Why Celebrity Endorsements Are Risky Agreements for Companies

Here`s another example of a celebrity damaging their reputation and that of a company. For more than 20 years, Bob Williams, CEO of Burns Entertainment, has brought together brands with leading endorsers. (On his contracts: get actress Mila Kunis for spirits brand Jim Beam and sign NBA star Steph Curry with Degree Antiperspirant.) Williams recently spoke to HBR about how companies react when an endorser is involved in a scandal. This is followed by edited excerpts. « The risks are not always devastating for an endorser if a celebrity misbehaves, » Sehdev writes. « Sometimes it helps brands get rid of their bulky image. Burberry hugged Kate Moss again after her alleged cocaine scandal. The two brands are still perfectly coordinated to this day. » Right to terminate the contract due to certain conditions such as celebrity or company misconduct or breach of agreement or if your company goes bankrupt.

Hopefully, your lawyer can make a good list of potential « exits » that usually arise from circumstances beyond your control. People cling to their favorite celebrity, and their fans usually trust them. When they use your product, it shows their fans that it is a product worth using and builds trust in your brand. Seeing a celebrity add their name to a product also reassures consumers about the quality of your product. Celebrity would risk damaging his reputation if he approved a product whose quality is lacking. [1] « Startruck`s marketing directors are warned, » Sehdev writes. « More and more celebrities are being overlooked by savvy consumers and brands are becoming a laughing stock as celebrities leave with reality TV show offerings. » Choosing the right celebrity can open up your brand to new markets. For example, when Nike wanted to grow by sponsoring tennis and athletics, it partnered with Michael Jordan – and that partnership was so successful that it grew into its own subsidiary. [2] In deciding to remove Lochte from their recommendations, Schiffer said, brands like Speedo and Ralph Lauren have had great opportunities to send a message about their values. Sehdev noted that 4 out of 5 people said Lochte`s bad behavior raised awareness of Airweave and Syneron-Candela, two brands that sponsored the athlete and then publicly abandoned him, Business Insider`s Cork Gaines reported. Ok, we`re not dogs, but advertisers rely on the same association between their brand and the celebrity who supports it.

For any brand or celebrity, Schiffer says it`s important to ask for forgiveness. The most critical point, according to Sehdev, is that using a celebrity could make a brand feel relevant. Celebrities can make brands cool and make them stand out. They can also help foster trust. So what happens when this celebrity falls out of favor? We`ve already mentioned a few endorsements of amazing celebrities who are very well paid, and it`s no surprise that celebrities are eager to sign endorsement contracts. But what happens when a celebrity supports multiple brands, simultaneously or quickly followed by the other? The answer is that brand and celebrity can suffer. The contract must also include any disclaimers that may need to accompany promotions, press releases or advertisements to protect you and celebrities. Next, the researchers looked at factors that might influence the public`s reaction to celebrity misconduct and found four that played an important role. First, does celebrity really deserve to be accused? Someone who commits domestic violence, for example, is clearly guilty of someone whose nude photos have circulated because their computer has been hacked; In fact, the latter person could be seen as a victim rather than an aggressor. Second, is the scandal directly related to the celebrity profession, as if an athlete were taken with performance-enhancing drugs, or is there no connection, as if the person were having an extramarital affair? Third, is the celebrity profession closely related to the product that is supported, for example when a musician touts a guitar brand, or is the relationship distant, such as when an actress attracts a liquor company? After all, did the celebrity make a public apology? Endorsements and advertising need to be carefully created and planned, and we hope this article has helped you learn what can happen to your brand if you choose the wrong celebrity to support your brand. No one is perfect, especially celebrities.

People tend to put them on pedestals and worship them, and then they are inevitably disappointed when celebrity takes a not-so-smart gesture or says something bad. How worried are companies about endorser scandals? Twenty years ago, the level of concern was one on a 10-point scale. Today, there are eight. I mark the change in 2003, when Kobe Bryant was accused of sexual assault. [Editor`s note: Charges were dismissed; Bryant publicly apologized and filed a civil lawsuit.] Until then, prominent celebrities had an aura of invincibility. After that, advertisers started looking at the kind of approval differently. Moral clauses for new endorsers have become too detailed in a very general way, if at all. And brands have started to do a lot more due diligence when selecting celebrities in order to minimize their risks. « A brand at the root is about trust, » Eric Schiffer, president of Reputation Management Consultants, told Business Insider. Using a celebrity, he says, fosters a sense of « familiarity » with a brand, so when shoppers go to the store, they already feel like they`ve built trusting relationships with certain brands. Moral clauses give the sponsor an exit in an otherwise irreproachable endorsement contract when the speaker commits an act that falls within the scope of the clause.

Typically, the « . defined as criminal, scandalous or otherwise publicly reprehensible conduct. 3 These clauses are generally among the most controversial and difficult to negotiate provisions of an endorsement contract, but they have been called « . valid and enforceable because the advertiser pays for the use of the good reputation and image of the [celebrity]. 3 This advertiser may want to end this relationship if that person`s actions damage that name and image. The latter is a big one. This means that celebrity is not « immune » when you make false claims about your product or service. They lend you their name and credibility, but the way things are presented is important because not only the reputation of the celebrity is at stake, but also the possible legal implications for you. As you can see, there are risks for both parties here.

However, even if a celebrity fits the brand well, using a celebrity for endorsements comes with its own potential risks: when celebrity endorsements are fine, they are a powerful tool. Sehdev points to successful deals such as Michael Jordan and Nike, Jennifer Aniston and Smart Water, and Mark Wahlberg and Calvin Klein. Celebrity endorsements are not new. They emerged in the mid-1800s, when suppliers of medical tonics received support from religious leaders and those in the monarchy to help them sell their products.1 Researchers first examined news databases for examples of publicly traded U.S. companies whose top supporters generated negative publicity from 1988 to 2016 while they were under contract. This resulted in 128 incidents involving 230 companies. Fifty-nine per cent of endorsers were athletes, 24 per cent were television or radio personalities and 17 per cent were musicians; 70% were men. (Nike had the highest number of incidents – 23.) Despite the 29-year period, half of the incidents occurred from 2010 to 2016, suggesting that the pace of celebrity scandals has accelerated. .