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Measuring the Impact of Celebrity Scandal on a Sponsor Brand

Measuring the Impact of Celebrity Scandal on a Sponsor Brand Measuring the Impact of Celebrity Scandal on a Sponsor Brand
12/17/14
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by Michael Spetner
Today, more and more companies commission celebrities to be brand ambassadors. But what happens to the perception of those brands if the associated celebrity is exposed as a fraud, caught cheating, or even put on trial for murder? How do you, as a brand manager, decide whether to cut ties with your celebrity endorser or to stick with him/her through tough times? Is signing an athlete sponsor a good idea in the first place? These are important questions, especially in the modern era where anyone with an iPhone can become paparazzi.

Diving into the BAV Database allows us to evaluate whether teaming up with a celebrity is beneficial to a brand at all. The results suggest that it is entirely worth it. Looking at nine brands that brought on celebrity endorsers for the first time, we found that, on average, esteem grew by 53% and brand stature grew by 47% in the first year of sponsorship. Additionally, eight out of the nine brands were seen as more trustworthy and friendly, while seven of the nine were perceived to have higher performance.

Athlete 1

So, it is safe to say that bringing on a celebrity to endorse a brand can be extremely beneficial. But as we’ve seen recently with endorsers like Adrian Peterson or Bill Cosby, a celebrity’s own brand can be irreparably tarnished by scandal. Again, we turn to the BAV data to explore how brand managers should react when a scandal transpires. The answer? In most cases; stay calm. While the scandal is likely to have an immediate negative impact, our study shows that brands can, in fact, recover in the long run.

Moreover, parting ways with a celebrity after a scandal does not automatically save a brand from losing esteem in the eyes of consumers. Of twelve brands that cut ties with their endorser after a scandal, eight declined on esteem in the short term, with an average decline of 9.4%. Of those same brands, more than half are back to where they were, or have even increased on esteem compared to before the scandal.

While some brands that fired scandalous celebrities have gained esteem over the long term, those that stayed loyal to their endorsers were credited as being more reliable over time. Of the four brands we looked at that did not cut their celebrity post-scandal, three are perceived to be as or more reliable as they were before the scandal.

The data provides a mixed picture for endorsement scandals. Celebrity scandals negatively impact the endorser brand in the short term, but this is setback that brands can overcome, as long as the company continues to reinforce brand differentiation, relevance and esteem. Dropping a sponsor is an easy fix in the short term but, in general, Americans will forgive brands that they already admire in the long run.

Athlete 2

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