Brands have been using celebrities in advertising for decades because they can bring in huge rewards. Choosing the right celebrity to endorse your products can help you stand out, build trust, and make your product memorable.
Are these benefits commonly associated with celebrity endorsements simply conjecture derived from anecdotal evidence? We delved into the research to determine whether celebrity endorsements truly do have an impact on the bottom lines of businesses and if so, how.
How do celebrities influence customer purchases?
Marketers use celebrity endorsers to influence purchase decisions of their target market. But how exactly does a celebrity impact a consumer’s buying behavior?
The Aspirational Reference Group
Celebrities and athletes make effective endorsers because people aspire to be like them. If a consumer looks up to a certain famous person who supports a particular brand, then that consumer will associate it with their success, beauty, athletic skill, etc. and subconsciously believe that using that product will give them the same traits they admire.
The more of a following a celebrity has the more it will bring attention to the brand they are endorsing. If a buyer sees an ad featuring a celebrity they like, they are more likely to remember that product and to make that association between the two. Even then, a Taiwanese study showed that consumers are more likely to memorize a product that a celebrity endorses, whether they are a fan or not.
Does it really make a difference to your sales?
This is an important question: what is the economic value of endorsements? The most important thing to know is whether there is a pay-off to enlisting a celebrity to endorse your product.
In the book Contemporary Ideas and Research in Marketing, researchers found that 85% of people surveyed said that celebrity endorsements enhance their confidence in and preference for a product, which in turn influences their purchase intention. However, celebrity endorsements do not translate to brand loyalty. Buyers will be attracted to a brand because of a celebrity but they will quickly shift if the product does not perform.
In this article in the Journal of Advertising Research, researchers at Harvard Business School and Barclays Capital found that yes, celebrity endorsements do increase sales ($10 million in added sales annually, or 4%) for the target company but do not affect competitor sales. They also found that celebrity successes can increase the company’s share price.
There is also the opposite effect: when celebrities make mistakes the brands they endorse will suffer. In 2009 when Tiger Woods’ image was scandalized, he was dropped from a number of his endorsements. Nike kept him and suffered a loss of $1.7 million in sales and 105,000 customers.
How can you use this information?
Celebrity endorsements are a multimillion dollar business and everyone wants to get involved, but is it right for your business? While the research says that they can increase sales, there is little discussion about the relation between customer acquisition costs and their long-term value from celebrity endorsements. That cost will vastly increase when you start working with a celebrity endorser, which means that an endorsement is most effective when your product can really deliver. That begs the question: if your product is really superior, do you need a celebrity to sell it?
If you decide to use celebrities in your advertising, here are some tips to make it work:
- Choose the right celebrity. They should represent the market you want to target. Ensure that they are not overexposed – if a celebrity is endorsing multiple brands it will dilute their influence, especially if you don’t have high brand recognition. Q Scores are a widely used shortcut to awareness and likeability.
- Be sure you can afford it. Not just in terms of the amount paid to the celebrity, but assume that they don’t bring in the revenue you expected. Can your marketing budget afford this risk?
- Speak to your consumers. You want your consumers to feel a connection with the celebrity, but also to your brand. Ensure that your product is meeting buyers’ expectations.
BuyerSynthesis brings consumer insights to food, culture and clothing brands and their agencies to refine product strategy, user experience and communications.