Celebrity Endorsements: A Gimmick for Product Pricing

Dear Readers,

I was fortunate to skip my exam today (It was Maths. Don't judge me). But instead I had a wonderful representing my college St. Andrew's at the Debate Competition organized by Rotary Club. Incidentally I won Runner-up Best Speaker. The cherry on the cake was that our Senior College team won Best Speaker as well as Best Team. Kudos guys and huge thank you to our beloved Raina Miss!

  
What I want to share with you guys today is the speech that helped me win 2nd place. Hope you guys like it!

Celebrity Endorsements: A Gimmick for product pricing

Good morning Ladies and Gentlemen. Today I shall speak against the motion at hand and emphasis the need that brands have for Celebrity Endorsement. And this is a dire need mind you. Ever since the Mad Men days, the ad industry has been using celebrities to endorse products. Chanel had Marilyn Monroe, Nike had Michael Jordan, Pepsi had Britney Spears, You may ask for deals closer to home so I’ll cite Amitabh Bachchan and Cadbury. Aamir Khan and Coke, and the list go on... Companies put in millions of dollars to get these famous and well-liked sponsors, but are it really worth it? Well since they have made billions in sales, don’t you think something was done correct?

The concept goes back to using credibility and attractiveness to persuade a point of view. Simple psychology tells us that if someone is appealing and trustworthy, it's easier to relate to them and be on their side. What an endorsee, the brand, is trying to do is transfer the positive traits associated with a celebrity to the product that the celebrity is endorsing. Also a brand is seeking to connect on a personal level with consumers to get them to identify with the brand by employing the celebrity status of “Stars” that the consumer holds in high regard.

But what I hear often is that Celebrity endorsements are a gimmick just to spike short term sales to boost stock prices. As you surely must have heard, “Every little move in the market is the cause for losing or earning million on the market each day”. I see the point respected proposition and I will counter with one question. What if a celebrity endorsement can earn you 1.75 billion dollars globally? And what if this endorsement is not a mere couple of years but is in fact 25+ years in existence? Will that convince you? Because that is exactly the stats by chosen example will display.

The best way to highlight this is to put before you perhaps the greatest endorsement partnership in sports, nay the entire marketing world is the evergreen Nike- Michael Jordan partnership. Jordan partnered with Nike after being drafted by the Bulls out of North Carolina in 1984. The original five-year deal was worth $500,000 annually, plus royalties.  

And He came along at a time when Nike, a struggling company, was suddenly willing to gamble millions, far more than had ever been gambled, on an untested NBA player, giving him an unprecedented deal before he had even played an NBA game.

“Nike turned its full efforts to marketing Jordan. Then suddenly he emerged as this amazingly athletic figure, wearing a shoe that was banned by the NBA.

People sometimes forget that part of the story. David Stern and the NBA banned the first pair of Air Jordan’s in 1985, just weeks before the start of the season, because they were completely Bulls red and black with no white on them. There is no better marketing endorsement than having the man say, “you can’t have it.” That shoe and that moment spawned today’s sneaker head cultureJordan’s play was the key. It started because of his athleticism, his “jumpman” dunks that went on to become the Jordan Brand logo. He could fly, and Spike Lee was yelling “It’s gotta be the shoes.” But everything grew exponentially as Jordan started to win and win big. He became the best player in the game and owned his generation, booming the popularity of the NBA.Also booming the sales of Nike and his shoes. Because everyone wanted to “Be Like Mike.” They paid Jordan so much, and his shoes sold so well that he essentially became a partner in Nike long before they officially recognized it. He became enmeshed in culture like no athlete before or after.And with him, so did Nike.

But I didn’t forget the stats I promised you’ll! The terms of Jordan’s current deal with Nike are a closely guarded secret, but royalties now generate more than $60 million annually for MJ. Nearly 30 years later, Nike owns the basketball shoe market. Owns it. When you factor in all the Nike brands — Nike, Jordan, Converse — you are talking nearly 95 percent of the basketball shoe market. Nike signed up current NBA stars Carmelo Anthony, Blake Griffin and Chris Paul, as well as non-NBAers like Derek Jeter and Nascar’s Denny Hamlin for the Jordan Brand. But the star is still Jordan and the Air Jordan franchise.
Celebrities are a short term thing? LeBron James is the top-seller among current NBA players with signature shoe deals, but Jordan outsold James by a 6 to 1 margin in 2012 in the U.S. That warrants an “in your face”!

And if you are not the type who is impressed with numbers but by sentiments and feelings, Michael Jordan turned 50 recently and yet his legacy and his shoes are such that when you talk to players coming out of college about their goals in the NBA, becoming part of the Jordan Brand family still comes up a lot. I mean with most of them. Players who were in kindergarten the last time Jordan won a ring.

What does this teach us? It is clearly not about just sticking a celebrity in a commercial. Just having a Ranbir Kapoor in your ad will not guarantee the Nissan Micra becoming the next Maruti 800. There is a need to build a brand and not just a commercial around the celebrity. Nike signed up Jordon before all his exploits in the NBA and sponsored him through hell and high water.

Sinking brands have been revived by the Midas touch of celebrity endorsers. Cadbury was given CPR by Mr. Amitabh Bachchan.  Coca-Cola decided to begin celebrity endorsements in India and the result was a ubiquitously appealing Aamir cheekily stating Thanda matlab Coca Cola. The recall value for Nakshatra advertising was only due to the sensuous Aishwarya. The Parker pen brand, which by itself commands equity, used Amitabh Bachchan to revitalize the brand in India.

I have let the facts speak for themselves (Using my mouth of course!) Brands do owe quite a bit to Celebrity Endorsements and it is the same the other way around. In this jungle of cluttering information being hurled at us from all directions, it is posters of David Beckham at Times Square that get more ogling eyes than most. Thank you.

Hope that wasn't very boring. Until next time, Hast La Vista!

Yours Truly,