Celebrity Endorsements: What are the benefits?

In the modern world, where most people have not just one or two, but several social media accounts, it is increasingly difficult for brands to get their voices heard amidst the never-ending din of noise made by their competitors.

Cracking the algorithm and ranking highly on Google are two of the loftiest goals for any aspiring business, but what of the tried and trusted endorsement method of advertising? Is it a remnant of a bygone era? Can a deal with an A-List star revive the fortunes of a struggling business? And what are the pitfalls of teaming up with a celeb?

Read on to find out…

Are Celebrity Endorsements Dead?

Certainly not. As well as being home to poutine, maple syrup and ice hockey, Canada is also home to the most prolific celebrity endorser the world has ever seen – Drake.

The 38-year-old rapper is worth a reported USD$550 million, and whilst most of that comes from his musical feats and business ventures, a large percentage of his income is from commercial deals.

Nike, Apple, Sprite, Burger King and even the Toronto Raptors are just a few of the brands that Drake has put his name to. Most pertinently, considering the current gambling landscape in Canada, the One Dance singer has signed an endorsement deal with Stake – one of Ontario’s very best online casinos and crypto investment companies.

Drake isn’t alone in using his name and brand to strike endorsement deals, but the list of celebrities doing similar is smaller than it was 20, or even 10 years ago. That’s because of the way in which the entertainment landscape has changed.

No longer do singers, actors and performers have a monopoly over airtime and exposure. With the advent of social media, more and more people are turning away from traditional media outlets for their entertainment needs.

In the world of celebrity endorsements this has led to a near eradication of the middle ground. Whilst huge names like Drake, Eminem and Ryan Reynolds are still making a fortune from commercial partnerships, there is now a vacuum between them and the smaller stars.

Outside of the A-List world, content creators, social media stars and B-List celebrities are flogging VPNs, accounting software and meal prep plans which reflects their dwindling market share by comparison.

(Drake is one of the most famous singers on the planet and is THE most prolific brand endorser on the face of the earth.)

Are Endorsements Valuable to Businesses?

Yes. Both large endorsements like those mentioned above with Drake and the smaller ones are valuable to businesses. The former is unsurprisingly the most beneficial as it hugely increases the exposure that a brand will experience and gives them a legitimacy. That is of course counterbalanced by the enormous cost associated with these deals – according to the Financial Times, Stake are paying Drake $100 million to front their brand.

On the other hand, smaller deals come with less of a risk in terms of financial outlay but less of a reward in terms of exposure and brand awareness. That’s why companies that engage in this type of endorsement tend to favour quantity over quality.

Nord VPN are a great example of that business model. Even if you have never had call to use a VPN or don’t know what one is, chances are you will have heard a podcaster, YouTuber or social media star recommending Nord VPN.

(Surely the most heard commercial in the world.)

The Pitfalls of Celebrity Endorsements

There are obvious and not so obvious pitfalls when it comes to celebrity endorsements. The most obvious is that the deal will not have the intended outcome. The celebrity will either fall out of favour, or their demographic might just not be suited to the brand that they’ve partnered up with.

A not so obvious pitfall is that the celebrity in question has a dramatic fall from grace, most likely through involvement in a scandal. The luxury jeweller Bulgari for example, experienced collateral reputational damage in 2017 when allegations of sexual misconduct were levelled at Kevin Spacey, an actor who they had only just recently partnered up with.

In the main though, the biggest risk is that the star or creator that a brand hitches their wagon to suddenly undergoes a dip in popularity, just after signing that lucrative sponsorship deal.

In Summary

The media landscape has shifted dramatically in the past decade or so, but there is still a place for celebrity endorsements. Outside of the upper echelons of celebrity, the market hasn’t decreased, rather it is shared across more creators than ever before.

That’s led to an increase in brand deals, but a massive decrease in the average value of these deals, which means brand and creators are having to work harder than ever before.