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Mon 5 Jul 2010 04:00 AM

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Star people

Celebrities have been cashing in on endorsement deals for years but can it really boost your profits? We find out.

Star people
Star people
Star power Eva Longoria and Victoria Beckham helped design LG’s Fashion Phone while Diego Maradona, Pele, Zinedine Zidane and Sean Connery have all featured in Louis Vuitton’s advertising campaigns.
Star people
Celebrity boost Sainsbury’s deal with the celebrity chef Jamie Oliver resulted in an additional £1bn worth of sales in the first two years of the partnership.
Star people
Singing sensation Lebanese-singer Nancy Ajram is Coca- Cola’s official celebrity spokesperson for Arabia, North Africa and the Levant.
Star people
Brand builders Paris Hilton is one of the most successful endorsers in the field, having launched her own fragrance collection.
Star people
David Beckham has deals with world-class brands such as Armani, Gillette and Pepsi.

Celebrities have been cashing in on endorsement deals for years but can it really boost your profits? We find out.

When Kylie Minogue told a British newspaper last month that she regularly uses Ponds Cold Cream, sales of the $6 moisturiser soared 120 percent. Unilever might have been selling its Cold Cream, known for its popularity among pensioners, for a century but never has it seen such a dramatic increase in sales. "We're calling it ‘the Kylie effect', and it has been dramatic, to say the least," says a Unilever spokesperson. "It's been crazy. Stockists are increasing their orders and we've had to up our product orders pretty dramatically."

Minogue might not have been paid to endorse Ponds but brand strategists wouldn't be surprised if the pint sized star was offered a lucrative deal to front its next campaign. "Kylie represents a fantastic opportunity for brands due to high levels of familiarity and affinity among consumers," says Rob Valsler, a media researcher at the London-based research company, Millward Brown. "Both parties potentially stand to gain from this alliance so I'd advise each side to seriously consider ways of working together."

Marketers are increasingly partnering with celebrities to maximise brand awareness and forge emotional connections with consumers. Desperate Housewives star Eva Longoria and Victoria Beckham laugh and giggle in adverts for LG's Fashion Touch Phone. Madonna starred in Louis Vuitton's summer campaign while Cheryl Cole swishes her hair in adverts for French beauty company L'Oreal. Football stars Wayne Rooney, Didier Drogba and Ronaldinho each take it in turns to line up a goal in Nike's FIFA World Cup advert.

Celebrity endorsement is nothing new. Ever since the advent of radio and television, companies have been using celebrities to increase brand awareness. Al Jolson was just as famous for his endorsement of Lucky Strike cigarettes as he was his acting and singing during the 1940s. The Monkees appeared in several Kellogg's adverts at the height of their fame in the 1960s.

Despite the global downturn this trend has continued. A quick flick through any magazine, website, blog or television channel reveals the frequency at which celebrities are used to promote products. Celebrity endorsement has doubled in the last ten years, according to a report by the market website,

. At high-profile events such as America's Super Bowl, celebrities and music stars featured in 40 percent of the commercials while celebrity ads increased 150 percent during the Grammy Awards this year, according to the talent and rights consultancy, GreenLight.

Why the increase? It's simple - celebrity sells. Match the correct celebrity with the right brand and the uptake in sales can be instant, says Hermann Behrens, CEO of The Brand Union, Middle East. "The short term reward of aligning a product with a celebrity, who is currently a strong equity in themselves, may lead to a quick uptake by consumers and an immediate response in terms of sales and commercial benefits."

"At the end of the day it is about vanity," adds Elie Khouri, the chief executive of Omnicom Media Group, MENA region. "If you see Justin Timberlake promoting a brand of aftershave and you are a Justin Timberlake fan, then you are probably more likely to buy that aftershave. Why? Because you are a fan. Do you think other people will think you are Justin Timberlake? No, of course not, but it means you are associating yourself with his image."

Almost two thirds of consumers (29 percent) said celebrity endorsements influence their purchasing decisions while 25 percent admitted they had bought a product because a celebrity was promoting it, according to a 2009 study by the media agency, Mediaedge:cia.

When the British supermarket Sainsbury's appointed the up-and-coming chef Jamie Oliver (also known as the Naked Chef) as the public face of the chain in 2000 they credited the chef with an extra £1bn of sales or £200m gross profit in the first two years. The ten-year partnership still remains strong. Just last month the supermarket attributed a spike in sales of asparagus and Jersey Royal potatoes on Oliver's current TV campaign.

"When you look at the reports that showed the value of the [Sainsbury's] brand and Jamie Oliver partnership two years into the deal, a lot of them were predicting the effect would start to diminish because of Oliver's exposure levels. But in fact they carried on using him and he's actually become a much stronger brand than when he was just the Naked Chef," says Valsler.

"Sainsbury's could have gone with the general consensus thinking he'll be overexposed and shifted to another up-and-coming celebrity but then they would have missed out on a lot of those benefits that they've had from that long-term partnership," he adds.

In February, Nielsen credited Cheryl Cole's collaboration with L'Oreal on a 2,400 percent uptake in sales of the firm's Elvive Full Restore 5 hair care products, which Cole fronts the campaign for. Sales increased from 10,000 at the start of September to a peak of more than 250,000 by the end of November, according to the marketing and advertising research firm. Cole isn't the only one. Nicole Kidman's 2003 feature length advert, directed by Baz Lurman, resulted in a 30 percent increase in sales of Chanel's classic perfume, according to Euromonitor.

But unlike Al Jolson's Lucky Strike adverts, today's most successful endorsements go much deeper than simply signing a star to a brand. The two have to work together; whether it's promoting the two brands alongside each other or getting the celebrity involved in the design.

"That's where you really start to see ownership and believability. Consumers are so smart and so informed that believability is created not by saying but by doing and brands are created not by saying any more but by doing," says Behrens. "If the actual celebrity is involved in the design of a product, if there's a real transfer of the celebrity's personality into the design and the way the product is delivered that is quite a deep form of endorsement and certainly the heartland of celebrity endorsement."

The Lebanese star Nancy Ajram's collaboration with Coca-Cola is a good example. Ajram signed with the drinks company to become the official celebrity spokesperson for the Levant, Arabia and North Africa region shortly after the launch of her fourth album in 2004. Her first Coke advert featured the song Oul Tany Kida? (Say That Again?). The advert was so successful the song was filmed as a music video and the two have since released four hit singles, which feature Ajram and a can of Coca-Cola.

When Victoria Beckham and Eva Longoria signed up to promote LG's Fashion Phone the two stars input into the design of the phone was evident. LG produced short video clips that clearly showed Longoria and Beckham working with the phone's designers.

Other collaborations include Madonna's tie-up with H&M, Kate Moss's own range for Top Shop, Christina Aguilera's jewellery line for Steve Webster and David Beckham's sportswear range for Adidas.

Some savvy stars are becoming brands in their own right. Actress Jennifer Lopez, who also has her own clothing line, was one of the first to successfully market her own perfume Glow by JLo back in 2002. Global sales peaked $78m in 2003, according to Euromonitor. Since JLo's debut on the fragrance scene, a plethora of big name stars have released their own perfume from Britney Spears to Sarah Jessica Parker to Paris Hilton and P Diddy.

Behrens - who is currently working with a local fashion designer to develop their own perfume - says celebrity fragrance in the Middle East has yet to reach the same epic proportions as in the West, and sees room for growth. "There is a big trend towards celebrities having their own perfume. Particularly in this market, perfume is a personal thing and an important ritual in the culture that I think there's quite a lot of interest from celebrities in having their own perfume brand," he says.

Some companies take brand association one step further by asking celebrities to join the company board. It may sound absurd but when Disney appointed actor Sidney Poitier to its board in 2004, the firm's share price jumped 4.2 percent that day. ‘Reaching for the Stars: The Appointment of Celebrities to Corporate Boards' is a study by four US-economists that was released in March. Of the 700 celebrity director appointments (out of 70,000 board appointments in all between 1985 and 2006 in the US) all of the firm's shares continued to outperform significantly over the subsequent one, two and three years. Why? Because "celebrities make firms more visible," one of its co-authors, Kenneth A Kim, tells CEO Middle East.

Paramount to success is picking the right star. London-based Millward Brown recognised the need to help companies choose appropriate celebrities several years ago when it launched a formula to calculate the relationship between a celebrity and brand partnership. The formula calculates cebra (celebrity plus brand) by measuring several factors including familiarity, affinity, buzz (how talked about the celebrity/brand is) and personality matching matrix (whether the celebrity is firm, reserved, calm etc). According to its most recent report Kylie Minogue, Cheryl Cole, David Beckham and Ant & Dec are Britain's most popular while Will Smith, Brad Pitt and Oprah Winfrey are all popular choices Stateside.

But marrying a brand to a celebrity can have its pitfalls, Tiger Woods being the most obvious example. The golfer was said to receive an annual salary of $110m from endorsements and tournaments and was the highest paid celebrity in the 12 months from June to December, according to Forbes. Shortly after his fall from grace several adverts featuring him were pulled.

According to the David Brown Index, which is used to gauge the ability of personality to influence shoppers, Woods ranking dropped to 24th from 6th following the reports about his infidelity.

"The danger is that it can very easily, in a single moment, go badly wrong," says Khouri. "You are relying entirely on the reputation of an individual. The best (and worst) example of this is Tiger Woods; within a few days he went from being the greatest brand ambassador in the world to someone nobody wanted to touch."

Companies should also be careful to tread the fine line between successful endorsement and overexposure. While it's almost impossible to sign exclusivity rights to celebrities, it is important not have their names splashed across everything; it doesn't bode well with consumers and in some cases has the opposite effect.

Behrens raises some concern over the overexposure of the Bollywood star Shah Rukh Khan who endorses several products in India and the UAE. "Khan is over endorsed. It will dilute his own brand and consumers will see [his association with the product as] labeling rather than a true endorsement. It cheapens the whole exercise."

So if you're looking to increase brand awareness and can afford to sign a celebrity, it could be a winner all round. Just make sure you choose wisely.

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