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Sponsors Pulling Plug On Misbehaving Celebrities

Canwest News Service, February 18, 2009

By Misty Harris

Alex "A-Rod" Rodriguez, Michael Phelps and Chris Brown might be feeling the heat this month but it will be fellow celebrities who get burned as brands grow wary of getting into bed with public figures.

In recent weeks, baseball player Rodriguez admitted to steroid use, Olympic swimmer Phelps was photographed smoking from a bong, and R&B singer Brown was arrested in connection with an alleged assault on girlfriend Rihanna, a pop star with millions of her own endorsements on the line.

"A couple of years ago, people said, `Yeah, yeah, that's just what celebrities do.' Today, I think we're questioning everything," says Ted Matthews, founding partner of Instinct Brand Equity Coaches Inc. in Toronto.

"These endorsers can become poster children for excess . . . They look like spoiled brats in a time of restraint, and companies don't want to appear to be flying in the face of what everybody is trying to turn away from."

In the wake of the recent incidents, A-Rod sponsor Nike has issued a statement affirming its anti-drug stance, Phelps was dropped as an endorser for Kellogg Co., Wrigley Co. pulled Doublemint ads featuring Brown, and even Rihanna, an apparent victim of bad circumstances, is being viewed as a lightning rod for negative attention.

"All people have been hearing for a couple weeks now is that Rihanna was involved in a domestic dispute and that arrests were made and police were involved," says Matt Delzell, who has worked with the singer as a group account director at Davie Brown Talent. "The public doesn't necessarily look into the details."

Matthews expects the recent revelations will put a chill on new celebrity endorsements by corporations who might see public figures generally as risky investments.

Opportunities for high-profile individuals to make their fortune in endorsements could be fewer this year, according to a new report by sponsorship authority IEG predicting the economy will cause companies to "keep a tighter hold on their purse strings" in 2009. According to the forecast, corporate sponsorship spending in Canada and the U.S. will see its smallest annual growth rate in the report's 24-year history, climbing just 2.2 per cent to $16.97 billion US.

And celebrities who become involved in controversies shouldn't count on receiving those sponsorship cheques for long.

"If the company thinks it isn't getting a good return on its investment, dropping a celebrity who has just tarnished their image is a good way to get out from under what can be a huge endorsement contract expenditure," says Melissa St. James, a noted expert on endorsement deals with public figures.

Increasingly, Delzell says, companies like his are being asked to safeguard brands by building stricter morality clauses into celebrity contracts that allow them to sever the relationship if the endorser's activities become a threat to their image.

St. James, an assistant professor of marketing at California State University Dominguez Hills, says previous cases of spokespeople gone bad demonstrate the public has a short memory for scandal. Less than a year after model Kate Moss was photographed snorting cocaine, subsequently losing contracts with Chanel, Burberry and H&M, she was back on the covers of top glossies and inking deals with Calvin Klein, Dior, David Yurman and Louis Vuitton.

But not every endorser has been so lucky, and some companies have thrived without using high-profile endorsers at all. Matthews believes more reliable returns may come from company-created endorsers such as The Maytag Man and Chester Cheetah precisely because they're easier to control.

The heyday of the celebrity in advertising might already be over. A new report by GreenLight, an intellectual property services company, finds only seven per cent of ads broadcasted during the recent Grammy Awards featured celebrity endorsers, down from 13 per cent in 2008 and 21 per cent in 2007.

"When (brands) are going to spend money on a celebrity, they're going to go for those people that are tried-and true . . . and have reached a point in their career where they've left youthful indiscretion behind them," says David Reeder, GreenLight vice-president. "The Nicole Kidmans, Brad Pitts and George Clooneys."

Sidebar: Celebrity Sponsorships Gone Bad

Cybill Shepherd: In the 1980s, ads in which the actress pitched for the Beef Industry Council and L'Oreal hair dye lost all credibility when Shepherd admitted she tried to "stay away from red meat" and didn't colour her hair.

Eric Clapton: At the same time Clapton's remake of After Midnight was featured in a Michelob commercial, the singer was in a detox facility for alcoholism.

Madonna: Pepsi shelved an ad featuring the singer after a single airing when her highly controversial video for Like A Prayer debuted on MTV. Madonna retained her $5-million endorsement fee.

O.J. Simpson: A two-decade relationship between Hertz and O.J. Simpson made the two brands synonymous, which became costly to the car-rental company when Simpson was arrested for the murders of his ex-wife and her friend.

Kobe Bryant: The basketball star lost lucrative endorsement deals with Sprite, Nutella and McDonald's after being charged with the sexual assault of a hotel employee in 2001. The assault case was later dropped and, after an apology by Bryant to his accuser for what he maintained was consensual sex, he resumed a handful of brand partnerships.