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July 26, 2016

Do celebrities stake reputations on the products they promote?

Throughout the 20th Century, the celebrity endorsement has served as a key corporate product marketing tool. With the rise of digital technology and social media, the global marketing landscape is changing rapidly. Increasingly, celebrities are beginning to stake their own reputations on the products they promote to consumers worldwide.

The 20th Century was the age of mass media, with mediums such as film and later television giving companies the means to promote their products to vast audiences. This era also saw the rise of celebrity culture. Ordinary people gained the ability to introduce themselves to audiences worldwide, again through film and television, turning themselves into household names.

Businesses turned this emerging celebrity culture to their advantage, hiring famous faces to promote products to their fans. Way back in 1937, the Daily Mail notes1, Hollywood actors such as Joan Crawford, Clark Gable and John Wayne were being paid US$10,000 per year to endorse Lucky Strike cigarettes. During this era, a celebrity’s ‘mystique’ was seen as an essential aspect of ‘star quality,’ meaning that companies often strictly controlled how celebrities marketed their products.

Changing landscape

This balance of power between famous people and the companies they worked with shifted in the 1990s and 2000s. These decades saw the rise of tabloid culture, sparking public interest in the secret lives of famous people and Brandsreducing the importance of a celebrity’s mystique to their star quality. During the late 2000s and 2010s, this process was speeded up by the rise of social media. With these sites, celebrities can now control the way they present
themselves to the world.

Social-media savvy celebrities such as model Kendal Jenner are capitalising on this increased control of their own images to take control of their own endorsement deals. They are now signing profitable deals to market products on social media, especially the image-driven portal Instagram, to their millions of younger fans. The Mirror writes2 that Jenner, who has over 61m Instagram followers, earns up to US$30,000 per promotional post on the site.

Celebrity investors

But some celebrities are taking this further, investing in the companies they endorse and the products they promote. Shedding light on this emerging phenomenon to The Telegraph 3, Will Hayllar, a partner at OC&C Strategy Consultants explained: “[There are two key drivers behind this trend] Firstly, there is an increase in the level of business savviness within a band of celebrities who are much more controlling with their business interests and highly entrepreneurial, like singer Will.I.Am.

“Secondly, there is often a strong alignment between these celebrities and small start-up companies who can’t offer sufficient cash upfront to cover their fees but can offer an opportunity to buy into their growth. For these small, but interesting companies, there is a very powerful message the celebrities can send to their fans along the lines of, ‘You might not have heard of this brand, but I think it is going to be big so I’ve put me and my money behind it.’”

Case studies

Global music superstar Beyoncé is the ultimate example of the celebrity investor, gradually building up her investment portfolio over the course of her career. Earlier this year, for instance, she collaborated with major fashion chain Top Shop to launch the Ivy Park athletic clothing range. Here we see the power of the celebrity investor, as when the Ivy Park range was released the Top Shop website crashed 4, due to incredibly high demand from members of Beyoncé’s ‘Bey Hive’ fan group.

The popstar also recently invested in WTRMLN WTR 5 (short for Watermelon Water), a start-up which transforms mis-shapen watermelons into cold-pressed juice. WTRMLN WTR Founder Jody Lexy reached out to Beyoncé after hearing her croon the words, “I’ve been drinking watermelon” on ‘Drunk in Love’ – the three-time platinum single from her 2013 eponymous album. After bombarding the Houston-born singer with free bottles of juice, Beyoncé soon agreed to invest in WTRMLN WTR.

Explaining why Beyoncé agreed to invest in WTRMLN WTR, Lexy said that the star wanted to work with the firm, “because it’s the right balance of inspiring people and doing good and it has some sex appeal to it.” Shedding more light on the celebrity investor trend, Lexy added that famous people “are looking for brands to partner with for the same reason brands are looking for influencers – in both cases people want to use their voice to share stories.”

Naturally, Beyoncé’s decision to endorse WTRMLN WTR has given the company’s public profile a massive boost. But the global superstar has also decided to stake her own image on the product, by marketing and selling bottles of the watermelon juice for fans on her current sell-out Formation World Tour. This phenomenon is not just isolated to Beyoncé; fellow hit-maker Rihanna has invested in and appeared in adverts for Vita Coco, which produces natural coconut water as a health drink.

Speaking about this partnership, its arranger marketing guru Rohan Oza noted: “She’s a great example of having the exact right fit of celebrity for a brand. She personally drank it, comes from the Caribbean where coconut water comes from and is big on social media.” In other words if the right company finds the perfect celebrity, they can create a business relationship made in heaven.

Bottling their reputations

Explaining this new celebrity investor trend, financial services firm KPMG Partner James Murray comments: “The rise of celebrity culture and so-called ‘above the line advertising’ shows that there is greater traction between consumers and brand ambassadors if they are shown to be using the product and promoting the product. There is a real focus on authenticity.

“Celebrities also recognise the opportunity and get some equity – it is increasingly becoming a model of choice. It’s like bottling their reputation and worth.” Celebrities are increasingly realising that their reputation is a marketable tool. If they stake it on companies and products they believe in, they can turn these investment ventures into extremely profitable revenue generation vehicles.

Footnotes

1. http://www.dailymail.co.uk/news/article-1061713/Revealed-The-Hollywood-stars-paid-thousands-promote-smoking.html

2. http://www.mirror.co.uk/3am/celebrity-news/kendall-jenner-earns-up-300k-7034664

3. http://www.telegraph.co.uk/business/2016/07/09/superstars-dont-just-endorse-a-brand-now-they-want-to-own-the-bu/

4. http://metro.co.uk/2016/04/14/beyonces-ivy-park-collection-launch-crashed-topshop-and-everyone-freaked-out-5816566/

5. http://fortune.com/2016/05/03/beyonce-watermelon-investment/

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