Tiger Woods and the Risks of Celebrity Endorsements

After news of his infidelity and his decision to quit golf, Accenture became the first firm to end its marketing relationship with Tiger Woods. To some, the ordeal underscores the risks around celebrity endorsements with the propagation of Hollywood gossip websites and social media.

Writing for Advertising Age, columnist Pete Blackshaw said that while gossip in the past was traditionally spread at office coolers, social media and the web’s search capabilities acts like a “feeding frenzy on steroids” for curiosity seekers. In the last two weeks, the shelf-space for Google search results for “Tiger Woods” had shifted from 95 percent favorable to nearly 50 percent hostile.

What particularly keeps scandals around, however, is that the web creates a permanent record of any scandal. And the bigger the scandal, the more content spreads across the web, equating to a perpetual “Reminder-gram,” Mr. Blackshaw wrote. He noted that Wikipedia alone had nearly 500 words dedicated to “Car Accident & Alleged Affairs.”

“At the end of the day, fair or not, our brand equity is inseparable from the volume and composition of our search results,” Mr. Blackshaw concluded. “And the web rarely, if ever, forgets.”

But writing for CNN, Anita Elberse, a professor at Harvard Business School, cited a study she conducted that showed that brands across a number of product categories jumped an average of four percent in the six months after the start of an endorsement deal. Some grew more than 20 percent. Importantly, the endorsements differentiated themselves from competitors, “which did not experience any spillover of increased sales.”

Beyond connecting a star’s fans to a brand, an endorser reassures consumers about a product’s attributes and quality. For example, seeing Maria Sharapova using a Prince racket shows the item is premium quality or the tennis star “herself would be at risk of damaging her reputation.”

Ms. Elberser said Accenture’s decision to drop Mr. Woods made sense since his actions ran counter to the consulting firm’s messages, including the payoffs of risk-taking behavior and recovering from setbacks. But she believes the rewards in most cases far outweigh the risks.

“Marketers who rely on athlete endorsers know they can be in for a rocky road — their allied partners can suffer from injuries, a loss of form, scandals, rumors, and a range of other woes — and they need to adapt accordingly,” wrote Ms. Elbserer. “But don’t expect firms to cut back on the strategy altogether, as endorsers on the whole generate considerable value.”