The Economic Value of Celebrity Endorsements

Anita Elberse

Harvard Business School

Jeroen Verleun

Barclays Capital

Management slant

  • Enlisting the help of an athlete endorser generally pays off: it increases both brand-level sales and firmlevel stock returns.
  • Because sales increase in an absolute sense and relative to the firm's competitors, an endorsement strategy fits a marketing campaign aimed at increasing market share.
  • Paying a premium for the most sought-after endorsers seems worthwhile; partnerships between topranked consumer-goods brands and top-ranked athletes yield the largest payoffs.
  • An athlete endorser's performance affects the rewards gained: sales and stock returns jump noticeably with each major achievement by the athlete.
  • Relevant to structuring contracts with endorsers, sales effects exhibit decreasing returns over time whereas stock-return effects are relatively constant.