What’s the ROI on a Celebrity Endorsement?

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Calculating the return on investment from a celebrity endorsement is to marketing what measuring the placement of an electron is to physics. The math is complicated and controlling the variables is impossible. Nevertheless, brands spend billions annually on endorsements – particularly around the Super Bowl – out of a an almost religious belief that fame drives purchases. 

It clearly can. That doesn’t mean it always does. 

Athlete endorsements offer the most consistent and quantifiable return on investment. There’s a simple reason why: Those endorsements are coherent. Lionel Messi sells soccer jerseys (mucho mucho) and soccer cleats. Sure. Michael Jordan sell sneakers. Goated. In a 2012 Journal of Advertising Research, article researchers from Harvard Business School and Barclays Capital concluded that “sales and stock returns jump noticeably with each major achievement by the athlete” and that an athlete’s endorsement increases a company’s sales by an average of 4% relative to its competition. 

But Patrick Mahomes, who may win on Sunday, won’t be selling helmets. He’ll be selling insurance (financial helmets) and when a celebrity endorses a product that isn’t integral to what makes them a celebrity, results can be mixed. 

 “The collaboration between Michael Jordan and Nike has been incredible, but the collaboration between Gap and Kanye West was a catastrophe,” Mark Cohen, a Columbia Marketing Professor and former big hitter at Sears, Gap, and Lord & Taylor tells SPY, “You have to sell to customers a product that has a relationship with the celebrity.”

Some brands seem slow to learn this lesson. Take, for instance, Solo Stove, which recruited Snoop Dogg for a big push last year. To Snoop’s credit, he did launch a viral campaign for the company when he feigned giving up smoking weed. Google data suggests a spike in searches related to Solo Stoves between November 19 and November 25, after Snoop made his big announcement and Snoop’s Instagram post got almost 2.9 million likes.

“When a celebrity endorsement is announced, there’s often a discernible burst in attention and sales,” explains Cohen. “But does the surge last?”   

Solo Brands’ fourth-quarter results came in below expectations by roughly $40 million. Solo Brands stock fell 32% last month. And Snoop went back to smoking weed.

That doesn’t mean that eyeballs are bad. The opposite is certainly true. Taylor Swift’s presence at Chiefs games this season has added an estimated $330+ million to the NFL’s bottom line (before the Chiefs made it to the Super Bowl). That number represents increased merch sales to women, but also a ratings spike. Celebrity drives attention in a positive way.

And people that actually intend to buy a product (how many of the people Snoop reached were on the market for a fire pit?), do buy celebrity-endorsed products. In a 2022 Psychology of Marketing study, researchers from Oxford University (lots of marketing researchers at prestigious schools for some reason) found that commercials viewers had “less pupil dilation” when choosing a product advertised by a celebrity. On a biological level, they spent less time deliberating their purchase. 

Cardi B, who will be flogging NYX during the big game, is an interesting example of the risk associated with celebrity endorsements. Following McDonald’s super successful collaboration with Travis Scott in 2020, the “Travis Scott Meal,” Cardi B and her then husband (and maybe current husband…) Offset debuted their own meal last Valentine’s Day. And… nothing really happened. Similar meals associated with J. Balvin, BTS, and Saweetie hit harder (McDonalds stock is up 62% over the last five years). But then, in October of last year, Cardi B did a campaign for Skims, Kim Kardashian’s compression garment company. 

Skims had seen swift growth in online searches up to that point, but post-Cardi the volume changed by about 8%. That may not sound massive, but that’s about 200,000 more buyers with intent per month – a lot of foot traffic.

But as Cohen stresses, the real test comes with an endorsement further in the rearview. The quick hit of attention might make the decision to use a celebrity seems smart – good for internal politics at a megacorp – but the goal is sustained interest and alignment. That’s harder.