There was a time when celebrities signed a contract to publicize a brand and got paid a handsome paycheck to do so.
They talked with reporters and writers about the brand, posted Instagram photos of themselves wearing a product and appeared in advertising campaigns. It caught consumers’ interest.
Now these celebrities are not only creating buzz about company products but are thinking of investing in products they promote or starting their own brands to reap a bigger reward.
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“They’re like, wait. I got paid $2 million and this company had a $400 million exit,” said Allison Statter, chief executive officer of Blended Strategy Group, a Los Angeles creative marketing and communications agency. “The talent, especially the big talent, have caught on.”
Statter was one of four speakers at the WWD LAB Forum to discuss the evolution of the celebrity beauty model.
She explained the three primary areas of branding that celebrities can take part in. One is the traditional pay-to-play model where someone receives a paycheck for an endorsement and act as an influencer. The second area is where a celebrity invests in a product and endorses it in exchange for a percentage of profit. The third is where the celebrity owns the intellectual property right and sets up his or her own brand, an area that has seen an explosion in the last two years. “Everyone thinks that looks easy, but the people who are in the throes of it know how hard it is,” Statter said.
Courtney McHugh, vice president and head of brand management at UTA Ventures, said she sees a lot of celebrities who have been promoting beauty brands for years and want to develop their own products because they see a gap not addressed by existing companies.
They are like many consumers who feel they can develop a much-needed product better than a large corporation. “A lot of the talent is like, I’ve been in this industry and have gained the permission to have my own thoughts,” she said. “I want a product that solves X.”
Sherry Jhawar, who cofounded Blended Strategy Group with Statter and is the company’s president, said that many musicians and celebrities gravitate to starting their owns brands or products because they are business-oriented. They have spent a lot of time building their own image as a well-known celebrity. “It’s in their DNA to want to do something entrepreneurial,” she said.
Despite all these business models, what is key to promoting a brand is pairing the right product to the right celebrity partner. “When talent is associated with a brand, it becomes more than just a product, more than authentic storytelling. You have to look at the risk factor [of selecting the right person],” said Shaun Neff, cofounder of Los Angeles-based brand builder Beach House Group, who noted that the company vets hundreds of celebs and has partnered with just four. “You want to partner with great people, smart people.”