Coronavirus Impact: Celebrity endorsers take ‘pay cuts’ of 30-50%

By: |
August 4, 2020 7:40 AM

Celebrity endorsement contracts are getting extended by three to six months to account for the time that brands have not been able to take advantage of their partnerships

Some brands that had been in the process of finalising endorsement deals are holding backSome brands that had been in the process of finalising endorsement deals are holding back

The coronavirus pandemic is resulting in ‘pay cuts’ for celebrity endorsers. Celebrity endorsement contracts are getting extended by three to six months to account for the time that brands have not been able to take advantage of their partnerships with celebrities on their roster.

In effect, celebrities are taking a 33-50% pay cut on their annual endorsement fees. In addition, some brands that had been in the process of finalising endorsement deals are holding back. Cricketer Virat Kohli, who is known to charge around `5- 5.5 crore per day for an endorsement, typically has two year-long deals which entails around four days of engagement. A three to six month extension for Kohli and others in his pay-band such as Akshay Kumar and Ranbir Kapoor could potentially mean a loss of about `2.5-5 crore on a single brand endorsement deal. Stars like Alia Bhatt and Sachin Tendulkar who charge about `1-2 crore per day stand to forgo about `25 lakh to `1 core depending on the duration of the extension.

Vijay Subramaniam, co-founder and CEO, KWAN, says that brands that have ongoing deals with celebrities are requesting for extensions of three-four months on an average while some are requesting longer extensions of about six months. Analysts say that an extension of the duration of the contract is preferred by the endorsers as reducing the fee could set a precedent for further requests. As per a TAM Adex report on celebrity endorsement for the period of January-June 2020, the volume of celebrity endorsed television advertisements dropped by 39% in April to June as compared to January to March.

Further, the volume of celebrity-led advertisements began rising in June, the report found. In June, there was a 63% rise in ads featuring celebrities as compared to April.

Even though advertisements featuring celebrities are making a comeback in several categories like washing detergents, QSRs and gaming, analysts say most of these were shot pre-lockdown and are being aired now. Further, while advertising shoots have resumed, celebrities are not yet stepping out of their homes for fresh ad shoots yet.

“Not all celebrities will agree to shoot immediately in studios,” says Sumanto Chattopadhyay, chairman and chief creative officer of 82.5 Communications, Ogilvy Group. Although he expects that some will agree in due course of time.

During this lean period of celebrity endorsements due to the lockdown and limited shooting, brands are opting for home-shot videos featuring celebrities. There has also been a significant pivot towards digital advertising, particularly on social media, involving celebrities.

“Many brand partners who work with us have opted to leverage their association with the celebrity on social media platforms, whether through tweets, videos or photos,” says Ramakrishnan R, co-founder and director, Baseline Ventures.

As a result the number of campaigns that use multiple celebrities for a single promotion has gone up. Brands are bargaining hard to extract the best value for money; however, top rung celebrities are not inclined to reduce fees for their social media engagements, say analysts. “We are seeing greater traction on social media and reach has increased on digital,” points out B Krishna Rao, senior category head, marketing, Parle Products.

“These social media campaign partnerships are mostly tactical engagements by brands. In fact, influencer marketing has seen a healthy acceleration during the pandemic because a lot of brands are communicating first through celebrity influencers now,” adds Subramaniam.

The latter half of the year is when the Indian Premier League and the festive season could prompt brands to loosen purse strings and increase advertising activity. In particular, IPL, when held during the summer, draws a lot of ads featuring cricketers for the launch of new products.

The unabated spread of the pandemic may impact celebrity endorsements during the festive season, experts say, particularly as many celebrities are not fully confident of partaking in fresh ad film shoots.

Read Also: How celebrities can act as a catalyst in creating consumer connect

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