close
Business
close
Big Shots

The Problems with Star Endorsements: When the "H" in Heroes stands for Hypocrisy!

Created on 23 Mar 2023

Wraps up in 6 Min

Read by 4.3k people

Updated on 13 Jul 2023

Whether it be the advertisement of Salman Khan jumping on trains to get that first sip of Thums Up or Vimal’s latest ad involving top stars like Ajay Devgn, Shah Rukh Khan, and Akshay Kumar, intervals between TV programs sure are star-studded. Gripping hook-up lines and a celeb's pleasing faces make up for the ad content, which sometimes does not even correlate with the advertised product. 

The tradition of choosing a celebrity as the face of the brand has been prevalent since earlier times. Lux is infamous to be hiring Bollywood stars in their endorsements since the 1990s. The popularity of the celebrity, along with their reputation, directly affects the product campaign, giving a sales boost of around 4%, as per a Marketwatch claim by Social Media Week. 

This practice keeps on increasing with time, as according to a 2021 report, celebrity-endorsed advertisements have seen a rise of 44%. Not only actors or actresses, but cricketers are also a great part of this ratio. Indian Cricketer Virat Kohli has the most endorsements bringing him an earning of around ₹261 crore in 2022. 

But, as change is inevitable, so are the charts in the market. Maintaining the position of the highest-earning star for the past 5 years, Virat Kohli was surpassed by Ranveer Singh with a brand value of around $181.7 million for 2022. This data was a part of the“Celebrity Brand Valuation” report released by Kroll. The reason for this decline is largely associated with the fact that Virat Kohli is no longer Indian Cricket Team Captain. 

The numbers sure do look good, but every facet has two sides. Where the celebrity effect causes profitable outcomes for both parties involved, the same can have drastic aftermaths. 

Is the hype for the star endorsements worth it, or the same-old advertising approach has finally aged?

Reasons for Choosing Celebrities for Advertisements

Boosting brand awareness is the main rationale behind planning a star endorsement. The familiarity and audience a celebrity brings with them benefits the ad campaign, increasing sales predominantly. Seeing your favourite artists endorsing a particular product increases credibility, thus improving the brand's visibility. 

Another plus point for the increasing ratio of star endorsements is the tried and tested funda. As per experience, hiring big stars like Akshay Kumar is bound to improve revenue, no matter the context of the ad. Consumers feel satisfied by purchasing the product their loved actor or actress is promoting, giving them the illusion of being inside The Circle. 

How are Consumer Opinions affected by Star Endorsements?

Let’s cover this with an example. Tiger Woods, one of the best golf players, endorsed Nike as its Brand Ambassador. Woods had a controversial scandal in 2009, due to which the brand had to face backlash and suffer losses of approximately $12 Billion. But the sale of TaylorMade golf clubs, which the player’s wife used to damage his SUV, jumped high. Saucy, right? 

By this elaborate example, I wish to explain how much influence a celebrity’s lifestyle, even their private life, can have. This is what brands bank on when they choose a celeb to endorse their campaigns. In the end, every company wishes to not only retain their old clientele but to likewise add more to the existing number. 

Star Endorsement's Effect on ROI

It is a debatable topic whether star endorsements increase ROI (Return on Investments) for brands or not. As per experts, star endorsements have an indirect effect on ROI. Products promoted by an artist receive more visibility and thus increases demand. This, in turn, leads to more sales which ascends the Rate on Investment graph by a certain percentage (usually 2-3%). The rise in ROI is not common for all endorsements, but the collaboration between a particular celeb, who has been the face of the brand for years, amounts to increasing the ROI in the long run. 

Since this advertising tool is so effective, no brand wishes to waste its time brainstorming a different approach. This reluctance in going forward with a better script instead of high-profile casting has led to the formation of the Celebrity Effect

The Problems with Star Endorsements 

Star endorsements most probably end up benefitting the brand, but the sky is not blue all the time. No matter how ethereal, celebs are also humans, and humans tend to make mistakes. For celebrities, these mistakes have a different word, Scandal. Either leaking of an affair or spouting hateful comments, stars fall from the pedestal and take their endorsees with them. Stakes fall, and the collection anchored with them suffers a decrease in sales demand.

The recent fiasco between the international sportswear corporation Adidas and artist Kanye West is a good sample. With the antisemitic comments, Ye (Kanye’s legal name) succeeded in attracting ridicule, hence losing endorsement from Adidas. The Adidas collection and Yeezy product line were hugely affected by this split, with an approximate loss of $540 Million. The Yeezy collection is now on the verge of being burnt, literally, as per a New York Post article. The ashes and smoke of this collaboration are still fuming on Page 3 of both entertainment & business news.

This won’t be the first time any company torched their products in case of a scandal or unsold supplies (Nike, and Louis Vitton, being some popular names). Resulting in a loss of $1.3 billion in revenue, the Yeezy line also faces the likelihood of being shredded or donated to either the needy or disaster relief. 

Similar examples of distress and then split are in abundance. We all remember the James Bond famed Pierce Brosnan's Pan Bahar dramatisement, oops advertisement, right?

Actions Have Consequences!

There were always the supposed consequences for celebrities or endorsers in promoting any brand, but it was not very severe. This resulted in celebrities misleadingly promoting products that were unhealthy. But now, strict laws have been enforced, which land a strong responsibility on the endorsers. 

As per Consumer Protection Act 2019 (applicable from 20th July 2020), many new restrictions have been imposed. A fine of ₹10,00,000 is mandatory for false or misleading claims, reaching up to ₹50,00,000 for multiple mishaps. For repetitive blunders, endorsers can also be banned from future ads for up to a year. The ban can be increased from a year to three years, hence causing heavy losses for the celebrity.  

With the power invested by social media, the public never fails to express their views on such misconduct. Popular actor Akshay Kumar backed out from the Vimal ad after receiving huge backlash from fans. Akshay apologized via Twitter and also pledged to donate the fee received from the endorsement to a good cause. The amount for the deal is estimated to be around ₹8-10 Crore. 

Similar occurrences are present in advertising history, which end up affecting the stardom of the celebrity excessively. This teaches a lesson for celebrities, sportspersons and artists to think twice before collaborating with a brand.

The Bottom Line

While collaborating with brands is a great feat for both sides, celebrities should still consider the side effects. By doing proper research regarding the product being endorsed, celebrities can protect their reputation as well as the sentiments and interests of their fans. 

The verdict for star endorsements is leaning highly towards the demands for freshness and innovation. More focus should be put on the ad’s script instead of putting all the eggs in the celebrity’s status basket. Advertisements highlighting basic issues and living values are always welcomed, especially endorsed by celebrities. It sure would be refreshing to see more ads that have the solid combo of being informative and entertaining.

Wish to read more about Bollywood drama? Then check out on the ever-going fight between artists & labels.

comment on this article
share this article
Photo of Preeti Gupta

An Article By -

Preeti Gupta

111 Posts

2.9m Views

515 Post Likes

A book-lover who adores everything fictional, Preeti has undertaken the life mission of tasting every flavour available in the pantry. A science student with a Master's in Mass Communication, she now wishes to conquer the Finance world as a writer. With the power invested by the randomly chosen music, she is here to make Finance fun for you.

Share your thoughts

We showed you ours, now you show us yours (opinions 😉)

no comments on this article yet

Why not start a conversation?

Looks like nobody has said anything yet. Would you take this as an opportunity to start a discussion or a chat fight may be.

Under Big Shots

"A few" articles ain't enough! Explore more under this category.

close
Share this post
share on facebook

Facebook

share on twitter

Twitter

share on whatsapp

Whatsapp

share on linkedin

Linkedin

Or copy the link to this post -

https://insider.finology.in/business/the-problems-with-star-endorsements

copy url to this post
Copied