Celebrity brand endorsement market shrinks 20%

Celebrity brand endorsement market shrinks 20%

Celebrity brand endorsement market shrinks 20%&nbsp

Key Highlights

  • A-list Cricket & Bollywood stars are holding on to their brand endorsement rate-cards
  • Brands are seeking more involved and immersive Digital content from their endorsers 
  •  The importance of the Force Majeure clause in Brand endorsement contracts is all set to rise

Mumbai: While Bollywood and Cricket spur India like nothing else, Brands have ridden on the mass appeal of their biggest stars. But now thanks to the Covid Crisis, those big A-list celebrity endorsement deals are taking a knock of over 20 per cent.  And from our combined sources we hear that the celebrities are not yet cutting their take-home on their endorsement fees. 

As per industry sources, in the BC or Before COVID world, if each A-list endorsement deal was roughly Rs 10 crore, at least 80 per cent of it accounted for the star’s offline appearances. That included launch events, adfilm shoots, TV shows and engagements with fans. Digital engagement was but a small part of a big contract. It barely made up 5 per cent of the total value of an endorsement deal. 

Now flip that to AC or After COVID, The size of endorsement deals has shrunk – and significantly at that… Digital content has come to rule with Brands in need of immersive involvement of their celebrity endorsers – building personal connect with their consumers… in short, being more real. Not as larger-than-life. Hence Katrina Kaif scrubbing the plates or floors of her home makes her that much more appealing to FMCG brands hoping to marry her star appeal with the newly acquired domestic vibe. 

Endorsers may or may not play ball. But brands are seeking their help in the meantime to extend their contracts at minimal escalation. 

Dhruv Chitgopekar, Co-Founder of Talent Management firm Kwan says If I were to put a broad-based band I would say we might see a reduction of anywhere between 15 to 20 odd per cent in the overall size of the endorsement market at least for the next two quarters… Brands are looking at doing extensions at zero per cent escalations. I can’t give a flat-out percentage but I could say that the market is moving towards conversations of 0 to 5% escalation vs 10 to 20% in a normal, non-COVID world.” 

The lockdown has put a hold on movie-making and content & brand shoots, While some celebrities have taken to supporting their brands online – just like an influencer would – deals that revolved around those big-budget adfilms are now based on smaller, home videos – and since it’s digital, their performance is tracked closely with analytics. But with ad budgets shrinking, the nature of deals changing, are the stars willing to take cuts on their endorsement fees?

Ashish Bhasin, CEO APAC & India Chairman, Dentsu Aegis Network says “Will they like to take a cut? The answer is no. Nobody likes to take a cut. Pricing is a supply and demand issue. If there is insufficient demand and enough supply pricing is going to find a level. There will always be a level both in cricketers and in Bollywood – which are the two big celebrity areas that you normally have in India where there will be a lot more demand. And they will be able to hold on to their pricing a little better but in general because budgets are shrunk and everybody now are on this era of efficiency, I do feel that endorsement fees will come under pressure as are all other parts of advertising.” 

So how will deals get impacted in the long term?  “I think there will be changes on 3 fronts – yes money but also in the. structure of contracts because I think digital will now become very important. And also one word that we always saw as terms & conditions but now people will be more careful – that is the ‘force majeure’ clause – that is in case you are not able to use a celebrity what happens, what are the obligations on each side etc – people will become more careful in spelling that out,” states Bhasin.

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