Celebrity Endorsements (Brand Ambassadors)

Celebrity Endorsements: Is it a Minefield?
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Asamoah Gyan in Melcom advert.

The 15th February 2013 arrest of South African paralympic star Oscar Pistorius for shooting dead his girlfriend Reeva Steenkamp shocked his countrymen and the rest of the world. In the wake of his trial for murder (Pistorius says it was an accident) many of his brand sponsors have either withdrawn or cancelled their endorsement contracts with him. These include sportswear manufacturer Nike, spectacles maker Oakley and French Fashion house Thierry Muggler. Though a few sponsors still remain, the quick dis-association from Pistorius by the sponsors named above illustrates the risks associated with having celebrities endorse a company's products/services, or serving as brand ambassadors. 

In losing these sponsors, Pistorius just added a new chapter to the big book of celebrities who lost lucrative sponsorship deals due to unacceptable or wrong behaviour.

Late last year the United States (US) anti-doping agency came up with evidence proving that cyclist Lance Armstrong used performance-enhancing drugs to win his record 7 Tour-de-France titles. Not only has Armstromg being stripped of all those titles but sponsors Nike, Anheuser Busch, Trek and others have severed ties with him.

It came as a shock in November 2009 when then world number one golfer Tiger Woods was exposed to have had extra-marital affairs with many women. The well-publicised scandal saw Woods lose his marriage and lots of endorsement deals too. He lost 6 deals with Gillette, Gatorade, AT & T, Accenture, Tag Heuer and General Motors. 

In 2009 again then Olympic World Champion swimmer Michael Phelps was pictured using a tube to smoke marijuana. Quickly some of Phelp's sponsors like Kelloggs and AT & T dropped him as their brand ambassador. Other US sports stars that have lost endorsement contracts in the past due to unacceptable behaviour include boxer Mike Tyson, basketball player Kobe Bryant and NFL quarterback Michael Vick.

Celebrities losing sponsorship deals abound in the entertainment industry.  

When in 2009 singer Chris Brown physically assaulted his girlfriend and fellow singer Rihanna, he was deserted by gum maker Wrigley's and Got Milk. Some radio stations even stopped playing his songs. Senegalese-American singer Akon was in 2007 dropped by his sponsor Verizon Wireless due to an incident at one of his concerts. The concert was meant for "over-18s" only. During performance Akon pulled on stage a lady fan and simulated sexual scenes with her. It turned out the girl was only 15 years old.  

The case of Grammy-award winning singer Britney Spears is particularly interesting. In 2001 she signed a brand ambassador contract with drinks maker Pepsi and after the signing Spears said "I'm a big fan of Pepsi products and Pepsi commercials". Later that year Britney was photographed with a can of Coca-cola (arch rivals of Pepsi) whiles on tour in Australia. In 2002 Britney was again caught on camera coming out of the studio with a bottle of Sunkist, a fizzy drink of Coca-cola. It appears Pepsi had had enough and the next year they cut contract ties with her. 

In Europe, sportswear maker Umbro ended its sponsorship with former England captain and Chelsea John Terry after he went on trial for racism. Similarly in 2011 newspapers confirmed that Manchester United striker Wayne Rooney had been sleeping around with other women while his wife Coleen was pregnant. Not long after, drink brands Coke Zero and Tiger Beer dropped Rooney as their celebrity endorser. Coke Zero had been marketed as a family-friendly brand so Rooney's extra-marital affairs were seen as inconsistent with the attributes of the brand.  The list of celebrity indiscretions is as long as it is endless.

Whereas examples abound in US and Europe of celebrity misconduct and sponsor severing ties, I struggled to find examples in Africa apart from South Africa. I was unsuccessful. Some cases come close though. In Nigeria popular Nollywood actor Nkem Owoh popularly called "Osuofia" is a brand ambassador for mobile phone firm MTN. There was a huge public backlash against him when it was reported that he allegedly ordered the demolition of a house belonging to a Nigerian widow. But this did not affect his deal with MTN. 

In Ghana mobile telecoms firm Glo Mobile has signed Ghanaian international footballer John Paintsil as a brand ambassador. In February Paintsil was arrested for beating up his wife and a next door neighbour who was a witness filed charges. Upon intervention by mediators the charges were dropped.   Paintsil's face is still splashed on billboards for his sponsor.

Three months ago well-known Ghanaian actor Kofi Adu, popularly called 'Agya Koo' was arrested and put before court for defrauding a lot of people by false pretences. He had collected monies from the people under the pretext of securing visas for them to travel abroad but could not do so. He admitted the offence and refunded the money to the victims. Agya Koo is brand ambassador for 'House Party computers' and 'Cho Cho cream'. Both adverts continue to run on TV as though nothing happened. There has not been any word or statement from the companies involved when the scandal broke out. 

What is Celebrity Endorsement (CE)?
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So what is CE? It is a channel of brand communications in which a famous person acts as a brand's spokesperson and certifies the brand's claim by extending his status in the society to the brand. Some advertisers refer to CE as "borrowed equity". In short a company using a famous person's popularity or likeability to rub on a product or service. Once signed on, a brand becomes hostage to a celebrity's image.

CE is big business that can establish the success of a brand or damage it. A colossal $50 billion is spent annually on CEs and corporate sponsorships, according to marketing research outfit Celebrity DBI.

Before a firm chooses a famous person to endorse its brand, many factors must be looked at to ensure maximum benefit is derived. Firstly every brand has a unique unseen 'personality'. Every product or service has a perceived image in the mind of customers so marketers must find a celebrity who appropriately fits the image of the brand. The celebrity must also be popular with the brand's target market to attract more customers. The celebrity's attractiveness, expertise and trustworthiness must all be considered. 

Successful Brand Endorsers
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One of the most successful of all time is former basketball player Michael Jordan's endorsement for Nike. Although he is now retired, Jordan reportedly still earns $80 million yearly from the deal. Since Nike signed on Tiger Woods as celebrity endorser for its golf products, Nike grosses $250 million in annual sales. PSG British footballer David Beckham is the wealthiest soccer player in the world. He currently earns about $43.1million a year from sponsorship deals with Adidas, Samsung, and Sainsbury's. He earns more from sponsorships than on the field.

Consumer Reactions to Celebrity Scandals
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When celebrities misconduct themselves, there is normally 3 reactions from the sponsoring company: stop the adverts, wait for the contract to end then refusal to renew it, or cancel the contract.

US based market research firm IPSOS MORI conducted a poll of 18,000 consumers worldwide on their purchase opinions after a company removes a celebrity for bad behaviour. 27% said they will stop buying a product or patronising a service completely. Of those who completely stopped buying a product, half of them said it was only a temporary measure. These temporary people said they resumed buying the product after sometime once the scandal died down. 

This temporary boycott the research suggests pre-supposes that negative reactions to a scandal involving a celebrity is deceptive, and has less impact on a product purchases than might first seem. Additionally reactions to celebrity misdeeds vary based on a consumer's own set of values and the cultural tolerance/values of the society   in which the act occurred.

It was further revealed that companies whose major markets are based in traditionally conservative countries like China, India, Saudi Arabia and in Africa must pay particular attention to the reactions of their customers. In these markets even if a scandal does not affect immediate purchase behaviour, there could be long-term image and credibility issues.

British consumers are however more forgiving of celebrity bad behaviour (only 6% were likely to stop purchases), probably because they have grown used to them. A few years ago, British supermodel Kate Moss was dropped by her sponsors H&M, Burberry and Chanel after photos appeared of her sniffing cocaine. After the scandal died down fashion brand 'Topshop' signed Kate on to front their new clothing line. 14 collections of the clothing line have been launched and such was the success that the Daily Mail tabloid reported that the cocaine scandal actually doubled Kate's income.

Advantages of CE
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 Famous people positively affect consumer feelings and in turn buying behaviour. Adverts featuring celebrities can increase brand sales by 20%, according to a 2000 research by Harvard Business School. Profits at Walker's crisps soared by 105% after the company enlisted former England football captain Gary Lineker to front its advert campaigns. Nike has continued to be a market leader in part due to its aggressive use of sports celebrities.

Brand ambassadors are most effective in sustaining recollection of an advert and the brand name. Research indicates that customers are more likely to choose a brand endorsed by a celebrity than those without one. CE can serve as signboards to a product's quality and also motivate consumers to buy.

Disadvantages of CE
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 Negative publicity of a celebrity can lead to a drop in sales. When Nike first introduced the 'Air Jordan' brand of footwear, it grossed $160million sales in the first year. In the 2nd year Jordan got injured and missed 62 basketball games and sales of the footwear fell sharply and considerably, proving that a brand can become hostage to a celebrity's image. In China movie superstar Jackie Chan featured in an anti-baldness shampoo advert. After sometime rumours emerged that the shampoo had cancer-causing ingredients. These rumours led to the company's stock price to fall and the company ended up with solvency issues.
      
Some celebrities are superstars and when they are used in adverts, they can overshadow a brand. How many times haven't consumers watched and enjoyed an advert and remember the celebrity who featured in it but not remember the product?

Another problem with celebrity endorsement is over-exposure of celebrities. Some celebrities endorse too many products/services and this causes confusion in the minds of consumers. This confusion raises source credibility issues. In China movie superstar Jackie Chan has featured in more than 20 adverts ranging from cars, soft drinks, washing powder, cameras, air conditioners and even hair shampoo! Because consumers assume that by endorsing a product, the celebrity has some 'expertise' or knowledge about it, if a celebrity features in too many adverts as diverse as shampoo and air-conditioners; it creates doubts in the minds of consumers about the advert.

Lastly CEs are expensive and normally beyond the reach of small and Medium scale companies.

Firm Reaction's to Celebrity Scandals
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 Whiles many companies instantly cut ties, others stick. Why so? After the Tiger Wood's affair in 2009 Nike stuck and supported him even after 6 others withdrew their sponsorship. Nike did so apparently because its golf line of products were started with and built around Woods so withdrawing from him was too great a cost. Some companies will not like to be perceived as kicking someone when they are down. So they will rather support them hoping things will turn out for the better.  

Some companies also stick with a celebrity in times of trouble because to these firms, all publicity is good publicity no what a celebrity has done wrong.

Disgrace Insurance & Reverse Morality Clause
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 Due to the uncertainty and risks associated with engaging celebrities as brand ambassadors, some innovative insurance companies in the US and UK have come up with "Disgrace Insurance" policies. These are policies that seek to protect firms against lost revenue/business arising from celebrity scandals. These policies don't protect the perception of the brand, but only the money spent on the celebrity to endorse the brand. These policies are however expensive.

Some smart corporate lawyers these days also insert what is called "Reverse Morality" clauses into CE contracts to protect their celebrity clients. These are clauses where if a company engages a celebrity as a brand ambassador and the company itself is engulfed in a corporate scandal, the celebrity can sue the company to claim compensation for damage done to the celebrity's image. In other words the celebrity has reciprocal or equal rights under the CE contract. Examples of company scandals include a firm engaging in accounting fraud, using child labour in their supply chain, using exploitative labour practices at their supply factories, or even company executives making offensive public remarks.

Do Ghanaian and African celebrities have Reverse Morality clauses in their CE contracts? I doubt it.   

CE can be very successful for business but their very nature means if they are not properly handled, it could become a minefield.