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Celebrity Endorsements: Risky Business or Rewarding Endeavor?

When you think about Oreos, what comes to mind? America’s favorite cookie? Check. Glass of milk? Most definitely. Shaquille O’Neal? Not so much.

Well, Kraft Foods begs to differ. Just last week, Kraft released a 30-second commercial in which Shaq is teamed with Eli Manning, Venus Williams, and Apolo Ohno to defeat the mysterious “hooded menace” who threatens to overtake the affectionately termed Double Stuf Racing League (DSRL).

One would think that companies would be reluctant to pair up with a celebrity after the infamous “crash heard ‘round the world” and resulting backlash towards golf-legend Tiger Woods. Such is not the case, it seems. Agents and CMOs (Chief Marketing Officers) will always get starry-eyed by the big names of “celebrity” because 1) brands love endorsements, and 2) consumers buy into “celebrity.”

Companies recognize the risk that comes with choosing the celebrity-endorsement approach; many have learned the hard way that it becomes a reflection of their brand. Putting a face to a name makes the brand recognizable; more so when that face is famous. According to Anita Elberse, associate professor at Harvard Business School, some companies have seen their stock increase by .25% on the day an endorsement deal was announced. That doesn’t mean that every brand needs a celebrity-endorser; it has to be relevant to both the brand and the consumer.

However, celebrity endorsement is always worth investing in if you have the right person.

International pop star Lady Gaga is set to revive the instant camera for Polaroid as its Chief Creative Officer.

Teen singing sensation Justin Bieber lends his famous hair and unblemished face to Proactiv.

New England Patriots Quarterback Tom Brady relies on Smart Water when hitting the gym to train for (hopefully) another Super Bowl appearance.

According to marketing research firm Millward Brown, U.S. celebrities show up in more than 15% of advertisements. Not all of the appearances are in front of the camera, mind you. Sometimes, all a celebrity needs to do is be seen toting around a product or updating their Twitter account with a simple 140-character tweet.

American socialite Kim Kardashian spotted with an exclusive Hermès Birkin bag.

That 70’s Show actor Ashton Kutcher tweeted behind-the-scenes details about Popchips (snack food item).

Celebrities generate gossip and gossip requires word-of-mouth communication. If consumers are talking about a celebrity and can link him or her back to a brand, the emotional connection or self-expressive benefit that consumers feel for / towards the celebrity is transferred onto that brand. As you can see, this is 50/50 chance that marketers must gamble on. When a celebrity behaves (Shaq), the brand (Oreo) does well. But, in the case of celebrity misbehavior (*cough* Tiger Woods *cough*), the brand (Accenture, Nike, Tag Heuer) suffers.

With that said, reports show that celebrities still push products. But the question that marketers need to ask of consumers is: Would you buy a product based on a celebrity endorsement?

Written by Vicki Truong

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