The costs and liability of celebrity endorsements
Queen Victoria married Prince Albert of Saxe-coburg and Gotha on February 10, 1840. She chose to wear a resplendent white satin gown to her wedding, thus becoming the first woman of prominence to wear white to the event.
It is hard to believe, but every woman who has chosen to wear white to her wedding since 1840, has taken a leaf, mostly unconsciously, out of Queen Victoria’s stylebook. Her singular act, 182 years ago, has created and sustained a global wedding gown industry worth billions of dollars every year. Wouldn’t we, shouldn’t we credit, and hold accountable, the once Empress of India for this mammoth, enduring success?
For all of recorded history, human beings have been enraptured by the lives and lifestyles of those above them in the social hierarchy. They believe, quite reasonably, that adopting the personal habits or accoutrements of people they venerate, might bestow some of these celebrities’ ineffable charm upon them. It is no wonder, therefore, that when largescale product promotion became formalised into advertising, in the 19th century, celebrity endorsement was among the earliest approaches to find widespread acceptance.
Other tropes and conceits come and go in the world of advertising, but celebrity endorsement has remained a reliable mainstay for brands in every conceivable category and geo-demographic segment. It was in the fitness of things, then, that the lucrative revenues which celebrities earn from commercial endorsements came with some obligations. Obligations, above all, to those consumers who would be affected favourably by the messenger, even more than the message, and procure the product endorsed.
Advertising regulation, both statutory and self-administered, has directly addressed the numerous issues surrounding celebrity endorsement for several decades now. The US Federal Trade Commission policy on celebrity endorsement makes it clear that “endorsements must reflect the honest opinions, findings, beliefs, or experience of the endorser”. In a similar vein, the United Kingdom’s Advertising Standards Authority’s advice to celebrities makes it clear that, inter alia, “endorsements must be genuine” and “claims must be accurate”.
India notified new guidelines applicable to celebrity endorsers on Friday, in continuation of rules framed under the Consumer Protection Act 2019. The new guidelines don’t exactly break new ground, to be sure. Celebrities are made directly liable for carrying out “specific due diligence” before they spout homilies about brands. And, should they fail to do so, they may face fines of up to ₹10 lakhs for a first offence, and ₹50 lakhs and simple imprisonment of up to five years for subsequent offences. Do these numbers sound like a lot to you? Even the 100th most valuable celebrity endorser now probably charges more than ₹1 crore per year to promote a brand. The least paid in the top 10 would still pull north of ₹5 crore every year.
Is this policy – of making it statutorily incumbent upon celebrities to do their homework before rushing to encash their popularity – fair and reasonable? In the immediate post-world War II period, Carl Hovland, a professor of psychology at Yale University, defined source credibility as “a communicator’s positive characteristics that affect the receiver’s acceptance of a message”.
This definition has played a critical role in developing “propaganda” models since. To the credit of Hovland, his research insights have been used, consciously or unconsciously (mostly the latter) by millions of brand communicators and pro“until duced billions, or rather trillions, of dollars in consumer spending. Endorsements often produce a much larger income than the income directly attributable to a particular celebrity’s primary vocation. Cricket stars in India began earning crores from endorsements a decade or two before their direct incomes from the sport were anywhere close.
Advertisers pay nothing out of a generosity of spirit. Return on marketing investments is closely monitored in every business. Big ticket endorsers are able to sustain their commercial prices only because their economic worth to the brands is a very attractive multiple of what they charge. In the current era, when millions of newly minted influencers have, in some sense, democratised the previously exclusive enclaves, the task of ensuring that consumers are not duped by misleading claims and untruthful representations is more urgent than ever.
Can a statutory regulator actually do this job: Of keeping a close, broad spectrum watch on the goings on in the world of celebrity (or influencer) endorsement, effectively and efficiently?
The good news is, it is not alone. The Advertising Standards Council of India put in place its own guidelines for celebrities a few years ago. This was followed up, logically, by guidelines for the nouveau celebrities, aka influencers. The council handles a raft of complaints on these issues every month, which mirrors the buoyancy celebrity endorsement continues to exhibit. Celebrities should stop complaining and start showing responsibility towards those fans and followers, who unquestioningly follow wherever their role models lead.