The coronavirus pandemic is changing the way the celebrity endorsement business works in India. With cuts in advertising budgets owing to slowing business, brands have reduced not only celebrity endorsement fees but also the contracted period of association.
Signing up a celebrity—mostly actors and athletes—for shorter periods (between four months to a year), along with a heavy focus on digital campaigns, is the new norm. Several brands have also started working with big celebrities but only on a project basis for Instagram or Facebook activation campaigns.
According to industry estimates, brands have been negotiating with celebrities to bring their endorsement fees down by 30-50%, depending on the brand relationship with the celebrity, the deliverables and the duration of contract.
“The volume of new endorsement deals has come down by 60-70%, owing to bad market conditions and restricted consumer demand, depending on the inventory a firm manages," said Vijay Subramaniam, co-founder and chief executive of celebrity management firm Kwan Entertainment and Marketing Solutions.
Celebrity management firms are busy renegotiating fees and extending the contracts, compensating for the time loss during the three to four months of lockdown. Traditionally, an endorsement deal entails physical and offline appearances at launch events, shoots, fan engagements and shows for which a celebrity charges a majority of the contract fee. With covid-related restrictions on shooting, most celebrity promotions are being done on digital platforms, which barely account for about 5% of the total endorsement fee.
The rise in content and influencer marketing is also squeezing the big celebrity endorsement business. As brands work on a month-on-month or quarter -on-quarter basis in keeping with the constantly evolving covid situation, promotional activities are being planned for short periods. In the absence of infrastructure to shoot traditional ads, social media marketing has emerged as the favoured medium as it is seen to be cost-effective and far more engaging.
Besides, hiring film celebrities right now makes little sense as most film releases have been postponed, and their visibility has been restricted.
“People who have influence on digital are in demand as they have deeper engagement with users. Fitness, as a brand category, is the biggest example where we have a rise of influencers. It was a phenomenon which already was happening, and coronavirus just fast-tracked it," added Subramaniam.
Even the most traditional advertisers have shifted the big annual campaign strategy with celebrities to multiple topical ads with influencers across platforms. PepsiCo India, which works with multiple stars such as Alia Bhatt, Ranbir Kapoor, Akshay Kumar and Salman Khan for its various brands, has taken to influencer marketing in a big way. Its potato chip brand Lay’s ‘Smile Deke Dekho’ and ‘Heartwork’ çampaigns featured a total of over 2,000 influencers.
“As building brand salience and establishing deeper consumer connect is a journey, celebrities help us drive scale and virality, and on the other hand, influencers act as ‘amplifiers’ of engaging and relatable content," said a PepsiCo India spokesperson.
The shift is also happening because of changing consumer preference as they are continuously demanding variety and novelty in terms of content from brands, especially on digital platforms. Hence, sticking to just one celebrity face makes a brand monotonous, said Ashutosh Harbola, founder of influencer marketing company Buzzoka.
“Currently, the majority of ad spends have gone into performance marketing with brands heavily investing in activations and campaigns on Google, Facebook, Instagram and YouTube. This trend will continue for the next three years," said Harbola.
The only silver lining for big celebrities is that their social media following has grown significantly during lockdown, with celebrities such as Virat Kohli and Akshay Kumar growing their online following by 40-50% when compared with pre-covid days, according to consultancy firm Duff & Phelps.
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