Celebrity Endorsements and Online Advertising

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The impact of celebrity endorsements on online advertisements is discussed in this research article. The study’s aims are to ascertain the efficacy of celebrity endorsements on online advertisements, to investigate the factors that lead to celebrities’ impact on the online audience, and to assess the benefits and drawbacks of celebrity endorsements on online ads. Furthermore, the study paper investigates the variables that influence celebrity influence on customers. The paper presents an analysis of the impacts of celebrity endorsement on Nike, which is an apparel, accessories, and footwear manufacturing company to understand the effectiveness of online celebrity endorsements on advertising. The research paper further identifies the research gaps and provides recommendations for future research and policy change.

Keywords: Celebrity, Endorsement, Advertisement, Online.

Chapter 1- Introduction and Methodology

Introduction

The primary objective of this study is to examine the influence of celebrity endorsements on consumer perception of the endorsed products or brand. Business entities across the world utilize several types of marketing tools to increase their customer base and ensure profitability. One of such marketing tool is celebrity endorsement (Ahmed, 2015). According to Ghosh (2014), celebrity endorsers are persons who enjoy considerable recognition. Utilizing celebrity endorsements in marketing has been in existence since the nineteenth century and has evolved from being used in traditional product brands to services industries such as airlines (Dissanayake & Ras, 2017). One of the companies that have effectively used celebrity endorsement is Nike (Passikoff, 2013).Currently, many television companies are using celebrity endorsers to advertise and promote brands (Zipporah, 2014).

Through celebrity endorsements, entrepreneurs can efficiently relay their message of advertisement and company brand to the potential consumers (Dissanayake & Ras, 2017). The celebrity success and liking is paired with a particular brand thus influencing consumer likely purchase behavior (Passikoff, 2013). The use of mass media and celebrity endorsement is seen to change the purchasing behavior of customers either positively or negatively. By using celebrities on media platforms, such as billboards, websites, television, internet and radio, companies can create awareness about their products to the targeted market segment (Zipporah, 2014).

In the 21st century, advertising techniques are shifting with many companies capitalizing on celebrity endorsements on online advertising sites (Kowalczyk, 2013). Some of the online strategies used include internet advertising, online public Relations, search marketing, opt-in email, Facebook, Twitter, You-tube and expanding ads. However, there is limited information on the effectiveness of celebrity endorsement on online advertisement.

Aims and Objectives of the Study

This study aims to examine the effectiveness of celebrity endorsement on online advertisement.

Therefore, the primary objectives are as follows:

To determine the effectiveness of celebrity endorsements on internet/online advertising.

To examine factors that contribute to celebrities influence on online audience

To determine the advantages and disadvantages of celebrity endorsements on online advertising

Justification of the research

The rationale of this study relies on the fact that, in as much as celebrity endorsements increase consumers likelihood of purchasing a given product, the relationship between the two is still unclear (Dugalic, 2015). While some companies are excited about celebrity endorsements, not all consumers portray high likelihood of purchasing intents for the company’s products (Dissanayake & Ras, 2017). Therefore, while focusing on Nike’s celebrity endorsement strategy, the study will provide significant information to guide future studies undertaking in the area of endorsements and help in the strategic decision on customer purchasing habits and celebrity endorsements.

Methodology

This study will examine secondary information from journals, peer-reviewed articles, websites, books, and text within the last decades. As such, the study will be able to identify and examine what other scholars have found out in the concept of celebrity endorsement and customer influence. The study will also analyze the effects of celebrity endorsement in an online advertisement on purchasing behaviors.

Chapter 2- Review of Relevant Literature

2.1.Effectiveness of Celebrity Endorsement and Online Advertisement

Celebrity endorsement is one of the most effective strategies for brand promotion and visibility (Rzemieniak, 2015). A business using celebrity endorsement not only influence consumer’s perceptions of their brands but also emphasizes on their goods and services (Bergkvist & Zhou, 2016), According to the study by Rzemieniak (2015) majority of respondents consider that online platform is the most effective ways to advertise. The study revealed that approximately 76% of all the respondents consider internet advertisement as an effective strategy. Only 14% of the responded claimed that internet advertising is weak. On analyzing the use of sponsored link advertisement, a majority of the responded considered it as an “very good” advertising method (Rzemieniak, 2015). Rzemieniak findings concurs with the study by Calder (2009) who, when analyzing the association between online engagement and effectiveness of advertising, found a positive connection between social and personal interactive involvement (Calder, 2009). Other reports by Saleh (2017) states that most people when talking about advertisement, they are likely referring to online advertising. Saleh further indicates that 95% of revenues for Google comes from online advertising.

Social media offers the best opportunity for the brand to advertise their products (Ghosh, 2014). Snapchat, for instance, reaches 40% of Americans aged between 18-34 years (Kwon et al., 2015). The cost of celebrity-endorsed advertisement can be exorbitant. Studies show that a celebrity with between 2-3 million followers can charge as much as $187, 500 for a product endorsement on YouTube, $ 75, 000 in Snapchat or Instagram and $ 75, 000 on Facebook (Saleh, 2017).

Initially, celebrity endorsements only happened in mainstream media and outdoor advertisement (Calder, 2009). However, with the advent of technology, companies are using celebrity endorsements to promote their products on online platforms (Ghosh, 2014). Studies show that when a celebrity endorses a company’s product, other companies selling similar products faces high chances of making low sales (Dissanayake & Ras, 2017). However, celebrity endorsement may result in losses especially when the celebrity faces negative allegations or damaged reputation (Zipporah, 2014). For instance, Tiger Woods alleged extramarital affairs negatively impacted Nike and other companies that had hired him to endorse their products. The damage in reputation resulted in losses of between $6 and $12 billion collectively (Kwon et al., 2015).

The primary objectives of advertisement are to inform, persuade and remind consumers of the existence of a given product (Ghosh, 2014). Informing potential clients is mainly used when introducing new products. As such, there is the delivery of information such as quality, benefits, and image of the product. Firms identify the most effective strategy to gain a competitive advantage. Consequently, the companies persuade clients that they are getting value for their money. The reminder strategy is mainly used to maintain the relationship between the seller and consumers. By using celebrity endorsers, companies can effectively inform, remind and persuade consumers to purchase their goods and services (Ghosh, 2014).

According to Calder (2009), celebrity endorsers have the potential to attract supporters and fans to try the product they are advertising, increase awareness and promote consumer purchase intentions. When a company recruits celebrities, they have a high chance of influencing consumer’s predisposition towards their brand which in turn increases the chances of purchase intentions (Bergkvist & Zhou, 2016).

2.2.Factors that contribute to celebrity influence on audience

Selecting celebrities for online advertisements require expertise, and careful consideration of many factors such as trustworthiness, expertise, attractiveness, respect similarity and brand personality (see table 1 below) (Zipporah, 2014). According to the study by Dissanayake & Ras, (2017) there is a significant association between the apparent attractiveness of the celebrity and the brand personality (Dissanayake & Ras, 2017).

Table: 1 Factor That Contributes To Celebrity Influence on Audience

2.2.1.Power

The power of a celebrity is another factor to consider. Endorsers should have the power to persuade and influence customers purchasing habits. Thus celebrity should be able to change consumer’s negative attitude about the advertised product. Michael Jordan, who is currently a brand ambassador for Nike, has effectively used his power to influence the customer to purchase more of the Nikes products (Um, 2017). Studies carried out in the US shows that approximately 64% of internet users following a celebrity also follow the brand that the celebrity advertises (Saleh, 2017).

2.2.2.Celebrity Credibility

Consumers trust celebrities who are credible and honest (Passikoff, 2013). The celebrity should be perceived to have relevant knowledge, experience, skills, and trust to give precise information about the product. As such, the celebrity should have a positive attitude towards the product which affects customers’ acceptance (Kwon et al., 2015).

2.2.3.Celebrity Attractiveness

It is imperative to select an attractive endorser to drive online advertising. Saleh (2017) claim that charming, beautiful and handsome looks, have high potential to attract consumers to purchase the products. Moreover, attractiveness is complemented by elegance and likeability (Kowalczyk et al., 2013). Thus, if an endorsee is attractive, successful and trustworthy, many customers tend to purchase the goods or services under the endorsement (Bergkvist & Zhou, 2016). Therefore it is imperative that marketers consider endorsers who are attractive, honest, and successful in their career, talented, entertaining and famous. Moreover, most people trust persons with whom they share similar traits such as ethnicity, race, and culture (Kowalczyk et al., 2013).

A study by Dissanayake & Ras, (2017) examined the relationship between celebrity endorsements and related dimensions. The findings show that there is a definite association between the effectiveness of celebrity endorsements and their brand personality factors. As such, trustworthiness and attractiveness play a prominent role in improving company sales.

2.2.3.1.Nike and Michael Jordan Celebrity Endorsements

Celebrity endorsement depends on many factors such as the product and the celebrity (Passikoff, 2013). Successfully endorsements have a functional association between product and celebrity that the consumer likes. For instance, Michel Jordan and Air Jordan shoe line have been an effective relationship. Michael Jordan is viewed as a quintessential endorser. Despite his success in basketball, he depends on the deep connection he makes with the products he advertises. Many companies have capitalized on Jordan’s success and expertise to sell their products. They include Wheaties, Nike, Jordan cologne, Coca-Cola, McDonald’s, Rayovac, MCI, Chevrolet and Sports (Dissanayake & Ras, 2017).

From 1990, Jordan has made approximately 240 million dollars in endorsements (Agnihortri, 2016). Air Jordan for instance, a division of Nike, grew its revenue to over 300 million dollars mainly due to Michael Jordan’s endorsements (Bergkvist & Zhou, 2016). To date, Air Jordan has become the most expensive sneakers selling over $ 200 million (Agnihortri, 2016). Since 1997, Nike’s gross revenues have risen from $ 8000 million to $ 19, 000 in 2009. In the 11 year period endorsement, Nike doubled her revenue mainly due to Air Jordan basketball shoe line giving Nike an edge over competitors such as Reebok (Bergkvist & Zhou, 2016). The success of such endorsements attributes to trustworthiness, expertise, attractiveness, respect/credibility and brand personality of Michael Jordan (Ahmed et al., 2015).

On social media sites, the celebrity can act as an observer on the products under advertisement. According to Chang (2016), online platforms such as Twitter, Instagram, YouTube, and Facebook have numerous numbers of followers who are a potential target for products brands. However, Saleh (2017) states that it is easier to utilize online influencers such as bloggers to access particular niche of customers rather than using a lot of money to get international celebrities to endorse products. For instance, local bloggers can be used to target a specific audience. Arguments opposing social media celebrity endorsement states that most of such celebrities are not recognized worldwide (Chang, 2016). In addition to cultural and moral value variations, some persons will not appreciate the use of celebrity endorsers and may end up not buying the products. Chang states that moral character significantly impacts on online advertising, endorsers and brand valuation. When studying the relationship between celebrity endorsement and moral character, Chang found out a significant causal impact of moral character information compared to warmth information on endorser’s impression (Chang, 2016).

From the table 2 below, individuals tend to be influenced by endorsements from celebrities as compared to the non-endorsed advertisement (Zipporah, 2014). The reason may be due to the perceptions that the celebrities are successful, role models and that the brands match the celebrities. From the table, celebrity endorsement in social media seems to be more efficient than print and electronic media.

Table 2: The Occurrence of Celebrity-Endorsed Versus Non-Endorsed Advertisements

2.3.Determine the Advantages and Disadvantages of Celebrity Endorsements on Online Advertising

2.3.1.Advantages of online celebrity endorsements

Ensures attention- celebrities command a lot of attention. Companies can capitalize on their popularity to increase product sales (Bergkvist & Zhou, 2016).

Establish brand credibility- celebrities have a significant influence on their fans in that; they look up to them as their role models. If such celebrities endorse company’s brand, most likely their fans would like to be associated with the same product (Passikoff, 2013).

High rates of recall-people commensurate celebrity personalities with the brand thus increasing recall value for the goods or services (Zipporah, 2014).

Also, a product endorsed by celebrities helps in reaching different target groups thus creating socio-demographic connections. Celebrities impress consumers differently basing on their age, gender, marital status and their geographical locations (Chang, 2016).

2.3.2.Disadvantages of Online Celebrity Endorsements

The high cost of advertisement- many celebrity endorsements cost relatively high fees per advertisement compared to other forms of advertisement. As such, not all business entities may afford (Bergkvist & Zhou, 2016).

Also, some celebrities endorse more than one brand which might lead to overexposure (Dugalic, 2015). A lot of advertisements from one celebrity may dilute the effectiveness of the advertisement thus may not have a significant influence on the audience. On the other hand, product or brand with a single endorser may be perceived as unexciting hence having a negative impact on the targeted group (Zipporah, 2014).

The other challenge is reputation- if the reputation of a celebrity gets damaged; there is a high likelihood that it will negatively affect the brand that the celebrity is promoting (Dissanayake & Ras, 2017).

Chapter 3- Analysis of Literature Findings

3.1.Analysis of Literature Findings

Celebrity endorsement can be a costly strategy but still perceived as a satisfactory way to increase profits by companies. As shown earlier, a celebrity can charge as much as $187, 500 per single online advertisement. However, the successes experienced by Nike, endorsement advertising can indeed justify the high costs associated with this form of advertising. The literature shows that celebrities play a significant part in influencing people’s opinions. Hence, many brands aim to boost credibility and awareness by selecting the right celebrities to be their next ambassador (Um, 2017, Agnihortri, 2016, Bergkvist, 2016, Dissanayake, 2017 & Kowalczyk, 2013). Most researchers agree that to choose the best celebrity; it is crucial to consider factors such as trustworthiness, expertise, attractiveness, respect similarity and brand personality (Um, 2017). For instance, Nike capitalized on Michael Jordan’s brand personality, respect, attractiveness to increase sales of Jordan Air product. Due to Jordan’s success in his sports, he has remained the brand ambassador for Nike on social media sites.

However, doing so is not an easy task (Saleh, 2017 & Dissanayake, 2017). For instance, in the case of Tiger Woods, reputation damage of a celebrity can significantly damage the reputation of a company and its product. As stated by Saleh (2017), Um (2017) and Zipporah (2014), celebrity partnership is risky, and if the collaboration between the celebrity and the brand is not consistent or if the celebrity reputation is questionable, the endorsement can be hazardous and deteriorate all the marketing efforts and the brand image. Thus, brand managers may need to carefully study celebrities and identify which one has the right mix of values that will reflect, exactly, the company’s brand.

Moreover, not all celebrity endorsements do well. For instance, a company such as Hanes continued to show a decline in profit yet Michael Jordan was the endorser. Such differences raise concerns about the effectiveness of celebrity endorsements. Between 2004 and 2009, Hanes revenues dropped from approximately $ 4, 000,000 to $ 3,000,000 (Bergkvist & Zhou, 2016). The statistics suggest that there are other aspects affecting sales that mask Michael Jordan’s endorsement efforts. Ahmed (2015), Dugalic, (2015), Rzemieniak (2015) agree that other factors affecting the effectiveness of company endorsement strategies may include inflation, political unrest, and economic sanctions. Regardless of global financial fluctuations, Michael Jordan was able to overcome low sales in Nike. It is important to understand why Michael Jordan has always been successful in the endorsements regardless of global economic fluctuations. Companies such as Gatorade and McDonalds have utilized the Jordan effect to increase their sales (Passikoff, 2013). Due to his tremendous success, Jordan is referred to as the “10 Billion Dollar Man,” (Bergkvist & Zhou, 2016).

Online sites such as Facebook, Twitter, and Instagram, compared to mainstream media such as television networks, provide a convenient platform through which companies can advertise their product (Ghosh, 2014). From the literature review, close to 3.2 billion persons are active internet users. With the ever-increasing number of online users and celebrity followership, companies can capitalize on celebrities on online platforms to promote sales of their products.

3.2.Theoretical Frame Work

This study will be based on two theories, social learning and diffusion of innovation theory to understand the influence of online celebrity’s endorsement on consumers purchasing behavior.

3.2.1.Diffusion of Innovation Theory

This theory explains why, how, and what rate new technology and ideas spread through culture (Chang, 2016). Diffusion occurs through the integration of needs, perceptions and social pressure. When persons view that the innovation is exciting, there are high chances they will get influenced. This theory is relevant in explaining how individual make a decision on new ideas and the influence of celebrities on people perceptions and product innovations (Chang, 2016).

3.2.2.Social Learning Theory

This theory posits that persons learn through observation of what others do. Through learning one develops behavior from other persons. Learning aspects may include feeling, acting, talking, dressing, diet, and lifestyle. Therefore, there is a high likelihood that persons will imitate models and celebrities who are perceived to like specific products (Kwon et al., 2015).

Chapter 4- Conclusion and Recommendations

4.1.Conclusion

There are several ways in which companies can boost sales and increase brand visibility. One of them is the use of social media endorsement. With the growth in the number of persons using the internet, especially the social media, online celebrity endorsement is becoming one of the most effective arenas for businesses to advertise their products. This study found out that, celebrity endorsement, when used effectively, is a vital strategy for businesses to reach their target customers and drive sales. Companies such as Nike have effectively used the celebrity endorsement marketing strategy. Selecting celebrities for online advertisements require expertise, and careful consideration of many factors such as trustworthiness, expertise, attractiveness, respect similarity and brand personality. When the brand personality of the celebrity gets injured, the company using the celebrity may suffer from low sales and reputation damage. Celebrities are essential in generating recall, attention and positive attitudes towards advertising. They can impact credibility, promote faster brand recognition, emotional unity, and association. Moreover, due to complexities in impacts of advertising on product success, it is imperative for companies to consider factors such as norms, morals and behavioral factors while considering celebrity endorsements. Celebrity knowledge, liking, appearance, and credibility are essential factors to consider.

4.2.Research Gap and Recommendations

Various aspects influence the success of celebrity endorsement such as the degree of customer loyalty that this paper did not consider. Moreover, the study focused on analyzing existing literature and did not actively conduct interviews or actual data collection. This study provides significant insights on the impact of online celebrity endorsement on influencing brand awareness consumer buying behavior. The recommendation to guide future researchers includes, analyzing how to leverage the strength of other research methodologies. It is imperative to integrate qualitative and quantitative approaches to similar studies to yield a better understanding of effects of online celebrity endorsement on influencing brand awareness and consumer buying behavior. Additionally, the study found out contradicting results of celebrity endorsement especially when a celebrity is successful in sponsoring a brand for one company but fails in another, yet he/she is promoting similar products. It is crucial for future studies to elucidate the reasons to why a celebrity can be successful in endorsing one product while failing in the other.

References

Agnihortri, A. (2016). The Market Value Of Celebrity Endorsement: Evidence from India Reveals Factors That Can Influence Stock-Market Returns. Evidence from India Reveals Factors That Can Influence Stock-Market Returns 57(3), DOI: 10.2501/JAR-2016-021.

Ahmed, R. (2015). Impact of Celebrity Endorsement on Consumer Buying Behavior. Journal of Marketing and Consumer Research 16, 12-20.

Bergkvist & Zhou (2016). Celebrity Endorsements: A Literature Review and Research Agenda. International . Journal of Advertising, 35(4), 642-663.

Calder, B. J. (2009). An Experimental Study of the Relationship between Online Engagement and Advertising Effectiveness. Journal of Interactive Marketing 23 (4), 321-331 https://doi.org/10.1016/j.intmar.2009.07.002.

Chang, Y. (2016). Reconsidering the Role of Fit in Celebrity Endorsement: Associative-Propositional Evaluation (APE) Accounts of Endorsement Effectiveness. Psychology & Marketing 9 (33), 678-691.

Dissanayake, R. et al. (2017). The Impact of Perceived Effectiveness of Celebrity Endorsement on Perceived Brand Personality. Journal of Accounting & Marketing, 13-18.

Dugalic, S. (2015). The sports celebrity endorsement in the promotion of products and services. Journal of Marketing, 207-216.

Ghosh, C. (2014). Printed Advertisement 1947-1970. Newcastle upon Tyne: Cambridge Scholars Publishing.

Kowalczyk, C. (2013). The Moderating Role of Celebrity Worship on Attitudes Toward Celebrity Brand Extensions. Journal of Marketing Theory and Practice 21(2).

Kwon, M. et al. (2015). Who said what: The effects of cultural mindsets on perceptions of endorser–message relatedness. Journal of Consumer Psychology 25(3, 389-403.

Passikoff, R. (2013, December). When It Comes To Nike Celebrity Endorsements, They Have To Make Sure The Shoe Fits (LeBron). Retrieved December 2017, from Forbes: https://www.forbes.com/sites/robertpassikoff/2013/12/12/if-the-nike-brand-dont-fit-lebron-cannot-commit-2/#718dd111177f

Rzemieniak, M. (2015). Measuring the Effectiveness of Online Advertising Campaigns in the Aspect of e-entrepreneurship. Procedia Computer Science 65, 980-987.

Saleh, K. (2017). Effectiveness Of Online Advertising– Statistics And Trends. Retrieved December 2017, from Invesco: https://www.invespcro.com/blog/effectiveness-online-advertising/

Um, N. (2017). What affects the effectiveness of celebrity endorsement? Impact of the interplay among congruence, identification, and attribution. Journal of Marketing Communications, 1-14.

Zipporah, M. M. (2014). The Effects OF Celebrity Endorsement in Advertisements. International Journal of Academic Research in Economics and Management Science 3(5), 178-188. DOI: 10.6007/IJAREMS/v3-i5/1250 URL: http://dx.doi.org/10.6007/IJAREMS/v3-i5/1250.

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