Message to brands: Do your homework before a celebrity endorsement

Not all celebrity fiascos can be fixed with 'death and disgrace insurance.'

L-R: Moderator Spotted CEO Janet Comenos; Al Lieberman, NYU; Josh Duboff, Vanity Fair; Paul Evans, Marsh & McLennan; Ajay Kapoor, SharkNinja
L-R: Moderator Spotted CEO Janet Comenos; Al Lieberman, NYU; Josh Duboff, Vanity Fair; Paul Evans, Marsh & McLennan; Ajay Kapoor, SharkNinja

In the era of social media, fame grows fast but can die even faster. For brands, that means extra homework before asking a celebrity to pitch their product, according to experts at Wednesday’s The Ins and Outs of Celebrity Marketing panel at Advertising Week.

Janet Comenos, CEO and cofounder of celebrity research firm Spotted, moderated the panel discussion with Josh Duboff, senior writer at Vanity Fair; Paul Evans, SVP and celebrity insurance representative at Marsh & McLennan; Ajay Kapoor, VP of digital transformation and strategy at SharkNinja; and Al Lieberman, clinical professor of marketing entrepreneurship and innovation at New York University’s Stern School of Business.

With the advent of social media, the universe of possible celebrity endorsements has grown, and media outlets are highlighting actors, musicians, and other performers earlier in their careers. Duboff said Vanity Fair increasingly focuses on people who aren’t as well-known, hoping to catch them as their fame grows.

"There’s an interesting shift from the established entities," he said. "I think we’re noticing a shift in that way, and we are taking chances on people that aren’t quite as established yet. As far as influencers, when I am looking at doing web pieces, I do look at that world because it’s kind of hard to ignore."

Kapoor, whose company SharkNinja has used celebrities such as actress Sofia Vergara to sell products, said he uses a ranking of celebrities as a decision-making matrix when considering endorsements.

"Traditional celebrities get the reach and frequency, but you have to be sure they align in terms of relevancy. Then there’s the bottom tier of true influencers, which for us means identifying micro-niches and individuals who can do that for us," he said. "They have to believe in the brand as much we do."

Kapoor added: "Then there are the hybrid, in-the-middle influencers who also have the reach in some cases that celebrities have. That’s the question you have to ask: ‘Do you go to celebrity or the up and rising influencer?’"

Regardless of the level of fame or the endorsement, the unforgiving social media environment is also forcing brands to be more careful when choosing an endorser. The public keeps a close eye on celebrities and quickly punishes them for perceived poor decisions, Duboff said. For example, actress Scarlett Johansson was forced to withdraw from a playing a transgender person in the movie Rub & Tug after a social media backlash.

"Celebrities have to be careful now," he said. "There is very different sense in the social media world where people are watching what [celebrities] are doing."

If a celebrity is endorsing a brand, the public will judge that brand, as well. "I think this is just a very interesting time. Brands will never be forgiven for making a poor decision when it comes to celebrity endorsements, and they must put checks and balances ahead of time in the process," Kapoor said.

Lieberman, who was an EVP at Young & Rubicam and founded Grey Entertainment before moving to academia, said brands must do their homework, given the amount of money involved.

"You wouldn’t buy a million-dollar house without doing some research," he said. "You have to do your due diligence and see if there are any skeletons in closet, whether it’s alcohol, drug abuse, or perhaps domestic violence. These are things you want to look into."

Beyond checking for bad behavior, brands should ensure a celebrity actually likes the product he or she would be endorsing. Taylor Swift had been seen drinking Diet Coke before she endorsed the soft drink, Duboff said, making her an authentic spokeswoman. However, Lieberman recalled the time when Michael Jackson, then a spokesman for Diet Pepsi, revealed publicly he didn’t even like the drink. "You have to make sure the celebrity uses the product or at least likes it and won’t talk about it in a negative way," he said.

Evans said one way to prepare for the potential downside of a celebrity endorsement is insurance. His company sells "death and disgrace insurance" policies, which pay out claims when celebrities do something that either ruins a campaign or the reputation of the company he or she is endorsing.

The policies are specific to each celebrity and endorsement, Evans explained, and are intended to reimburse a brand for the cost of the endorsement and sometimes to replace a celebrity with another so a campaign can continue. Issues of personal behavior including drug and alcohol use or even a celebrity’s political statements are taken into account.

While death and disgrace policies can help brands recover from poor celebrity decisions, Evans reminded the audience that the companies underwriting the policies, like all insurers, hate paying claims. They won’t write a policy to reimburse a brand if it hires a celebrity known for previously engaging in bad behavior.

"I think that’s an important piece to remember," he said. "Death and disgrace insurance is not a get-out-of-jail-free card. It’s important that the brand is taking responsibility to look at who it is they want to work with. If you work with someone who has a history of political statements and you put a claim in for that person making political statements, the insurers would have a problem with that."

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