How Celebrities Drive Profits for Companies

Black entertainment gossip

It is the crux of many advertising strategies: Get a celebrity to endorse a product, then feature them in commercials in the hopes that the celebrity will drive consumers to buy that product. An example of this strategy is Gatorade, who employs numerous high-profile athletes to drive demand for its product.

In basketball especially, African Americans are employed to drive profits of products anywhere from sports drinks to shoes and apparel. LeBron James, for instance, has been featured in Gatorade commercials, and many basketball players have shoe lines. Stephen Curry, who plays for the Golden State Warriors and has been an NBA MVP, has a shoe line that is enormously popular and profitable.

The statistics show that this strategy works for most companies as well. A 2011 study conducted by the Harvard Business School showed that companies who signed a big name endorser saw that their sales rose 10% annually and they received a .025% increase in stock returns.

The list of high profile endorsers can be correlated with the sums celebrities make and the net worth that they have. Beyonce, for instance, is one of the most successful female music artists in the world, with a net worth of $450 million. Often called the music industry power couple, she and her husband Jay-Z total $1 billion in net worth.

Often, the stock of high-profile celebrity endorsers can be driven by current celebrity news. For instance, a good news story, such as when Russell Westbrook posts yet another triple double, can raise the value of his line of sneakers in the eyes of those that consider Russell Westbrook an NBA star. Celebrity news, though, goes beyond the court however.

Every day, current celebrity news can cover topics ranging from the sensational to the feel-good to the damaging. In one viral video, Ed Sheeran was shown to go on stage at a girl’s performance in a mall and sing with her. In other current celebrity news, the ongoing divorce between Johnny Depp and Amber Heard has the potential of damaging Johnny Depp’s stock.

A gossip site, whether a standard gossip site like TMZ or a black gossip site, can damage an individual’s reputation. This is especially true of up and coming actors and actresses, who may not have the established following to ride out the ups and downs of celebrity life.

Net worth, however, is a good barometer for evaluating whether an endorser would lead to profits for a company. This is due to the fact that net worth is an indicator of success and whether that individual has a large following or not.

One example of a strong endorser is Tyra Banks. She garnered net worth and a following by becoming the first African American woman to be featured on the covers of GQ, the Sports Illustrated Swimsuit Issue, and the Victoria’s Secret lingerie catalogue.

Net worth and an individual’s reputation have a strong influence on endorser capability.

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