Celebrities are important for peer endorsement

Consumers have always bought into celebrities. With new media trumping old, now there are more self-made celebrities and brand ambassadors than ever before. They are also making more money than ever before as brands scramble to associate themselves with their star power. In the States, celebrities appear in more than 15 per cent of ads, with the number even higher in India (24 percent) and Taiwan (45 percent) according to Millward Brown.

Let's take a look at two contemporary stars.

Roger Federer is arguably one of the world's most bankable stars. His achievements on the tennis court are many but his newest challenge is to help provide quality education for underprivileged children in Southern Africa. Riding along with him is Rolex. The watch maker is marking time and capturing every moment because Rolex knows as well as anyone, that celebrity sells. And there's no one more bankable than a Federer who keeps himself clean and out of trouble.

Another powerful celebrity is prima ballerina Misty Copeland, the first black principal dancer at the American Ballet Theatre. She is a strong female icon because she's breaking racial barriers and stereotypes. Apart from her colour, Copeland has been criticised for not having the body type needed to lead a ballet company. Born into a multiracial family and raised by a single mother are just two of the challenges that Copeland concedes to have given her the fire to work harder than most and push against the pushing. Copeland also believes its because of her colour, that she has played a pivotal role in forcing a lot of top-tier companies to address diversity issues. Copeland also attracts intense sponsor interest and is a beacon of light – and hope, not only for black Americans but for all Americans.

While celebrity sells, the same can't be said for every celebrity, especially when they are at the centre of controversy and criticism. Sponsors are quick to enter the debate by choosing to make a stand – to back the celebrity or to part ways in the spotlight. When a celebrity has fallen on hard times, it can have a devastating impact on a sponsors' brand perception. Nike has chosen to stand by fallen tennis star Maria Sharapova despite being tested positive for drugs.

Meanwhile Holden Australia recently had a decision pending as to whether to continue their multi-year sponsorship with AFL Club Collingwood. The 'Magpies' had a nervous wait for the decision following controversial comments made by their Club President and television celebrity Eddie McGuire. During light-hearted banter with radio station Triple M, McGuire apparently made a joke that was disparaging towards women. While Holden, one of the club's four premier sponsors, held out to review its sponsorship and has subsequently diverted where funds are received, other sponsors CGU Insurance and La Trobe Financial chose to continue their association with the Club.

While some may question if celebrity endorsements are still worth it given the risks, there is no compelling argument against it. Brand share is too important for marketers to ignore the power of celebrity. Reports are that approximately $50 billion is spend globally on celebrity sponsorship. With new Internet stars being made every day, the celebrity boom continues as the lines are blurred even further between traditional stars and Internet influencers.

The fact remains when a celebrity is associated with a brand, consumers are more likely to associate the two positively. Research shows that sales can increase up to 20 per cent when a celebrity endorsement is in place.

Despite the highly engaged and content-driven world we live, research has proven that peer endorsement wins every time. Celebrities play an important role in peer endorsement and word-of-mouth recommendations. Celebrity endorsements can be leveraged across multiple platforms but are even more powerful if they can be used to tap into the fan base of the celebrity. Celebrities are creating new markets and new partnership opportunities for brands across platforms that make this marketing strategy more accessible than ever.