In today's world of advertising, nearly one-fifth of all ads you view have a celebrity in them. There is a reason for this - celebrities have the potential to increase consumer sales. Businesses that are having lackluster sales, are a start-up business or seek a boost in current sales often look towards celebrity endorsements for a turnaround. Many companies report an increase in their sales because of a celebrity endorsement.

Most companies, however, see celebrity endorsements as 'brand' building. The recognition and product growth come over a period of time, though it can grow faster than average with the right celebrity hawking the product. A respected Hollywood star may not increase sales immediately, but his or her name alongside your product in advertising can give it credibility (depending on the celebrity).

Businesses That Have Benefited
Building brand is the bane and the glory of every business. If consumers don't know you or the product you are selling exists, then business will remain stagnant and eventually you will go out of business.

A company brand needs to be instantly identifiable in today's fast-paced media world. For example, UPS, Levi's or Coke are globally recognized. However, these companies have had years to build their brands. Companies today seem to have a smaller window of time to develop their brands. That is where celebrities come into the picture.

Jenny Craig
The major weight loss company Jenny Craig was suffering from stagnant sales before it found a celebrity sales 'angel' in Kirstie Alley. Once it added her to its advertising campaign, sales increased nearly 120% between 2005 and 2006. With additional stars jumping on board, sales increased even more. Consumers develop a connection to celebrities, and very often, if they are a fan of a celebrity who they see using a product, then they are more likely to try it. By using Kirstie Alley to endorse Jenny Craig, the company is showing that even celebrities can face the same problems as millions of women.

Activia Yogurt was just another yogurt in the dairy aisle among dozens of other brands.

Then the company secured Jamie Lee Curtis as its celebrity spokesperson. Since bringing her on board, the company reports having raised the awareness of Activia to 80% of its target demographic, making Activia the number-one-selling yogurt brand in the U.S.

Burger King
Burger King is a great example of having celebrities turn around a stagnant bottom line. The fast food chain had long been in decline and was struggling to generate sales. It revamped its menu, remodeled nearly 40% of its stores, and hired Jay Leno, David Beckham, Mary J. Blige, Steven Tyler and Sophia Vergara to star in its ads. This gave the company a bigger one-quarter earnings growth than McDonald's, the giant of the fast food industry. While it may have been a combination of changes, the celebrity endorsements obviously made a difference.

Kate Middleton
When it comes to a celebrity selling a brand, few do it better than Kate Middleton. She has become the iconic British lady of beauty and fashion. Photographed wearing Marks & Spencer Shoes, the styles she was wearing were sold out in hours and have become the store's best-selling shoe style.

Dresses that the Princess has worn have sold out within hours, and she is considered the reason J Brand Jeans sales have skyrocketed. Wearing a wedding dress designed by Alexander McQueen and often seen wearing other designs from the label, McQueen's sales have increased by over 27%.

Other Celebrities
Occasionally, a product is given a sales boost by just the mention of it from a well-known individual that isn't even considered a celebrity. President Obama was videotaped singing a line from Al Green's song "Let's Stay Together," and sales of the of the song soared 490%.

The Downside to Celebrity Advertising
Having a celebrity use your product or agree to endorse it may seem like advertising 'manna' from heaven. However, celebrities are still human and they make mistakes. The difference is that our mistakes are usually only seen by a few. A celebrity's mistakes are the stuff of worldwide media and social media circles. One faux pas by a celebrity and it can be instantly reported and viewed around the globe.

Consider some companies that have used certain celebrities, only to regret their decision later. Recent scandals involving Kobe Bryant and Tiger Woods are just two examples of that.

There can also be an over-saturation of a celebrity. If consumers see a particular celebrity too often, the celebrity can lose his or her credibility. Alternatively, if advertisers put the wrong celebrity and product together, you could actually see a drop in sales. Rachel Ray wore a scarf in an ad for Dunkin' Donuts that viewers thought looked like a 'keffiyeh,' an Arab headdress for men, and it was instantly associated with terrorism.

A recent article by AdAge revealed some research that suggested that most celebrities do not increase sales. "We studied every nationally televised ad for the first 11 months of 2010 and found that celebrity ads performed either below average or merely equaled it," said the publication.

In fact, the magazine discovered that one-fifth of celebrity ads had a negative impact on advertising effectiveness. It noted that with today's social media, consumers are not as easily swayed by a celebrity as they once were. "Today's consumer is more likely to be influenced by someone in [his or her] social media network than a weak celebrity connection."

The Bottom Line
While many celebrities such as Kate Middleton can be seen as good influences and raise sales, many celebrities do not.

It would be wise for advertisers to consider what celebrities they hire or solicit to endorse their products thoroughly. Although celebrities can increase sales and help build a brand, the quality of the product is what will keep consumers coming back. If the product doesn't have mass appeal, or isn't a quality product, all the celebrity endorsements in Hollywood won't make it a bestseller. While there might be a boost in sales, ultimately the product itself must stand the test and entice consumers.

Photo Courtesy of Calgary Reviews