As businesses consistently strive to explore innovative methods of connecting with their audiences, comprehending the influence of celebrity endorsements and their associated strategies becomes critical.
What is Celebrity Endorsement? How Does Celebrity Endorsement Work?
Celebrity endorsements entail collaborations of celebrities, or highly well-known individuals, with brands. How this works is that the brand leverages a celebrity’s influence or popularity to create awareness of its brand and, ultimately, generate sales.
The concept of utilising celebrities for brand promotion has been a subject of enduring interest and debate. To what extent does a celebrity endorsement influence the consumer’s decision-making process?
Read more: What Is a Global Brand Ambassador and What Do They Do?
Exploring the Role of Celebrity Endorsers in Strengthening Brand Connections
The Marketing Psychology Behind Celebrity Endorsements
The neuroscience study of pupil dilation and eye-tracking movement is used as a standard to determine the decision-making process. A study published in the Proceedings of the National Academy of Sciences suggests that the direction in which individuals turn their gaze and the extent to which their pupils dilate can reveal the decisions they are making.
These biomarkers additionally provide insights into the fundamental biological processes that come into play during the decision-making process.
Delving into consumer decision-making, a Wharton School study in marketing psychology discovered two significant results confirming previous findings:
1. Celebrities’ presence helps to speed up the decision-making process:
Consumers tend to prefer products endorsed by celebrities over those endorsed by non-celebrities, and they make these decisions more swiftly.
When opting for a product promoted by a celebrity, consumers exhibited reduced pupil dilation, suggesting a quicker decision-making process and greater confidence in their choice.
As celebrities often embody trusted figures in the eyes of consumers, their endorsement has the power to instil confidence in a brand, fostering a sense of trust that extends to the associated product or service.
2. Non-celebrities exhibit a more pronounced gaze-cueing effect:
When non-celebrities are present, viewers often direct their gaze towards a product, concentrating on the item for an extended duration.
On the contrary, in advertisements showcasing celebrities, viewers typically fixate on the face of the renowned individual, irrespective of whether the celebrity is looking at the product or back at the viewer.
The emotional appeal of celebrities plays a crucial role in shaping consumer behaviour. When a beloved figure is associated with a brand, consumers are more inclined to establish a personal connection with the product.
How Celebrity Endorsers Impact a Brand
A recent study confirmed that celebrity endorsers can transfer their positive attributes to the endorsed brands.
The study concludes that when consumers have limited knowledge about a brand, the presence of a celebrity endorser can enhance the brand’s image, irrespective of the specific benefits the brand may offer.
Conversely, if consumers know a brand lacks or doesn’t offer many inherent benefits, having a celebrity endorsement is unlikely to improve those aspects significantly. Celebrity endorsements mainly enhance the positive aspects of the brand, rather than compensate for the brand’s weaknesses with their positive influence.
Therefore, this highlights the key role of a celebrity’s positive impact in supporting a brand, as only their positive contributions can be transferred to the endorsed brand.
However, it’s essential to recognise that celebrity endorsements may not necessarily influence consumers with strong emotional and physical preferences for a particular product.
Wharton Neuroscience Initiative’s Executive Director and Senior Fellow, Elizabeth (Zab) Johnson, echoed this,
“That doesn’t mean a celebrity can make you choose a product you hate. Your strong preferences — if you absolutely love or hate something — don’t move, but there is a lot of wiggle room in there with products you might not yet have strong feelings about.”
The Case of Compose Coffee x V of BTS
Compose Coffee, one of South Korea’s most popular coffee chains, made headlines when recruiting K-Pop idol V of BTS as its latest brand ambassador.
Established in 2014, Compose Coffee has become the second most popular budget coffee chain in South Korea. Its franchisees, around 400 in 2020, have surpassed 2,400 as of 2024. That’s almost double its number of outlets in the past two years.
Originating from Busan, this coffee chain marked its international debut in October 2023 with its presence at the Suntec City shopping Centre in Singapore. The brand is purportedly exploring opportunities to expand into additional new markets.
At the end of 2023, the brand announced V as its latest model to commemorate the brand’s 10th anniversary. Choosing V is a vital component of the brand’s plan to capitalise on the global superstar and leverage his influence.
Consequently, the company came under fire when its franchisees expressed dissatisfaction with BTS’ V and footballer Son Heung-min on their brand posters. The discontent arose due to the franchisees’ obligation to bear a portion of the advertising fees, amounting to billions of Korean won.
The headquarters informed franchisees that they are required to share expenses, contributing ₩2 billion ($1.54 million), which is one-third of the total advertising fees amounting to ₩6 billion ($4.50 million).
Apart from that, franchisees also need to bear the expenses of advertisement stickers, which cost between ₩200,000 and ₩300,000 each.
Due to that, the company clarified that 78% of the franchisees agreed to adopt V as the brand’s model. Per the Fair Transactions in Franchise Business Act, the franchisor can initiate advertisements for all stores when the agreement is secured from over 50% of franchisees. Still, more than 75% consensus is required for promotional offers.
Nevertheless, certain franchisees who had not consented to the agreement argue that the franchise headquarters, with its annual operating profits in the tens of billions of won, shouldn’t impose the costs on franchisees.
Therefore, this issue raised the question of whether endorsing celebrities, which incurs significant expenses in marketing within the budget-friendly franchise business landscape, is profitable.
Compose Coffee Records Rapid Growth in Engagement & Sales
Since the announcement of V as brand ambassador, Compose Coffee has revealed that the brand’s app user base has surged from under 9.3 million to almost 12 million. The app acquired an additional 2.6 million users within 10 days after V’s endorsement.
Further, the brand’s Yuja Tea sales climbed by around 72% in two days, compared to the same period last year after V mentioned it as his favourite product.
On top of that, following the release of a special-edition customised V cup sleeve, the brand trended #1 in South Korea’s largest delivery service, Baemin, due to a large influx of orders.
@angootv Taehyung’s cup sleeve at Compose Coffee💕 컴포즈 뷔 컵홀더 나왔다 #bts #btsv #방탄소년단 #kimtaehyung #btsarmy #korea #seoul #seoullife
Even though Compose Coffee has yet to reveal its first-quarter earnings of 2024, it expects that the sales surge will help increase its revenue tremendously.
The substantial surge in sales and user engagement has firmly established the coffee brand on the global stage, underscoring the potent worldwide influence of the superstar.
It further emphasises V’s influence even during a period of inactivity due to South Korea’s mandatory military enlistment; his ability to impact persists and continues to work its magic.
Thanks to the success of the collaboration, the brand is now poised for an even more expansive global footprint. Likewise, the company’s leadership foresees that this ongoing collaboration will replicate the triumph witnessed in South Korea on the international stage.
As Compose Coffee strides confidently into this thrilling phase of expansion, it carries the aspirations of globalising a homegrown Korean brand.
Are Celebrity Endorsements a Sure-Win For Brands?
Partnering with well-known figures allows brands to stand out and make a lasting impression on consumers.
The collaboration between Compose Coffee and BTS’ V is a clear example of how celebrity influence can propel a brand to global recognition. This partnership is potentially the most lucrative deal in its brand’s history, as the superstar’s international influence managed to transform the local brand into a global sensation within a short time.
The case of Compose Coffee underscores the impact of celebrity endorsements when done effectively. It shows how crucial a celebrity’s positive influence is in a complementary endorsement, as it is the sole factor that positively affects the endorsed brand.
As consumers seek authenticity and connection, the strategic alignment between celebrities and brands becomes significantly effective. Leveraging this symbiotic relationship can enhance brand visibility, trust, and market competitiveness.
Not only that, the strategic partnership harnessing the influence of a prominent figure won’t succeed if the brand lacks inherent benefits for consumers. In this case, V, as the celebrity endorser, plays a pivotal role in elevating the perceived benefits of Compose Coffee in the eyes of consumers, ultimately influencing their purchasing decisions.
On the flip side, partnering with a celebrity whose values or actions clash with the brand’s can damage the brand’s image and reputation. The fallout from Adidas’ partnership with Kanye West, following his antisemitic comments, serves as a stark reminder of this risk.
The Future of Celebrity Endorsements
The future of celebrity endorsements in the business landscape is promising and dynamic. As time passes, celebrity endorsers will continue to serve as powerful channels for brand promotion and consumer engagement.
The role of celebrities in brand promotion is anticipated to remain significant. However, the strategies employed are expected to adapt to emerging trends and consumer preferences. Businesses must navigate the challenges of maintaining genuine connections, and ensure the chosen celebrities align with their brand values.
Through inventive strategies and a careful comprehension of evolving consumer trends, the effective partnership between celebrities and businesses is set to play a substantial role in shaping future marketing and ensuring brand success.
