The value of celebrity endorsements
15 January, 2016
I've always discouraged my daughters from thinking that becoming a celebrity is a worthy career goal.
Some of the bigger names today have celebrity status just because ... they didn't earn it by being particularly good at anything; they have simply been afforded it by their followers.
Celebrity has two meanings: it is the state of being celebrated, particularly in entertainment or sport. It is also the state of being well-known or famous. I understand the first definition but am less enamoured of the second.
But, on the basis of recent celebrity endorsement deals, I might have to re-think my disdain. Some individuals are using their fame to make serious money; more even than they earn from their sporting or entertainment achievements.
Just before Christmas, Taylor Swift signed a deal with Apple that will bring her $US100 million for giving them access to the world tour concert video for her 1989 album. That's $US100 million not to write a new song, make a new album, or create a great video. It's just for giving Apple Music the exclusive rights to distribute her concert video to Apple devices.
This deal is significant for Swift because it was only last year she took a stand against Apple for planning to offer users free access to music i.e. not pay royalties to artists. Such was the extent of her social media influence that Apple quickly relented and contacted Swift personally to say sorry.
They made up and then went a step further — Apple now has Taylor Swift exclusively and she has a wad of cash.
Then there's LeBron James. The 30-year-old basketball superstar has just signed a lifetime deal with Nike which is lucrative to say the least. He signed his first sponsorship deal with Nike in 2003 and has been a successful brand ambassador since, much like Michael Jordan was (and is) with Nike's Air Jordan sneakers.
But this deal is different; according to Nike it is the "largest single-athlete guarantee" in the company's 44-year history and is thought to be worth in the order of $US60 million a year.
Celebrity endorsement deals worth $US50-60 million a year are not unusual — that's about what George Clooney earns for his association with Nespresso and Nicole Kidman for promoting Chanel No. 5. But when it is paid for a lifetime, even after celebrity status fades, it is a biggie.
LeBron is predicted to make $US1 billion by the time he is 70 from this deal.
While you can understand a music company signing one of the most popular music stars of the time, and a sportswear company seeking an association with a great sportsman, other endorsement deals are less obvious.
Why would musician Kanye West be selected as a brand ambassador for sports company Adidas? In this case it is not Kanye's sporting prowess that matters; it's that other sort of celebrity.
Thanks to Kanye's marriage to Kim Kardashian (and, granted, his talent might have something to do with it too) he has 16 million social media followers. Kim has 37m Twitter followers, Khloe has 17m, Kourtney 16m, Kylie and Kendall about 12m each.
That's potentially 110m people who might get to see or hear about Kanye's Adidas shoes. That's more than LeBron James' 25m Twitter followers.
Clearly not all celebrity and business partnerships will be lucrative or long-lasting. When they go wrong they can go horribly wrong, with disgraced celebrities dragging down the brands they are associated with.
But when it works, it can be spectacular. Maybe fame and fortune really do go together.