Americans are celebrity-smitten. Gossip sheets such as the National Enquirer and TV shows such as "Hard Copy" thrive on our insatiable hunger for news about the stars--never mind if the stories are true.
That's why many marketers have long held an unwavering belief that celebrities are sure bets to sell products. The thinking goes something like this: If Michael Jackson can sell 10 million records, he can certainly sell 20 zillion Pepsis. And if Michael Jordan can fly on the court, the recently retired basketball star must be worth the $36 million he earns endorsing products off the court.
But does it work? That point has been debated in the marketing field at least since comedian Bob Hope first pinned the Texaco star to his chest and Ronald Reagan hawked Chesterfield cigarettes more than 45 years ago.
Today, though, the debate is taking on more urgent financial tones. The sums that consumer product giants are paying celebrity endorsers have soared to record levels, even as an unprecedented number of the highest-paid stars have had their names dragged through the media mud bath.
Jackson was on an international tour sponsored by Pepsi this summer when the father of a 13-year-old boy accused Jackson of molesting his son. Jordan was Nike's top spokesman when he was linked to sizable gambling debts. Actor Burt Reynolds was the Florida Citrus Commission's sole spokesman when his divorce from Loni Anderson suddenly turned ugly. Two years ago, Earvin (Magic) Johnson was the most highly paid spokesman for Converse shoes when he announced he was retiring from basketball because he had contracted the AIDS virus.
Although few marketers are immune to celebrity worship--and some swear by it--there is considerable evidence that their increasingly risky bets on famous names rarely do much to help business.
Executives close to Frito-Lay quietly concede that the recent, multimillion-dollar signing of Chevy Chase as pitchman--on the eve of his swiftly canceled Fox talk show--has failed to give a boost to Dorito sales. And even Michael Jackson was unable to thrill consumers with a line of offbeat L.A. Gear sneakers that cost the company millions of dollars in losses a few years ago.
Consumers are growing skeptical about celebrity endorsements. In one recent survey of 2,000 consumers by Total Research Corp. of Princeton, N.J., most respondents said they would not buy a product just because they liked the celebrity pitching it. Another survey by the Athletic Footwear Assn. revealed that celebrity endorsements ranked as the least important factor cited by consumers for buying a particular brand of shoe.
"Celebrities are a tremendous waste of money," said Bob Garfield, editor at large for Advertising Age. "The consumer no longer believes that a celebrity pitching a product is anything other than the direct result of millions of dollars exchanging hands."
How many millions? While Jordan earned $3.9 million on the court for the Chicago Bulls last year, his $36 million in endorsement fees was $1 million more than the 1993 budget for the city of West Hollywood. One Hollywood celebrity broker estimates that marketers will spend 25% more to lure top stars in 1993 than in 1992. The amount could grow another 25% next year, he said.
The jockeying for celebrity endorsers escalated from a footrace to a space race 10 years ago, most celebrity brokers say, when Pepsi spent $5 million for Jackson. That was roughly five times the amount any celebrity had ever been paid for a product endorsement.
Indeed, Pepsi has spent the past decade trying to appeal to youth by building its brand with the help of celebrities--from Jackson to Madonna to its most recent signing of singer Billy Idol.
But Jackson is Pepsi's most highly publicized celebrity endorser. Over the past decade, Pepsi has sponsored three Jackson concert tours while paying him endorsement fees of $20 million. During that time, Pepsi has picked up two market share points on archrival Coca-Cola--each point worth an estimated $500 million in annual sales.
The match-up helped enrich Jackson--while linking Pepsi with the younger generation whose business it so badly desired. By all rights, it was a match made in marketing heaven.
Or was it?
This summer, the parents of a 13-year-old boy filed a civil lawsuit charging Jackson with molesting their son. News reports followed about Jackson's alleged overnight stays with young boys, and Pepsi's $20-million investment seemed to lose some of its fizz.
Pepsi has since remained low-key in its support for Jackson--even though no criminal charges have been filed against the pop star. Jackson has denied all allegations of sexual abuse and said they stem from a failed extortion attempt by the boy's father.
Although Pepsi has not dropped Jackson, it has done little to publicly back him, and company executives quietly concede that his current international tour will likely be their last dance with the star.
