Topic: What are the issues around celebrity endorsement and how should they be dealt

with? Celebrity endorsement has enormous power to attract attention to a brand or cause.
But there can be issues. Celebrities can misbehave, potentially damaging the brand. The
products or services they are promoting may be turn out to be unhealthy or unethical.
Discuss the issues relating to celebrity endorsement. What are good guidelines for celebrity
endorsement of products/services from both the celebrity’s and the organisation’s
perspective? Are there cases (like medicines) where celebrity endorsement should be
banned?

Modern-day celebrity endorsement

This topic has been chosen because of the prolific use of celebrity endorsers and the
mounting challenges public relations practitioners face in using them given the growth of
social media, changing legislation and past high-profile failures. This paper will focus on
examples of celebrity endorsers in New Zealand and globally since 2000 across several
industries including food, finance, medical and sport to highlight the issues. It will establish
good guidelines for celebrity endorsement from both the perspective of the celebrity and
organisation.

In a New Zealand Herald article from 2000 entitled ‘Celebrity endorsements do pay off’,
journalist Dita De Boni describes celebrity endorsement as, “one of the most important
tools of modern marketing” to gain trust and credibility with audiences and writes, “If
getting consumers to recall a brand is the most critical task a marketer faces, that task is
undoubtedly made easier by the brand's association with a high-profile sporting, political or
entertainment darling….Even more successful are companies that choose international
stars, creating ads that have a better chance of global branding success.” (De Boni, 2000)

The article acknowledges the downsides advising, “that a contract with a celebrity should
well considered, legally water-tight, and adaptable to change should either party take a
tumble from grace” and that, “while celebrities might grab attention [they] can also distract
the audience….reducing the impact of the brand's message.”

Since 2000, the rise of social media, in particular Facebook, Twitter and now Instagram,
means celebrity endorsers can be greater influencers and are often promoting more than
one product. The successful celebrity endorsements are when the celebrity and brand are
seen as one of the same. Global celebrity and ex-footballer David Beckham is an example
having long associations with Adidas, H&M and Breitling watches. (Platt, 2017) British chef
Jamie Oliver is someone who has fronted for various brands, including supermarket chain
Sainsbury’s, but who now uses his celebrity status to campaign on food standards and
animal welfare helping force government action. (Jamie’s Food Revolution, 2017)

Defining influencer endorsement

When considering celebrity endorsement, it is important to define influence in a public
relations context. Influencers have always been part of a public relations strategy as by
reaching key influencers, messages are taken to a wider audience.

“As well as identifying public, stakeholders or audiences, we need to single out the key
influencers or opinion-leaders among them. Modern communication management will
include influencer mapping, or stakeholder analysis, giving weight to different publics
according to their significance to the particular opportunity or problem to which we are
planning to respond.” (Mersham, P; Theunissen P; Peart M, 2009)

With celebrities having large followings across social media and media running celebrity
stories to meet consumer demand, they have the potential to spread messages wider than a
brand can by its own channels and through traditional media releases. As well as awareness
and reach, a celebrity association can give a brand or cause trust and credibility that the
audience can relate to.

Celebrity endorsement issues and ethics

From researching case studies of celebrity endorsements, moral principles or ethics, are at
the heart of issues around their use, both from the perspective of the celebrity and the
organisation.

A local example highlighting these ethical issues was when New Zealand Pork Industry Board
ambassador and celebrity Mike King changed his mind making a U-turn from promoting
pork in 2009 after seven years of fronting advertising campaigns. He broke into a pig farm
with animal protestors and said, “the callous and evil practice of crate farming pigs should
be outlawed immediately.” (NZPA, 2009)

The publicity around his change of opinion and drastic actions forced a change in policy for
the Pork Board with the government banning sow stalls from 2016. Despite efforts from the
New Zealand Pork Board to address public concerns with a ‘Pig Care’ accreditation
programme, the actions of King had put the organisation on the back foot creating negative
publicity and forcing the government to act. (Carter, 2013)

This example highlights the importance of the organisation’s own moral principles before
engaging with a celebrity to promote it. The organisation must act with integrity and be
comfortable with its procedures being made public. Both the Pork Board and Mike King
should have been open and honest with each other before agreeing to work together. The
fact that it took seven years after King started promoting pork for him to see what pig
farming conditions were like does not reflect well on either party. King should have
researched these conditions himself before agreeing to accept payments and be the face of
the organisation. Similarly, from the organisation’s perspective, King should have been
educated on the pork journey from farm to table.
From an organisation’s perspective, the example also shows how celebrity endorsement
should not be seen as an add-on to promotional efforts. Like other public relations
objectives, the use of celebrity endorsement should be aligned to business goals whether
that is to create brand awareness, generate sales or create brand loyalty with publics. The
tactic of using a celebrity should be well considered and the risks assessed. While this is an
extreme example of an influencer making a U-turn becoming an enemy rather than an ally,
it shows the importance of the values of both the organisation and celebrity being aligned.
More simply, it shows how the use of an influencer has the potential to make a complete
campaign fail very quickly, even one that had been going for seven years. In this case, the
negative publicity resulted in the government banning sow stalls.

Consequences for celebrities too

Another high profile celebrity endorsement in New Zealand, which highlights more ethical
issues around their use and which forced government action, is from 2011. This is when
veteran Television New Zealand (TVNZ) newsreader Richard Long was the celebrity endorser
for failed finance company Hanover.

It collapsed owing 16,000 people with investments totalling more than $500 million (NZ
Herald, 2015). The relationship was controversial for a number of reasons. His ads ran
regularly on the same TVNZ network he had presented on, where had built up trust with the
audience over a number of years as a prime time newsreader.

The wording of some of the ads, "This One Weather Update is brought to you by Hanover, a
New Zealand business with the size and strength to withstand any conditions" had prior to
the collapse already attracted the attention of the Advertising Standards Authority after a
complainant had said the ads were misleading given the financial downturn. (Otago Daily
Times, 2010)

When the collapse did happen, it prompted the government to pass legislation to the
securities law to increase penalties for those who make misleading statements about
securities, including celebrities, accountable. The legislation was for individuals to be liable
for up to $1 million and for companies to be liable up to $5 million plus compensation
orders. (Kloeten, 2011)

As legislation was brought in after the Hanover collapse, Long did not receive any financial
punishment for his involvement. He did admit to media that the collapse cost him $50,000
due to his personal investment in Hanover. (Otago Daily Times, 2010) While it is hard to
hold him accountable for the collapse itself, given his role at TVNZ over a number of years,
ethically it could be seen as inappropriate for him to help the company gain investments
from an audience who had his trust. It also demonstrates that a celebrity risks damaging
their own reputations and facing financial repercussions if the organisation they endorse
fails.
The government’s legislation is a major deterrent to celebrities endorsing securities and
shows how important they believe these influencers are. Arguably, the businesses that ran
the advertising were also accountable and consumers themselves had the ability to do due
diligence on Hanover before investing but the government’s legislation shows that they
view the responsibility to be with the company and its endorsers.

Where are the ethical boundaries?

Like with securities, the use of celebrity endorsers for medicines is controversial yet New
Zealand is yet to legislate this area. New Zealand still allows direct-to-consumer advertising
of prescription medication.

According to a 2014 New Zealand Medical Journal report on this direct-to-consumer

advertising topic, “Such industry funded ‘health information’ campaigns have been banned
in almost all industrialised countries [expect United States of America] since the
1940s.”(Every-Palmer, S; Duggal, R; and Menkes, D, 2014)

Kiwi celebrity Jude Dobson appears on Family Health Diary spots screening around prime
time television shows. The Medical Journal summarises, “Advocates assert that the
advertisements are informational and empower consumers with medical knowledge,
encourage dialogue with health practitioners and enable informed choices about treatment
options. Opponents argue that the information presented in commercials provides an
unbalanced view of prescription medications in favour of benefits over harms, leading to
unnecessary prescription, iatrogenic harm and increased costs.”

Three years on, the government is yet to legislate despite lobbying by the Royal New
Zealand College of General Practitioners (RNZCGP). (NZ Doctor, 2017)

Similar to the Long case, the celebrities fronting these adverts should be conscious of their
association with these medicines if there were repercussions for consumers taking them.
For organisations producing these medicines, the ethics of promoting these products to
consumers, who may not need to take them, is concerning.

It is not just the medical and financial areas where cases have been made to ban advertising
and celebrity endorsement. Similar arguments were made in the past around the
advertising of cigarettes, alcohol and firearms with legislation introduced. They continue
today around tighter legislation for these areas and others identified as unethical, for
example, the promotion of sugary drinks and fast food to children. In the case of sugary
drinks, it is still common to see the country’s sporting stars endorse these.

Legislation covering celebrity endorsement on the rise

As the New Zealand examples show, some legislation has been introduced here but more
around specific industries. The medical examples show there are inconsistencies in which
sectors are legislated and different rules in each country. Overseas, specific legislation
around celebrity endorsement have been introduced.

When America’s Federal Trade Commission (FTC) guidelines were updated in 2009, it made
several changes to the FTC Act covering advertising and celebrity endorsers (Federal Trade
Commission, 2009).

In a summary of the new guidelines, celebrity endorsers are now liable, “While the 1980
Guides did not explicitly state that endorsers as well as advertisers could be liable under the
FTC Act for statements they make in an endorsement, the revised Guides reflect
Commission case law and clearly state that both advertisers and endorsers may be liable for
false or unsubstantiated claims made in an endorsement – or for failure to disclose material
connections between the advertiser and endorsers. The revised Guides also make it clear
that celebrities have a duty to disclose their relationships with advertisers when making
endorsements outside the context of traditional ads, such as on talk shows or in social
media.” (Federal Trade Commission, 2009)

The legislation means endorsers and bloggers should declare posts with suitable hashtags
like #ad or #sponsoredcontent. Aside from securities, New Zealand is yet to tighten its rules
specifically on social media advertising for celebrity endorsers. These legislative changes in
America and elsewhere are forcing change and legislative action is likely.

Currently in New Zealand, The Fair Trading Act prohibits misleading and deceptive conduct
in trade, as well as prohibiting false or misleading representations. (NZ Entrepreneur, 2016)

Both the Advertising Standards Authority (ASA) and the Public Relations Institute of New
Zealand (PRINZ) have a Code of Ethics, which members are expected to follow. Under
Advocacy and Honesty, the PRINZ code states, “That a member shall: i. Provide
independent, objective counsel for clients or employers; ii. Promote the ethical, well-
founded views of clients or employers; iii. Be honest and accurate in all communications –
and act promptly to correct erroneous communications; iv. Avoid deceptive practices.”
(PRINZ, 2017)

So under the code, celebrity endorsers used by practitioners should be disclosing their
relationships with advertisers like in America to avoid deceptive practices and be honest and
accurate in all communications.

Pead PR was criticised last year for using celebrity endorsers including All Black TJ Perenara
for a My Food Bag promotion and not declaring the free product as an advert. (Wall, 2016)
According to the article, “the firm argues that in those circumstances the fact the product
was gifted doesn't need to be disclosed because there is no editorial control and the
influencer could just as easily write something bad.”
Again, this illustrates the fine ethical line in the use of celebrity endorsers with practitioners
needing to ensure they follow the code. Practitioners could face sanctions from PRINZ, ASA
and legal action if endorsements are seen as breaking the Fair Trading Act.

Putting legislation to the test

Even when legislation is in place, boundaries are tested. Well-known British TV presenter
Graham Norton invested in and promotes New Zealand’s Invivo Wines. His involvement as a
celebrity endorser for the brand has helped its sales in the UK go from 14,000 bottles in
2014 to an expected two million bottles in 2017. (NZ Herald, 2017)

In July, he was criticised for allegedly breaking British television advertising guidelines which
state that, “presenters should not appear on air using any products in which they have any
financial interest, and marketing material should not refer to their BBC [British Broadcasting
Corporation] programmes.”

Norton drinks the wine during his chat show along with the programme’s guests and Invivo
has filmed adverts on set. It’s another example of testing the ethical and legislative
boundaries. It can be argued that Norton has a conflict of interest and is acting for personal
gain. On the other side, if Norton was drinking other company wines, his credibility as the
endorser of Invivo would be clouded.

Since the article, Invivo Wines removed the reference to Norton’s show as ‘the wine of
choice for UK chat-show star Graham Norton and his guests’ from its marketing. The onus is
on the organisation to do the right thing ethically and to follow legislation. For now, it seems
negative publicity is the biggest punishment for brands that don’t but with tightening
legislation, it is likely to be only a matter of time before celebrities and organisations are
faced with legislative action.

Endorsers behaving badly

Another side to celebrity endorsement is when celebrities misbehave. Former All Black Dan
Carter was caught drink driving in Paris and losing his endorsement deal with Land Rover
earlier this year. (Stuff, 2017) In Carter’s case, it is the only misdemeanour in his sporting
career.

His quick and public acknowledgement of his mistake limited the damage to his reputation.
It read, “Over the last few days my management and I have had to front up to my sponsors.
Not surprisingly, Land Rover, who for good reason have zero tolerance towards drink
driving, have ended their relationship with me. I understand this completely and am
disappointed I put them in this position."

Carter accepted Land Rover’s decision and the organisation had little choice given its zero
tolerance towards drink driving and the offence’s direct correlation to its brand. If the
organisation had not dropped Carter, it would have faced negative publicity which would
have outweighed a continued association with Carter and ethically would have been seen to
be doing the wrong thing.

The fact that Carter’s major sponsor Adidas stuck by him and he was unveiled as a new
endorser of Tag Heuer Swiss Watches in March, just weeks after, shows how highly the
brands still rated Carter as a celebrity endorser. (Stuff, 2017) While Adidas’ decision could
be viewed as showing loyalty given their long association, the timing of the Tag Heuer
endorsement is questionable from both the perspective of Carter and the organisation.
Arguably, it was too soon and they were capitalising on publicity around the losing of his
sponsorship with Land Rover to gain wider publicity.

Overseas, golfer Tiger Woods fell from grace after a 2009 sex scandal losing several major
sponsors including AT&T and Gatorade yet Nike chose to stand by him, reportedly still
paying him US$20 million a year. Eight years on from his first scandal, he made headlines in
2017 for driving under the influence of prescription drugs yet he still has the backing of
major companies, including TaylorMade, Bridgestone Golf and Rolex. He reportedly made
US$45.5 million in 2016 mainly from endorsements, down from US$100 million annually
prior to 2009. (USA Today, 2017) Some organisations believe Woods convinces their
audiences to buy their products. It shows some organisations are prepared to forgive
mistakes if they think it makes business sense.

American swimmer Ryan Lochte immediately lost his four major sponsors including Speedo
in 2016 after falsely claiming he was held up at a petrol station during the Olympics. Despite
a decade association, Speedo dropped him and donated US$50,000 of Lochte’s fee to
charity. (Bonesteel, 2016) Five months later, he was signed as a swimwear ambassador for
TYR, a rival to Speedo, and unveiled as the face of PowerBar. (Barstow, 2017; B&T Magazine,
2017) Both campaigns played on moving on from his misdemeanour using
‘#JustLetMeWork’ for TYR and ‘Clean Start’ for PowerBar. While many organisations would
only look for positive celebrity influencers, some see the benefit in this case integrating the
mistake into a humorous campaign.

There are many examples of brands immediately dropping celebrity endorsers, often with
sexual crimes. High profile examples are British Paints cutting ties with Rolf Harris and
Subway dropping global ambassador Jared Fogle. (Meadows, 2014; Kaufman & Lord, 2015)
These examples and the sporting ones illustrate the need for organisations to insure
themselves for the risks involved with celebrity endorsers. If organisations are not proven to
have been aware of allegations against the endorser previously, they can be forgiven for the
association and judged by their actions.

In the cases of Adidas and Nike with Carter and Woods, ethically perhaps they should have
cut ties yet they made business decisions not to.

Guidelines for celebrity endorsement

This paper has highlighted the main issues around celebrity endorsement with ethics a key
factor from both the perspective of the celebrity and organisation. The following guidelines
are appropriate:

For the celebrity -

• Have a genuine connection to the brand. Use the organisation’s product or services.
• Do due diligence to ensure the organisation’s ethics are in line with own beliefs.
• Agree on payment, length of agreement and terms of endorsement.
• Be prepared for the downside if the organisation fails. This may include legislative
action, financial penalties and negative publicity.
• Have an exit clause if the organisation’s values no longer align or the organisation
fails.
• Ensure relationship with the organisation is disclosed in adverts and social posts in
line with legislation and meeting the PRINZ and ASA Code of Ethics.
• Consider supporting causes rather than organisations.

For the organisation -

• Ensure the celebrity’s values and ethics are in line with the organisation.
• Be comfortable with the integrity of the organisation being in the public eye. Front
page of the paper test. E.g. New Zealand Pork Board and their pig farming practices.
• Align celebrity endorser’s use with business goals and do a risk analysis.
• Have insurance to protect against a celebrity scandal.
• Agree on contract length, payments and terms of endorsement.
• Have an exit morality clause if the celebrity’s behaviour does not meet the standard
of the organisation.
• Ensure exclusivity so the celebrity can’t work with other organisations without
consent.
• Ensure the celebrity discloses in adverts and social posts in line with legislation and
meeting the PRINZ and ASA Code of Ethics.
• Celebrities are human so be prepared to make difficult ethical decisions during the
association whether they make business sense or not.
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