Tahir's Tips: The Law and Celebrity Endorsement Deals

Following on from a previous article on designer and retailer collaborations, here I focus on another way in which designers can further their brand – through the use of celebrity endorsements. Whether it be images of David Beckham gracing advertising boards in nothing but a pair of Emporio Armani briefs or Tiger Woods sporting a Nike cap whenever he leaves the house, examples of celebrity endorsements can be seen everywhere you look. For the brand owner, having a celebrity endorse your products can help increase publicity and, when used in conjunction with a successful marketing campaign, can cause a sizable increase in sales, revenue and, ultimately profits. For the celebrity involved the most obvious benefits to them are the eye-watering fees they can demand. For example, last year David Beckham reportedly earned circa $40 million from endorsement deals alone.

However, there are matters that brand owners should be cautious of before entering into such deals. Having a celebrity endorse your brand could actually cause more harm than good, especially if the celebrity involved turns out to not be as clean cut as you originally thought (a certain American cyclist comes to mind), resulting in lasting damage being done to your brand. Here are my top tips for brand owners to bear in mind when hiring a celebrity to endorse their products:

1. In light of recent cases involving sports celebrities who were signed up to multi-million dollar endorsement deals being involved in drug or sex scandals the most important power a brand owner should have in any endorsement deal is the right to terminate the deal immediately in certain situations. The termination clause should set out clearly under what circumstances the brand owner can terminate. For example if your brand has a particular environmental or social message behind it, the events that trigger termination should be tailored specifically to take this into account. A notable example of this can be seen in Kate Moss's endorsement deal with H&M being terminated after her widely reported drug-taking was seen as being incompatible with H&M’s own anti-drugs campaigning. With this is mind some endorsement deals will contain a crisis management or morality clause which obliges the celebrity to assist the brand owner to minimise any damage they may have caused the brand through appearing at press conferences and taking positive action to show remorse for what they have done. As a bare minimum brand owners should ensure that a termination clause can be triggered should the celebrity bring the image of the brand into disrepute and that the brand owner is only obliged to pay for the services of the celebrity up to the point of termination.

2. Where a brand owner is paying large amounts of money for a celebrity endorsement they will, in return, want some sort of exclusivity. This will obviously be resisted at all costs by the celebrity involved as they will of course want to pursue other endorsement projects. What is important is that the endorsement deal prevents the celebrity from endorsing competing products and thus eroding the value of the investment that the brand owner has put in. An example of this occurred where Charlize Theron was photographed at a number of high profile events wearing a Dior watch in breach of her exclusive contract with Swiss watchmaker, Raymond Weil.

3. In return for being paid substantial amounts of money the endorsing celebrity should grant to the brand owner a licence to use their name, image and goodwill. The celebrity will wish to control this as much as possible as they will want to minimise the risk of their hard-earned goodwill being tarnished. On the other hand the brand owner will want to use the celebrity’s image on as wide a basis as possible and without the constant need to obtain consent every time a new product or campaign is launched. Any endorsement deal should clearly state which products or lines the celebrity’s name can be used to promote and how the celebrity’s image can be used in marketing and advertising.

4. Brands ought to be clear on what they expect from the celebrity, so any endorsement deal should set out what services the celebrity is expected to do to promote the brand. This can include a wide range of things such as personal appearances at launch events and shows as well as appearing in promotional material such as photo shoots and advertising films. Recently brand owners have been keen to use endorsement deals to tap into a celebrity’s social media presence. It is becoming increasingly common for endorsement deals to contain a schedule of social media services that the celebrity will provide. Examples of this are obligations on the celebrity to post photographs of themselves wearing particular products on Instagram or to mention the brand in a certain amount of tweets. Including a clause obliging the celebrity to mention the brand on Twitter or Facebook can be particularly lucrative considering the amount of followers some celebrities have on these platforms. Katy Perry currently tops the list with 53 million Twitter followers.

5. The way in which the celebrity is paid should be clearly set out and, in light of the vast sums of money that can be involved; the brand owner should push for payments to be staggered. The last thing a brand owner wants is to pay a celebrity millions of pounds upfront to endorse their brand for the celebrity to then fall out of favour with the public or, in extreme situations, die or become physically unable to perform their services. A detailed payment schedule should be included in any endorsement deal that sets out the maximum amount the celebrity will be paid and the conditions that must be fulfilled for particular payments to be made, for example appearing at certain events or completing filming for an advertisement.
Celebrity endorsements can be hugely beneficial to a brand, but there have been many examples of a brand being damaged through a celebrity endorsement. As well as ensuring that appropriate contractual protection is put in place, as explained above, brand owners should be mindful of choosing the ‘right’ celebrity for their brand. This will include conducting research into the history of the potential celebrity endorsement so they can predict the potential for any skeletons coming out of the cupboard at some point down the line. The choice of celebrity should also have some credible link to the brand and, to maximise the investment being made, the celebrity should be used as part of a wider marketing campaign over a range of media.

For more information on Industry member, Tahir visit his personal partner page on the Sheridans website. To contact him directly, visit The Industry Directory, email [email protected] or telephone 020 7079 0103.