Endorsed Brands Take a New Twist

Endorsed brands have always been an important brand strategy. Endorsements take on different variations. We continue to see people with lab coats acting as doctors to endorse the efficacy of a product or demonstrate what a "talk with a doctor" might look like. There are Ralph Lauren and Eddie Bauer interior in cars. Reebok sponsors work-out rooms in hotels. Martha Stewart is an endorser of towels, pillow cases, dishes, and other home products. Her name provides a risk reduction for those who are not certain they know how to properly decorate their homes. Oprah's endorsements can drive book sales, generate traffic at stores, and create new celebrities (Dr. Phil, Dr. Oz, etc. were all created by Oprah and have now become their own celebrities and are now endorsers).

Endorsements are designed to lower fear, uncertainty and doubt in the purchase. Endorsements are not designed to attract everyone. They are designed to attract the target. They connect the target with people who are admired or looked up to. They are a reference group--someone we aspire to be like or be associated with. A Nike shoe is a brand, but an Air Jordan takes on a whole new dimension because Michael Jordan is behind it. His endorsement was so strong that LeBron James actually said one time that he thought he could jump higher when he was young because he was wearing Air Jordans.

As a result of social media, consumers have become even more skeptical or celebrity endorsements, so a new twist has occurred. Celebrities like Ashton Kutcher and Lady Gaga are now taking a piece of the company and taking on management roles within the company so that their endorsements are not only more believable, but so that they share in the success or failure of the company (actually, there is little downside for the celebrity from a monetary standpoint since they get paid as well as a getting equity). Kutcher, for example, is going to be the head of social media for Popchips, a line of potato chips that are baked rather than fried. He is considered a social media expert because he has more Twitter followers than almost anyone on earth. He may not really know social media, but his Tweats about Popchips will likely lead to increased sales--at least amongst people who like Kutcher.

We saw how intimately tied companies and products are to their endorsers during the Tiger Woods problems. Accenture dropped Tiger immediately because his endorsement was no longer appropriate for a consulting firm. At the same time, Nike continued to support Tiger since he was responsible for the rise of Nike Golf. His personal issues could be separated from his athletic prowess. Tiger may not have had a piece of the equity at Nike, but he has a lot to say about design, similar to the input and responsibilities that Michael Jordan had at Nike.

Nike better watch closely what is happening. If Tiger or Jordan wanted an equity stake in the company, they would command a lot a hefty amount of stock--more than shareholders might be willing to tolerate, but the negotiations and calculations would be very interesting.