A Cautionary Tale

4.1
A Cautionary Tale

The Pros and Cons of Sponsorship and celebrity endorsement.

Sponsorship or celebrity endorsement to build your brand may seem attractive, and done right it can shorten the time it takes to build an iconic brand. However, there are several factors to consider before jumping in.

Let me step back and share a personal experience that highlights the caution of jumping in too quickly. This is what happened just before I took on the brand responsibility and strategic repositioning of Crown Royal.

In 2004, Kurt Busch was the reigning NASCAR champion when Crown Royal entered a sponsorship agreement for him to be the driver of the Crown Royal car and the face of Crown Royal's responsible drinking efforts. November 12, 2005, as I entered my office, I was pulled into an emergency meeting to deal with a PR issue that was all over the news. Kurt Busch had been pulled over by police and detained on suspicion of driving under the influence and was cited for reckless driving. This instant association of a beverage alcohol brand with drunk-driving was the worst nightmare that a brand like Crown Royal could face. It quickly became clear that jumping into this sponsorship, purely due to the connection between NASCAR and Crown Royal consumers, without carefully vetting the celebrity and considering potential issues, put Crown Royal in a tight situation and hurt the brand’s reputation.

With this cautionary tale, here are some pros and cons to consider before entering any type of sponsorship.

Pros

  1. Builds credibility - People generally trust products that celebrities endorse. Endorsements tend to transfer a fan's admiration of the celebrity onto the product being endorsed and the fans view the product as one of high value, high quality, and one worth purchasing.
  2. Builds awareness - Using a celebrity to represent a brand differentiates it from the competitors. The brand's association with the celebrity drives easy access to the celebrity's fan base, providing a large boost in exposure, awareness, and brand recall (people remember the brand).Opens new markets - Choosing the right celebrity can open your brand to new markets. For example, when Nike wanted to expand from primarily sponsoring tennis and track, they partnered with Michael Jordan and Nike became more than just tennis and track shoes; it was now a brand for anyone and everyone who wanted to succeed.
  3. Opens new markets - Choosing the right celebrity can open your brand to new markets. For example, when Nike wanted to expand from primarily sponsoring tennis and track, they partnered with Michael Jordan and Nike became more than just tennis and track shoes; it was now a brand for anyone and everyone who wanted to succeed.

Cons

  1. Celebrity images change - When you sign on a celebrity to endorse your brand, you sign on to everything that comes with them. While this usually means bringing in some of their fan base as customers, it can lead to disaster if a scandal occurs. In the case with Kurt Busch, Crown Royal then had to find a way to distance itself from Kurt Busch without alienating his fan base.Your brand may be overshadowed - A celebrity’s popularity might overshadow your brand resulting in the brand association in advertisements going unnoticed. The more popular a celebrity is, the chance they will endorse multiple brands increases, reducing the overall impact of the endorsement for your brand, and should one of those other brands face a scandal there would also be a negative impact on your brand.
  2. Your brand may be overshadowed - A celebrity’s popularity might overshadow your brand resulting in the brand association in advertisements going unnoticed. The more popular a celebrity is, the chance they will endorse multiple brands increases, reducing the overall impact of the endorsement for your brand, and should one of those other brands face a scandal there would also be a negative impact on your brand.
  3. Endorsements are expensive - As attractive as quick recognition and entry to new markets may be, it comes at a price. Endorsements for popular celebrities typically cost millions of dollars; Adidas’ lifetime endorsement with David Beckham cost $160 million, and McDonald’s one year arrangement with Justin Timberlake cost $6 million.

Before jumping into any sponsorship or endorsement, it’s important to carefully consider all the factors and explore other more affordable, less risky solutions to building your brand.