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Do Brands Need Celebrity Endorsement?
By: Anamika Pande Ved
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"Everybody wants to know what I am on. What am I on? I'm on my bike, busting my ass six hours a day. What are you on?" says Lance Armstrong in the 2001 Nike ad.



Well, this doesn’t sound quite right after his recent confession to Oprah Winfrey, which unleashes the fact that he was indeed on his bike but on performance enhancing drugs too.

In 2012, in the wake of the doping allegations against Lance Armstrong, Nike drew flak not only as a sponsor that chose to remain visibly loyal to a scandal-stained athlete but also as an active participant in what the USADA report described as the most sophisticated doping program in sports history. The company later said that it was an innocent victim in all this and released a statement, "Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him. Nike does not condone the use of illegal performance enhancing drugs in any manner."

Innocent or not innocent, Nike’s ad does raise a few pertinent questions. Should brands shell out hefty amounts of money to rope in the celebrities to endorse their products? Are celebrities today worth such investments, especially when in certain cases celebrity endorsement can lead to skepticism about the credibility of the brand itself?

The subject of the payoff to enlisting celebrity endorsements has evoked a mixed response. The popular assertion is that celebrity endorsement is a tried-and-true, simple-to-implement way to maximize advertising effectiveness. This apparently is not always true. A study conducted by Ace Metrix in 2010 exposed the myth of the effectiveness of celebrity advertisements. Ace Metrix studied every celebrity ad from the first 11 months of 2010 and found that one-fifth of the ads had a negative impact on advertising effectiveness. It showed how advertisements with celebrities like Tiger Woods, Lance Armstrong, Kenny Mayne, Dale Earnhardt Jr., and Donald Trump backfired. A study by CU-Boulder’s Leeds School of Business also revealed that negative perceptions about a celebrity are more likely to transfer to an endorsed brand than are positive ones. According to Margaret Campbell of CU-Boulder’s Leeds School of Business, who led the study, “The overall message to marketers is be careful, because all of us, celebrities or not, have positives and negatives to our personalities and those negatives can easily transfer to a brand.”
 
Despite scandals, hitching celebrities with brands does find favor with some brand experts.  Jim Andrews, senior vice President at IEG, remarks, "Whenever these kind of scandals come up, there’s a conversation around, 'should brands be involved with individuals’ — they're such a risk. They are indeed a risk, but a calculated risk that I think is worth taking."
 
Celebrity endorsement can be an important tool for brand building only if a powerful idea and impeccable positioning accompany it. Today’s consumers are more enlightened and empowered than ever; they are time-compressed and difficult to impress, and therefore are only influenced by ads that are relevant and provide information. The effectiveness of the advertisement today is subject to the perceived expertise and the trustworthiness of an endorser.

So if marketers want the advertisement to work in the positive manner they envision, it is important, as Campbell says, that they consider all the positives and negatives that can occur with a celebrity. With so many scandals happening, marketers cannot afford to have their products pushed on the consumers, even from a celebrity.


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About the Author
Anamika Pande Ved is a blogger, content curator, and content writer with Global Washington, a non-profit in Seattle, Washington. She is fascinated by commercials, more so if they are used for "social good." She is an avid traveler, reader, and a singer. Find her on Twitter here anamikaved15@gmail.com
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