Famous Brand Turnovers Are Worth Billions. What Could Go Wrong, Kanye?

Famous Brand Support, What Else? George Clooney made an estimated $40 million by endorsing Nespresso, Beyoncé signed a multi-year contract worth $50 million with Pepsi, and Taylor Swift’s $26 million deal with Coca-Cola in 2013… made it look a little flat.

Harry Styles and Gucci bring vibrant colors to a new collection, while Lionel Messi and Kylian Mbappé will face off against the Adidas-wearing Argentine and Nike-wearing Frenchman in the World Cup Final.

Using celebrities and athletes to promote your brands has been around for centuries. Gladiators in Rome were tasked with supporting olive oil brands. And now, thanks to social media, David Beckham and Kim Kardashian are bringing their massive fan bases to a proven profit-making tactic for both celebrity and brand. So what could go wrong?

In recent weeks, designer clothing brand Balenciaga announced that it will no longer work with Kanye West. Adidas, Gap, and Foot Locker soon followed. Meanwhile, NFL Quarterback Tom Brady and supermodel Gidele Bundchen are accused of defrauding investors who lost money on crypto exchange FTX. And former England and Manchester United footballer David Beckham is facing scrutiny and criticism from human rights and LGBTQ+ activists for accepting an estimated £150m as brand ambassador for the World Cup in Qatar.

So how can brands and celebrities alike make the most of the potential power and pitfalls of endorsements? Giana Eckhardt is Professor of Marketing at King’s Business School in London and a leading expert in consumer behavior and branding. His advice is simple. “The brand may look at past behavior (especially online behavior) to determine the risk of future explosions. People will let you know who they are. Look no further than Donald Trump as an example. But the same goes for Kanye West, for example, who has a long history of ragged tweets.

According to David Dubois, Associate Professor of Marketing at INSEAD and co-director of the school’s campus and online program, Leading Digital Marketing Strategy, companies should avoid over-reliance on a single individual. “Celebrities are just people. Companies should consider allying with more than one influencer and pool the risks. Instead of using celebrities on a strategic level that can be very dangerous, they need to understand their tactical use and value.

Understanding and managing human brands like Martha Stewart has been the focus of Giana Eckhardt’s research with Susan Fournier, Senior Associate Dean at Boston University’s Questrom School of Business, published by the American Marketing Association. In their article, ‘Managing Risk in Human Brands’, the authors acknowledge that “Human brands are risk-laden because they offer people increased chances for undesirable events such as illness or abuse, and these reputational challenges can reduce returns.”

Nike won’t regret signing Michael Jordan in 1984, which was then a five-year deal worth $500,000 a year. But according to Forbes, Adidas could lose $650M after quitting Kanye’s Yeezy Line.

“When considering endorsements and marketing partnerships, one must consider who the celebrity is as a person, whether it aligns with the brand to be endorsed,” explains Giana Eckhardt. For example, if he is a famous adventurer (Richard Branson), so should the brand. When these align, the authenticity of the support is maximized and therefore the partnership can be mutually empowering for the brand and celebrity.”

Despite anger over David Beckham’s $150 million 10-year deal as ambassador to Qatar, Dr. Rajesh Bhargave emphasizes the importance of brand compatibility. “Every story has two sides and David Beckham probably sees this as ‘I’m here to support the World Cup and football’. I grew up playing football, that was my childhood like so many children in the world.’”

But Bhargave says the rules of engagement are different when celebrities present themselves as someone who is very dedicated to specific causes. “Then they have to be consistent going forward. If I was a famous football player, I would be more careful because I don’t want to walk on tiptoe all the time.” He points to the example of Michael Jordan, who chose not to take a political stance in public and instead focused on basketball. “Republicans are buying sneakers, too.”

Nike won gold with the Jordan deal 38 years ago, but the sticker price of many celebrity endorsement deals is a tearful one. Star of the beloved series modern familyIn 2011, Sofia Vergara signed $94.5 million deals with Pepsi, Head & Shoulders, and Quaker Oats, Jay-Z signed a $20 million deal with Samsung, and Academy Award Winner Charlize Theron signed an 11-year contract worth $55 million With Dior for the J’adore perfume. These are exorbitant amounts for most brands, and David Dubois of INSEAD advises companies not to overlook their key marketing priorities.

“The most critical factor is balancing access and effectiveness. Most companies try to reach out to high celebrities, which often comes at the expense of effectiveness when fame doesn’t make it to the brand. In Dubois’ experience, it’s better to opt for low-profile individuals who are closer to the brand DNA. “You can easily learn through basic social media analytics. These low profile individuals are closer to their followers and therefore will make endorsement/co-branding more effective.”

Cristiano Ronaldo was the most followed person on Instagram as of this month, with over 513 million followers. This partly explains his $1 Billion lifetime deal with Nike, which former Forbes Senior Editor Kurt Badenhausen reported could be a bargain for the sportswear giant.

Social media has certainly changed the situation for brands and celebrities alike, but Giana Eckhardt of King’s Business School sees both advantages and disadvantages. “Social media simultaneously gives celebrities and brands more control as it allows them to communicate directly over their relationship with fans and consumers. However, they also have less control, as the cultural meaning of brands and celebrities is determined by what others – near or far – say and think about the brand, and what others say on social media cannot be controlled.”

For Eckhardt, the key to success in the social media space is authenticity. “The PR turn doesn’t work there.”

David Dubois insists on the importance of developing a social media content strategy. “Everyone is a media powerhouse, so you need to transform yourself into a content powerhouse. This requires new operational, strategic and organizational principles.”

So, if an MBA student raised his hand during class and asked what advice our experts would give David Beckham or Kim Kardashian for their support in the face of criticism, what would he answer?

“I would say it’s too late for David Beckham to do anything,” replies Giana Eckhardt, who teaches Brand Management in the MA in Digital Marketing at King’s Business School. “He has already made the choice to be a part of the World Cup in Qatar and now he can’t get out of it. Had he made a statement condemning the world cup at the same time by taking money from his sponsors, he would never have gotten a sponsorship deal again.”

David Dubois at INSEAD would encourage a risk audit to be conducted at different time periods. In the short term, they need to combine warmth, transparency, expertise and commitment in their messages. In the long run, they need to recalibrate their brand DNA through other engagements or rephrasing of interaction.

Dr. Rajesh Bhargave teaches at Imperial College Business School in a variety of programs including Ph.D., Executive Education, MBA and Pre-experience Masters courses. He draws attention to the legal consequences if David Beckham returns £150m. “Every case is a little different and difficult because the moment they apologize, it gets harder and they can incur losses.”

One of the most important takeaways for students, according to Bhargave, is that certain fundamentals of marketing are still the same. “We should talk to the consumer when the consumer cares. And it’s true that what consumers care about has changed, that society has changed. People are more passionate about certain topics, thanks in large part to social media. Consumers are now more conscious and everything has a price. Brands and celebrities alike should think two steps ahead.”

Giana Eckhardt advises Beckham to wait for everything. “Budweiser, Adidas, Visa, McDonalds, etc. There are many non-human brands that support the World Cup in Qatar without facing the kind of criticism that Beckham receives. Ultimately, Beckham’s brand equity is tied to football, so in that sense, his support of the World Cup fits well.”

There may not be a knighthood from King Charles this year, but it won’t lose any fans for Eckhardt in that regard. “When the 2026 World Cup arrives in the USA, it will be forgotten.”