29 Jun The Economic Value of Celebrity Endorsements
Question
BUSI615
[Date]
Article Presentation
Article Title
The Economic Value of Celebrity Endorsements
Source
Journal of Advertising Research, [Date]
Marketing Topic
Celebrity Endorsements
Summary
An article in ADWEEK asked the question “Are celebrity social endorsements worth the big bucks or the gamble (Beltrone, 2013)? I read over the article and begin an expedition for the article I am reviewing for this assignment. The article I am review was more empirical sound than that of ADWEEK. The article asked the question “Do Endorsements Drive Up Sales”(Elberse, & Verleun, 2012)? The study showed that a firm’s decision to hire an endorser generally has a positive impact on the firm’s focal brand’s sales (Elberse, & Verleun, 2012). The estimate’s average value, 0.20, indicates that weekly sales increase with just over $200,000 over the course of the duration of the endorsement (Elberse, & Verleun, 2012). That corresponds with over $10 million in added sales annually (Elberse, & Verleun, 2012).
The second question asked was “Do Endorser Achievements Increase Sales (Elberse, & Verleun, 2012)?” What happens when the athlete endorser adds to his or her reputation by capturing a championship (Elberse, & Verleun, 2012)? That is,
when the athlete captures a championship during the endorsement, weekly sales are expected to increase with an additional ($210,000–$140,000 =) $70,000 per week (Elberse, & Verleun, 2012). Do Endorsements Drive Up Stock Returns (Elberse, & Verleun, 2012)? Thus, entering into an endorsement increases a firm’s valuation (Elberse, & Verleun, 2012). Do Endorser Achievements Increase Stock Returns (Elberse, & Verleun, 2012)? When it comes to the impact of endorsers’ athletic achievements, such performances significantly and positively impact the endorsed firms’ stock prices (Elberse, & Verleun, 2012).
Implications
It would be beneficial overall to have Celebrity Endorsements (Elberse, & Verleun, 2012). First, in general, enlisting the help of celebrity endorsers pays off (Elberse, & Verleun, 2012). Second, the finding that sales increase in an absolute sense and relative to the firm’s competitors suggests that an endorsement strategy fits a marketing campaign aimed at increasing market share (Elberse, & Verleun, 2012). Third, when it comes to selecting endorsers– the results suggest that paying a premium for the most sought after endorsers seems worthwhile in terms of both sales and stock returns (Elberse, & Verleun, 2012). Fourth, in structuring contracts with endorsers make sure you are aware of how sales effects decrease over the course of the duration of the contract, the return on investments in such contracts will likely become less favorable for the advertiser over time (Elberse, & Verleun, 2012). Fifth, the study highlights that practitioners will generally likely face trade
offs in maximizing sales and stockreturn performance (Elberse, & Verleun, 2012). Reference Beltrone, G. (2013). Are celebrity social endorsements worth the big bucks or the gamble? the new frontier for firing up a brand. Retrieved from http://www.adweek.com/news/advertisingbranding/arecelebritysocial
endorsementsworthbigbucksorgamble152781
Elberse, A., & Verleun, J. (2012). The Economic Value of Celebrity Endorsements. Journal Of Advertising Research, 52(2), 149165. doi:10.2501/JAR
522149165
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