How influential are the influencers?

Posted on by Guy Cookson

Kate Hudson walks purposefully along a frozen beach. George Clooney smiles at a private joke. Eddie Redmayne stares into the middle distance.

These images are from advertisements – for La Mer, Nespresso and Omega, respectively – and they can be worth millions in fees to the featured celebrities.

But what are these endorsements worth to the brands? Or to put it another way, how influential are the influencers?

Advertisers have been leaning on our affinity for the famous since mass marketing began. One of the first was baseball legend Babe Ruth, who lent his face to Red Rock Cola.

Athletes, actors and musicians have carried on ever since, though for a long time those with an eye on maintaining their credibility steered clear of commercial affiliations – as Bill Hicks made clear in a classic stand-up routine.

According to research by Harvard Business School professor Anita Elberse and Barclays Capital analyst Jeroen Verleun celebrity endorsements increase product sales by an average of 4% relative to its competition – which might not sound much, but even a single digit uptick can represent billions in sales for a global brand. Really successful partnerships can increase sales by much more.

But why do endorsements work?

“The answer lies in the brain,” explains brain scientist and entrepreneur Jeff Stibel, who is better placed than most to understand the dynamic. “Our minds do not do a good job of differentiating between real and make-believe, so celebrities become familiar to us. When a familiar face promotes a product, it makes it seem as if the product itself is familiar, which makes people more likely to buy it.”

The old model is shifting. Whereas once brands paid celebrities for the endorsement in a fairly simple transaction, celebrities like Dr Dre, Kylie Jenner, Kanye West and Rihanna have launched or co-founded successful brands themselves.

“The celebrity endorsement is a three-way relationship connecting the star, the product and us,” says critic Amanda Hess. “And the internet has worked to draw all of its participants closer and closer together. We’re all mingling on the same platforms, our photos pinned to the same timelines.”

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