only do celebrity endorsements usually pay off, but they also influence the speed at which consumers make decisions about a product compared to decision-making in the absence of celebrity endorsement. In other words, a product sold with an A-lister endorsement is likelier to hook long-lived and loyal customers. Further scientific research argues that sports stars appeal to a broader section of consumers than any other type of A-lister.

The science behind this research looked at pupil dilation and eye movement among would-be consumers in a mock ad scenario with celebrities and non-celebrities. This revealed that consumers experience less pupil dilation when making a decision about a product endorsed by an A-lister. This led researchers to conclude that consumers make much quicker decisions when a celebrity is involved and are much more confident about their choice. Known in marketing circles as the ‘vampire effect’, pupil dilation and eye-movement tracking suggest that would-be consumers watching a TV commercial tend to fix their gaze far longer on the celebrity than the product itself. The term ‘vampire effect’ was coined to address fears that marketers run the risk of allowing A-listers to outshine the product. Despite concerns about celebrity endorsements overshadowing the brand, data suggests these fears are unfounded. TV commercials featuring celebrities still achieve strong results in KPIs such as brand awareness, positive brand perception, customer loyalty and sales.

A-lister endorsements: the pitfalls and the selection criteria

To casual students of marketing principles, it would seem on the surface that success in sales and revenue, as well as brand enhancement, are based exclusively on a celebrity endorsement and the specific choice of celebrity. But the first thing organisations need to understand is that many organisations that enjoy little more than moderate success in this field, have used celebrity endorsement as a primary tool to help build their brand. This misses the point of celebrity endorsement. As we can see from Nike’s association with Tiger Woods, Nike’s branding journey had established momentum long before hiring the famous golfer, as it had been engaged in a consistent, long-term branding process. The endorsement from Woods, as many marketers have pointed out, was just one of many elements of a holistic branding strategy, but they used it as one of the principal channels to establish their brand in the minds of a particular set of consumers.

So, it’s worth remembering that A-lister endorsement is just another channel; large organisations would do well to understand that endorsement should never be seen as a prize in and of itself. As just another channel, it forms part of a broader category of sponsorship marketing. The key takeaway here is this: don’t expect an A-lister to build your brand without an existing strategic plan for brand building in place.

How do companies choose A-listers as potential endorsers, and how can you measure A-lister ROI?

There are three main considerations here, and although it’s unlikely a company’s first choice will ever satisfy all three, getting two out of three is essential.

Most people would reject the accusation of being superficial; we like to think we bring intelligent, reasoned analysis to all situations. It may come as a surprise, then, to hear that successful endorsers will be physically attractive and lead an appealingly attractive lifestyle. For major brands like Nike or Nespresso, target audiences consider a celebrity’s attractiveness just as important as their professional achievements, whether it’s acting prowess, basketball skills or F1 racing expertise. Attractiveness enhances brand recognition, and unattractiveness will pull the brand down.

The other quality more intellectual consumers will analyse, at least subconsciously, is whether an A-lister is credible. In other words, is your potential A-lister trustworthy and credible when it comes to being seen as a gifted individual in their field? Marketers regard endorsements as a way for consumers to cut through the high levels of brand white noise in the market, so whether your A-lister has credibility will influence a consumer’s willingness to accept them at face value, and therefore your product. After all, although a simplistic example, Nespresso customers might struggle to accept Clooney’s endorsements of its products if he was known to hate the taste and smell of coffee, however good his performance in Ocean’s Eleven.

The third and final principle for selecting a successful brand or product endorser is what marketers refer to as ‘meaning transfer’ between the A-lister and the brand. In other words, the ultimate success of the partnership between your brand and your chosen A-lister is predicated on lifestyle, identity and personality. If these brand attributes are not compatible or have nothing in common with those of your chosen celebrity, there will be little leverage to exploit for your branding channel, and the collaboration will likely prove unfruitful, at best. At worst, it could be a disaster.

As for measuring the ROI on engaging an expensive celebrity endorser, many of the traditional KPIs are qualitative as well as quantitative, and therefore the calculus on your return can be punishingly difficult to justify to the board. Some marketing scientists, however, have argued that stock price and enterprise value are the most sensitive measures of the success or failure of brand endorsements. However, an analysis of some of the most high-profile celebrity endorsements in relation to 20-year stock prices remains inconclusive. Nike’s stock price has risen relentlessly since Woods started endorsing them in 1996, and Adidas’ share price has climbed healthily since Messi signed his deal in 2017. However, Nespresso owners Nestle’s stock price has continued to rise since the company dropped Clooney as its brand ambassador in 2013.

Star quality pays off

It’s part art, part science, and part trial and error when it comes to selecting your ambassador and measuring their ROI in sales,  profitability and shareholder value. And while it’s crucial to remember that brand endorsers are just one channel of a much broader marketing strategy, with the right mixture of expertise and analysis, it’s entirely viable to successfully reinforce your brand with celebrity star value while driving profits and increasing sales.

Posted inContent Marketing Posted on
written by

Alex Ionides Managing Director, Silx