Startups -Time to Rethink Celebrity Endorsement Part 2

In Part 1 of this series, I discussed how changing consumer habits is making celebrity influencer endorsements less effective for startups as a means of promoting their products due to unlimited information at the point of sale & that peers now have equally or more voice in the purchasing decision due to social networks. The other aspect that is decreasing the power of celebrity endorsements is that consumer discovery of products has also shifted.

Changing How We Learn About New Products

Flashback to the early 90’s, I remember watching Saturday morning cartoons religiously. Every Saturday morning, I would stare at the tv for hours while eating my frosted mini-wheats. During that time, I would view nearly an hour’s worth of sponsored content, also known as commercials (not including clever product placement within the shows themselves). This is often where I would find out about a new toy that I wanted. Reading Nintendo Power was how I found out about upcoming video games. This is how we found out about new products in the 90’s — Mass media: Commercials, TV News, Newspapers, and National Magazines. Sure we always had friends recommend products to us but this was rare as these product recommendations needed to come from talking to each other — word of mouth. Mass media advertising was the primary way we found about products and having these ads more memorable was extremely important. Having a well known celebrity endorse your product in the ad was one of the most sure fire ways to make your product more desirable and trustworthy to a set of consumers.

The monthly magazine and newspaper has transformed into a scattered array of blogs with a dizzying amount of information. If you look at the monthly magazine which runs about 10 articles per month and compare this to a blog like Techcrunch which posts over 1,100 articles every month! The power of a single article has diminished by a power 110x! Watching TV has transformed into either an ad-free experience on Netflix or a 5 second skippable ad on youtube. Mass advertising has been continuously losing power with the rise of the internet.

Power to the People

While mass media has decreased in capability, the power of word of mouth has risen. A consumer who was frustrated with an airline’s customer service only had a few friends to complain to. Now they can post their negative experience on multiple social networks conveying their experience to thousands of people in their social sphere. A consumer who loves their Camp Chair can now share their experience to thousands to thousands in their social sphere causing. Word of mouth sales have always been effective, the difference is now word of mouth has scale.

Celebrity influencers and consumers use the same channels now to promote products — twitter, facebook, instagram, etc. Both celebrities and consumers have the same measurements for influence, number of followers. So while a celebrity promoted post can be effective- for radically less cost, a company can recruit 1,000 consumers to post the same promotion to reach the same number of people. While one can argue that a celebrity posting has more cache than simply 1,000 consumers, I argue that this is false for a few reasons.

1 — The age of hidden pay to play is over. Celebrities now need to mark their posts with a disclaimer like “#ad”. This is equivalent to the celebrity stating that they really don’t use or believe in the product.

2 — Consumers trust the opinions of their friends more than the opinions of celebrities.

3 — Consumers posting about how much they love a product is an authentic endorsement. Word of mouth sales will always win out over a commercial or an article. Consumers are willing to recommend a product they like for very little incentive because they would recommend it anyway.

While at TrackR, I used the consumed of #3 to dramatically increase our sales by giving a small incentive to consumers to promote the product. I made a simple offer of “click share on facebook and get your choice of colors”. The color upgrade didn’t cost the company any additional money and gave consumers the little incentive they needed to recommend a product they already were excited about.

So What

Celebrity influencer endorsements are a good thing. They do have influence and they have their place in a company’s promotional plan. I simply state, that they are a less effective means of promotion for the money spent. So next time I get recommended by a PR or marketing firm to do a celebrity partnership, I would challenge that firm to see what we could do for a partnership with 1,000 consumers.