Does your celebrity endorsement deliver incremental sales?

I am not easily swayed by celebrities selling cola. Or so I thought! Yesterday I got the video below in the email from a friend who knows how much I like cats. 

Once I got beyond the kitten overload, it registered that Taylor Swift was actually promoting Diet Coke. To her (or the kittens’ credit), I did sit through the whole ad. Made me wonder how much she got paid for this. Pepsi’s endorsement contract with Beyonce was worth $50M! Just how many bottles of cola does the company have to sell to pay Beyonce, the production team, the agency AND turn a profit?! So I started looking into the big money behind celebrity endorsements.

Why do brands invest in celebrities?

Short answer: Celebrities DO carry a lot of sway with their followers. Here are a few examples.

  • Harry Styles. There was an article in the news recently about Harry Styles urging his fans to boycott SeaWorld. According to various sources, this anti-endorsement caused a 400% jump in buzz and 13% in negative commentary for months.

SeaWorld’s net income dropped 84 per cent in the three months ending June because of problems with attendance and what it called ‘brand challenges’- says Hazel Sheffield of Independent.

  • Rihanna. According to study conducted by Media Post, her recognition rate is 93%, familiarity – 74% but the influence on purchase ranges from 16% to 25% depending on segment. Note, 25% is not an increase in revenue, it’s a measure of influence (which may may have been constant).
  • Sophie Ellis-Bextor. This story is more about the people on earth (not the stars). A small British company selling expensive hot tubs was noticed by a potential celebrity client – Ellis-Bextor. They made a deal – she praised them on her social media channels and got a good discount for a tub. It turned this very small business into a £1M company.

Is it all about eyeballs, clicks, shares and tweets?

celebrity endorsement valueSince celebrities have aspirational qualities associated with them (disputable), brands choose to invest big bucks in them (indisputable). So the thought is that the more the star power, the larger the follower-base, the more the celebrity is worth. One agency claims that Toronto Blue Jays’ athletes are paid $500 per tweet for every 100,000 followers they have. The numbers ramp up the bigger the star power. For instance LeBron James gets paid $139K per tweet. Other athlete celebrity “rates” are in the attached graphic.

This is not restricted to personalities who have achieved fame and fortune through a singular accomplishment. The digital age has brought about celebrities of more modest talent who have created significant follower bases and thus command a price to promote brands based on the eyeballs, clicks, shares and tweets.

But how much is each celebrity worth? Is the marketer ACTUALLY getting a benefit from their investment? That’s the questions to be answered.

How to monetize celebrity endorsement?

The questions still remain – What is a celebrity endorsement worth? How to measure the *incremental* impact of the endorsement? Is there a long-term halo effect beyond that initial spike of interest through the endorsement?

There are two paths forward

  1. Conversion path analytics: This is a very specific method best used by retailers or manufacturers with direct-to-consumer sales channel. The retailer in this case has asked the celebrity to promote a particular product with a link from their social feed to their e-commerce website. The retailer should consider two key metrics
    • Where on the conversion path does the celebrity endorsement deliver the most customers? The conversion path comprises the acquisition, engagement and conversion.
    • What’s the time to convert between the sponsored visit and the purchase action?
    • What’s the halo effect beyond the sponsored visit? i.e. what else does the visitor purchase other than the promoted product?
  2. Social reach analytics: This method is used by brands or retailers who are doing mass media promotion without a direct link to purchase actions. The brand/retailer should use algorithmic revenue attribution to isolate the causal relationship between the endorsement and the actual sales. Another factor to consider when using digital channels is to consider the cumulative social reach of the celebrity.

Still unsure how to proceed? Drop us a note to discuss your unique issues.

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Photo by Mike Mozart Attribution 2.0 Generic (CC BY 2.0)


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