Over the years, celebrity endorsements have played a pivotal role in brand promotion and awareness. Many businesses have successfully leveraged the popularity and appeal of celebrities to enhance their brand image and drive sales. However, the landscape of celebrity endorsements has undergone significant changes in recent times and with the rise in digital-first brands. With new risks, higher consumer expectations, and changing preferences, businesses are now taking on completely different risks and challenges with celebrity endorsements. One of the most notable shifts is the transition from traditional celebrity endorsements to celebrity-owned brands. In this blog post, we will explore the evolution of celebrity endorsements, the new risks associated with them, and the impact of celebrity-owned brands on the market.
With the rise of social media, the risks associated with celebrity endorsements have increased significantly. In today's digital age, anything can go viral in a matter of seconds, and bad publicity can have a significant impact on a brand's image and reputation. Moreover, both the celebrity and the brand are liable for each other's actions, and any misstep can result in costly lawsuits and damage to their public image. A prime example of this is the latest lawsuits for celebrities who endorsed FTX before its historic fall. The list of celebrities in the lawsuit includes A-list stars and professional athletes like Tom Brady & his ex-wife Gisele Bündchen. The underlying argument of these lawsuits is that celebrities should have done their own due diligence to ensure FTX was operating correctly. Since they didn’t do the proper due diligence and still choose to endorse the brand they effectively influenced their audience to interact with a brand that ultimately led to the majority of people losing their money. The risks of celebrity endorsements go beyond just financial and legal repercussions; they can also cause irreparable harm to a brand's image, and it can take years to recover from a public scandal. Even more recently than FTX, Bud Light has been under scrutiny for its brand partnership with transgender influencer Dylan Mulvayne. In short, Bud Light posted a promotional video for a new sweepstakes that featured Dylan Mulvayne. This sparked outrage and in some cases calls for a boycott of the brand. As of this article, Bud Light’s parent company Anheuser-Busch lost over $6 Billion dollars in market capitalization just 6 days after the partnership became public. Although this specific situation has a ton of different layers that contributed to the outrage, this is a reminder that businesses must be more cautious and strategic when selecting celebrities to endorse their brands and should consider the potential risks associated with their chosen celebrity carefully.
In recent years, the impact of celebrity endorsements has been on the decline. While in the past, celebrities were seen as powerful influencers who could sway consumer behavior and drive sales, today's consumers are more discerning. With the rise of social media and influencer marketing, consumers are becoming savvier and can easily spot inauthentic partnerships. As a result, celebrities looking to launch their own brands need to be more strategic in their approach. They need to be authentic and transparent, showing that they truly believe in their product and are not simply using their fame to make a quick buck. Otherwise, they risk alienating their fan base and losing the very consumers they were hoping to attract.
One significant shift in the celebrity endorsement landscape is the rise of celebrity-owned brands. Unlike traditional celebrity endorsements, these brands are built on a genuine relationship between the celebrity and the product they are selling. Because the celebrity has a personal stake in the success of the brand, they are often more invested in its success and can be more effective at promoting it authentically. This not only helps to drive consumer action but also gives the celebrity a greater upside than a traditional endorsement deal. By owning the brand, the celebrity can benefit from its success in the long term, rather than simply collecting a one-time fee for their endorsement. This does however place the full risk on the celebrity themselves. If a celebrity is involved in a scandal that is separate from the brand itself this can still impact the brand itself. We saw this take palace over the past year with Kanye West and Yeezy. As Kanye found himself in a massive public scandal, his brand took a massive hit as Adidas announced it would stop manufacturing and selling Yeezy products. Overall, the power of celebrity-owned brands lies in the authentic relationship between the celebrity and the product, leading to more effective promotion and greater long-term benefits for both the celebrity and the brand.