Celebrities have an established name that can easily be lent to advertising, so it naturally follows that companies pay big bucks to have them endorse their products. But that advertising strategy doesn't always work, especially when that famous spokesperson falls out of favor with his or her adoring public.

TUTORIAL: Microeconomics: Factors Of Consumer Decision-Making

Early Ad Integration
Celebrities from the entertainment and sports world have been endorsing a wide variety of products for decades. Back in the 1950s, the comedy team of Grace Allen and George Burns broke the "fourth wall" of live television by hawking Carnation milk products during their popular television show. Other celebrity endorsers followed suit: the cast of "I Love Lucy" smoked Phillip Morris (NYSE:PM) cigarettes (which sponsored the program) and even animated characters got into the act. Hanna-Barbera's Fred Flintstone character was seen puffing on a Winston after a long day on the job. However, the show's creators later switched to Welch's juice after the main character's baby, Pebbles, was born.


But not all celebrity endorsements have been a match made in advertising heaven.

Athletes Behaving Badly
For more than a decade, golfer Tiger Woods was the poster boy for everything from Nike (NYSE:NKE) sporting goods to AT&T (NYSE:T) to Tag Heuer men's wear to Gillette shaving products. But Woods' marital indiscretions and subsequent ugly divorce saga did not sit well with advertisers, who may have feared he could no longer be a fan-friendly front man for their goods. By December 2009, sponsors silenced millions in advertising contract deals. For example Accenture killed its six-year sponsorship deal within weeks of the breaking news about Woods' extramarital affairs. In fact, Woods' popularity among potential ad wooers has suffered more of a fall from grace than his golf game. (Learn more about advertising challenges in Advertising, Crocodiles And Moats.)

NFL quarterback Michael Vick also lost big money sponsorship deals after his 2007 federal felony in connection with illegal dog fighting. Vick's loss as a result of the scandal was estimated to be $50 million by the University of Oregon's Warsaw Sports Marketing Center. Animal lovers came out in droves against Vick, who spent 19 months in prison. He has since signed a new deal with sports gear company Unequal Technologies.

In 2004, NBA superstar Kobe Bryant's McDonald's (NYSE:MCD), Ferrero SpA (known for its Nutella brand) and Sprite promotions dried up after he was accused of sexual assault. The case was ultimately dropped, but the companies refused to comment on the reasons for not renewing Bryant's endorsement deals

Similarly, U.S. Olympic swimmer Michael Phelps captured the world's attention when he claimed more gold medals than any Olympian in history. But Kellogg (NYSE:K) failed to extend Phelps' contract after photos of him smoking a marijuana pipe went viral in 2009. However, other companies including Subway, Visa and Speedo, stuck with Phelps.




Famous Voices and Faces
In 1989, Madonna's infamous music video "Like a Prayer" offended many with its controversial religious imagery including burning crosses. Pepsi (NYSE:PEP) had launched a commercial starring the pop star a day before the video was released, which many customers associated the video with Pepsi ad. The American Family Association launched a boycott of Pepsi products and although the boycott was short-lived, Pepsi decided it wanted no part of that negative publicity and discontinued the ad. (Learn more about the power you have in Protesting With Your Money: Does It Work?)


In 2005, supermodel Kate Moss, a long-time face behind Calvin Klein and Chanel, among others, built her wealth on her image and subsequent product endorsements. That is, until a British tabloid published photos that purported to show Moss using illegal drugs. H&M (OTC:HNNMY) swiftly dropped its approximate $7 million per year contract with Moss, according to the Daily Telegraph and Chanel said it would not renew its contract, but also said it was unrelated to the events.

The Bottom Line
Just because you're a superstar athlete or gifted performer doesn't mean consumers will rush to the stores to buy whatever you're endorsing. And misbehaving celebrities - no matter how good they are at what they do - spell certain doom when it comes to companies forking over big dollars for endorsements.

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