Celebs and Risky Biz

Risky Business: Celebs Can Drag Sponsors Down

At the risk of sounding overly cynical, I was reminded again this week of the risks involved in hitching your brand to a celebrity, such as an entertainer or athlete.

The widely reported massive security breach of Apple’s i-Cloud over the weekend left many celebrities over-exposed when their private picture-phone photos were posted on the Internet.

This immediately changes the public discourse about any of them from positive to problematic at best, and to prurient at worst.

This should only serve to reinforce the lessons from Tony Stewart’s tragic incident Aug. 9 in which fellow driver Kevin Ward Jr. was killed. Even if Stewart is cleared in the investigation, it has been a rough month for his sponsors.

In our celebrity-dominated, media-driven culture, there are massive potential rewards in associating your brand with a celebrity, but there can be massive risks as well.

Here are three ways to manage the risk:

1.     Sponsor a team rather than an individual. This concept extends to sponsoring a movie or show, rather than a single actor, for example. The beloved celebrity or athlete is still front-and-center, but the focus is widened, which reduces the potential for harm, should something happen. There is less reward, both in terms of total upside and duration, but massively lower risk. It’s a bit like investing in money markets, rather than individual stocks.

2.     Keep your crisis response plan up-to-date. You don’t want to be fumbling for answers if something happens. Prepare for the worst, hope for the best. If you trust your relationship manager to make the appropriate response on a moment’s notice, you may find that they are too quick to support the celebrity, based on the personal rapport that has developed, at the risk of backing you into a corner. Some sponsors may even have been able to turn the recent privacy breach into a positive message for their brands.

3.     The least effective way to address risk is by incorporating a “morals clause” into the sponsorship contract. This at least has the benefit of allowing you to escape the relationship without spending more corporate sponsorship money. But it doesn’t exempt you from “guilt by association,” and it doesn’t make up for the opportunity cost. After all, you got into the relationship to advance your brand, and that’s not going to happen if you sever ties.

If this approach had been used in the Tony Stewart case, the Stewart team could have continued racing in NASCAR with another driver at the wheel, while Stewart sat out pending the results of an investigation. Sponsors would continue to benefit from exposure, while publicly doing the right thing by everyone involved.

Instead, the public continues to debate even now whether Stewart returned to racing too soon, in part because he “owed it to the sponsors.” That’s risky business, for sure.