Is Your Favourite Celebrity Fooling You With A New Business Brand?

In this world, nothing is constant, and time is constantly passing us by. This statement follows the advice to buckle up and do things. Many of us are in a rush to make ends meet and create something for ourselves or our loved ones. The glittering, familiar, yet prominent celebrities we see on stage are actually not that different from us in this department. They might seem miles apart, but celebs are well aware that fame is a fickle thing. To capitalise best on the fame spotlight brings, celebrities are often seen promoting, investing, or even launching their own brands as a side hustle.   

But, in recent months, the entertainment industry has seen a rapid rise in celebrity-owned brands as compared to endorsed or invested brands. 18 brands, on average, were launched in the last 3-4 years alone, including now popular names like Rare Beauty by singer Selena Gomez, Anomaly Haircare by actress Priyanka Chopra Jonas and many more.

Every other week a celebrity would announce the launch of their business, and we would hear news about their products being sold out within days. All this buzz makes me wonder how exactly this phenomenon works and how it affects our lives. And it does affect us, either directly or indirectly. So, we will be peeking through the confines of celebrity business today with Insider's critique pair of glasses.

The Historical Aspect of Celebrity Selling

Prior to all kinds of celebrity investments and businesses, there were only celebrity endorsements. Since the 19th Century, famous actors and actresses, athletes, and royalties have been plastered all over the city endorsing a brand. Actress and producer Lillie Langtry, in the Pears Soap advertisement, was the first celebrity to market a brand.

This became a shortcut for brands to bring their products into consumers' eyes, and the tactic was such a success that it's still being used. But, with this master tactic came a teeny tiny complication. Brands, being all high and mighty, often forget to mention a minute detail of whether these advertisements were endorsed or promoted by the chosen artists. Confused? Let me clarify!

At the beginning of the advertisement era, the royal people had most of the businesses under their control, some of which they initiated, and others were taken over. So, to promote those businesses, royalties, in the flesh, shouldered the advertisement shooting responsibility. These ads were different because the royals were vouching for the product's quality.
In the present time, artists are not always giving certainty to the consumers that the product being promoted is the best in the market. Celebrities often are unaware of the context of the ad they shoot for, which often leads to scandals. Remember Akshay Kumar's "Vimal Pan Masala" advertisement? That's a good example of this scenario.

Wish to know more about celebrity endorsements and their hypocrisy? Read here!

The Birth & Development of Celebrity-Owned Brands

Since the 1990s, the glam world has seen a rapid rise in the unveiling of celebrities-owned businesses and brands. Supermodel Iman's owned "Iman Cosmetics" is said to be the first successful beauty brand run by a celeb. In the beginning, most celebrities came up with business ideas largely revolving around their comfy zone.

Actresses like Gwyneth Paltrow and Jennifer Aniston came out with makeup brands “Goop” and “Living Proof”, which capitalised on their popularity in being counted among beautiful actresses. Launched in 2008, Gwyneth’s Goop is still going strong, but Jennifer ended up cutting ties with her assisted brand Living Proof after Unilever acquired it.

This is solid proof that not every brand established by a celebrity is bound to rank high in the popularity charts. Yes, the "Celeb Status" would be a huge factor in contributing towards its success, but it won't be enough to establish the business as a reputed brand. Even Salman Khan's movies don't succeed anymore just from his name. Check out the box office collections of the superstar's recent movie "Kisi Ka Bhai Kisi Ki Jaan". With physics-defiling action scenes and non-sensical dialogues, the movie was bound to fail in viewers' opinions.

This also applies to the businesses launched by our favourite celebrities. People are well aware of the benefits they can get as well as the options they deserve. And so, consumers don’t just follow blindly like a flock of sheep anymore. They want credibility, uniqueness, as well as better results than other options out there.

How Is Owning A Brand Better Than Endorsing It?

From the beginning, many brands have relied upon a celebrity's popularity to sail their brand's marketing ship. Till recent years, celebrities were only involved in selling other's brands. Industries like beauty, cosmetics, clothing, footwear, automobiles, and many more have been more than partially dependent on the number of fans stars bring with them. No matter where one looks, you can see a celebrity’s face plastered all around you. Billboards, posters, billboards on wheels, TV ads, and even the products we buy contain the smiling faces of well know entities.

If you compare the overall data of the past 5 years, the number of advertisements involving a celebrity has seen a steep rise. This proves that the ideology of putting a loved personality in a product's advertisement is on trend and is going to be in demand for many more years to come. Even the brand's favourite celebrities earned a pretty good sum for spending a few minutes or seconds on screen.

The industry for celebrity endorsement has only seen a continuous rise in terms of both revenue and numbers. Then, why do high-profile celebrities prefer starting a business from scratch to shooting ads for other products? There are a variety of reasons for that.  

First, celebs endorsing brands only get a fixed revenue for every ad, whereas the brand would benefit from the celeb's efforts & popularity. Another factor not in the celebs' favour was the repercussions of promoting an unhealthy product. The major difference between both the segments of a celebrity's advertising life has been shown below ⬇️

Since even a slight disfavour in a celebrity's life would lead to them losing millions, celebs usually find themselves in a tight spot. They had to deal with the public's backlash for promoting an unhealthy brand, often leading to losing future work. Thus, a great solution to this problem led to the discovery of celebrity-owned brands.

Celebs realised the power their popularity could have and also understood the importance of having a retirement plan. So, to sum up, all of the requirements, they decided to launch their own businesses for which they could record ads and capitalise on them.  

Just take this infographic below as an example. If you compare what pop singer Rihanna earned from endorsing renowned brands like MAC Cosmetics and Dior fragrance, the preference will become pretty clear. For example, her MAC Cosmetics collaboration was reportedly worth $10 million; her Dior fragrance deal was worth around $9 million. And her Pepsi endorsement deal was reportedly worth $5 million.

All the celebrities mentioned below in the graph own around 51% to 49% stakes in their brands. Kylie Jenner is an exception, as she owns 100% stakes in her brand Kylie Cosmetics. Wonderful, isn’t it? So, they are earning way too much and constantly as compared to endorsement ads.

Should You Choose Celebrity-Owned Brands or Not?

If you see the Y-O-Y data for the last three years, many celebrity-owned brands have been launched one after the other. In 2020, 10 celebrity-owned brands were introduced in the market, including Rihanna's Fenty Skin. Fenty Skin was an extension of the popular brand Fenty Beauty by the global singer. In 2021, 15 more celebrities launched their own businesses, most of which were related to the cosmetics and beauty industry.

 By 2022, 18 more celebrity-owned brands hit the market, including popular actress Scarlett Johansson's The Outset and Deepika Padukone's co-found brand 82E. In short, the number of celeb businesses kept increasing, which led to the question: are the products as good as they are being projected?

To find out which brand is worth your money and which is not, you can go through these parameters:

• A Reflection of the Celebrity’s Interests:

All fanboys and girls love to get to know their favourite stars. Observing the celeb's whereabouts on social media to catching clips of media and airport presences are a few methods fans usually opt for. These methods can turn into something more obsessive if you are a stalker. 😏
Through these tricks and observation skills, fans learn about their beloved stars' interests and passions. So, when a celebrity comes out with a business idea, the targeted audience immediately knows and relates to it.

Take Virat Kohli, for example. Being a global ambassador of PUMA India, Duroflex, and several other brands, famous cricket player Kohli has a dedicated fanbase. He also has the most followed Instagram account in the world. All these played a major role in making “One8”, Kohli’s owned sports brand is, turning out to be a success.   

• Correlates with the Market Demand

Trends come and go, and so do businesses catering to those trends. In simple words, whatever is in demand in the market is what’s in profit. Consumers purchase products based on two factors. One is the basic requirement, like food products, whereas the other is what’s on trend, such as AI apps and services for the present time. Another thing which is in high demand is the liquor industry and celebrities dropping into the liquor industry.
90s Bollywood superstar Sanjay Dutt has just launched his scotch whisky brand “The Glenwalk”. Sanjay Dutt’s freestyle reputation from his acting days and alcohol being an eternal sector has boosted the brand’s potential for being well-received.

Hence, celebrities who cater to the right audience as per their demands and interests are more likely to perform well. People also find more options in those sectors, and thus, the market will expand for everyone to scoop revenue from. This also provides the safety blanket of being a business from a sector that never goes out of the market. You know, there will always be a supply of people enjoying shots of alcohol worldwide, so you have a market that will be able to handle the dwindling marketshare.

• Unique Yet Relatable Marketing

Everyone has a story, and audiences of all kinds love to hear stories. Celebrities know the power their popularity has, but they also understand the strength a good script has. When both of these factors intersect, a good brand is born. Celebrities often adopt a unique prospect when it comes to choosing the marketing strategy for their brands. They find a topic the audience can relate to and make it the prime focus of their brand’s vision.
Like HRX by Hrithik Roshan. The brand represents its agenda of helping people make fitness their priority. So, the products designed, ads shot, and vision portrayed for the brand are focused solely on this angle.

By going through the ad's context and marketing strategy, audiences get attracted towards the brand. This plays in supporting the celebrity's star presence and helps boost revenue in the long term.

These are a few factors that showcase whether the brand launched by a popular celeb is worth our time and money or not. If you can’t connect to the brand, then you should steer clear of it.

The Bottom Line

There are several reasons celebrities connect their name with a particular brand. Sometimes it's for fame, other times for a social purpose, whereas most of the time, it's for financial stability. After all, the sound of Cha-Chiing 💸…is dear to all! No matter the reason, our screens have always been filled with familiar faces promoting electronics, makeup, restaurant chain, liquor, and everything else we use.

Now, celebrities have entered the entrepreneurial grounds and are there for the long game. Many consider this the easiest way to make good money, whereas others believe it is unnecessary and a waste of time from the celebrity's end. But one thing is clear, starting a business is no easier for a celebrity than for you and me.

Also Read:

• Starbucks: More Than a Coffee Shop
• Tata Group & Renesas Partnership
• Success Stories of Indian Businesses