Take Stock of Celebrity Endorsement Value

In the past, economic analyses concluded that an endorsement by a celebrity protects against drops in stock prices of a publically-held company. The effect was said to be substantial enough to give a company financial benefits greater than the cost of the endorsement, even if sales didn’t increase.
     Now, a study from TV advertising consultants Ace Metrix indicates that the stock of celebrity endorsements may itself be dropping. Among the 2,600 ads assessed by Ace Metrix over the months of year 2010, fewer than 12% using celebrities showed evidence of superiority over non-celebrity ads. More importantly, nearly twice as many of the celebrity ads—20%—showed evidence of the celebrity endorsement actually dragging down the ad’s effectiveness.
     Among the worst of the 2010 celebrity ads, according to the analyses, were Radio Shack ads with Lance Armstrong and Nike ads with Tiger Woods. Among the best were Liberty Mutual and Progressive insurance ads featuring Oprah Winfrey and iShare ads with Ed Burns.
     What made the difference? Celebrity endorsements do carry weight. Here are tips on how to get the best from them:

• Feature winners. Marketing agency Zeta Interactive said that positive buzz on the Internet about Lance Armstrong dropped dramatically during 2010, the drop closely matching what happened to RadioShack’s Internet buzz during the same time period. Zeta Interactive attributed the excessive drop to suspicions Mr. Armstrong used performance-enhancing drugs during races. Golfsmith International, who call themselves the world’s largest golf superstore, reported that their sales of Tiger Wood’s signature line of golf clothes were down over 7% during a time that golf apparel sales overall climbed about 11%. Golfsmith International attributed the drop to Mr. Wood’s failures to bring home the money in PGA Tour tournament wins during that period.
• Draw attention with the celebrity, show how what the celebrity says is logically linked to the benefits of shopping with you, and then stay with talking about your store for the rest of the ad. Research finds that celebrity ads are weaker if you start by showing the brand and end by showing the celebrity.
• Researchers at INSEAD-Fontainebleau, Erasmus University, and University of Florida find clear advantages in arranging for endorsements from a group—such as a sports team—rather from an individual—such as a particular star on the team. Endorsement from an individual makes you too dependent on the behavior of that individual.

Click below for more:
Select Celebrity Endorsers Who Have Credibility
Get Endorsements from Groups
Consider Using a Business Character Icon
Make Your Sales Staff Celebrity Endorsers