The costs and liability of celebrity endorsements

Queen Victoria married Prince Albert of Saxe-Coburg and Gotha on February 10, 1840. She decided to wear a white satin gown for her wedding, thus becoming the leading lady in white for the event.

It’s hard to believe, but since 1840, every woman who has ever chosen a white dress for her wedding has taken a leaf from Victoria’s Stylebook. Her singular work 182 years ago created and sustained a global wedding gown industry worth billions of dollars each year. Should we not credit the Queen of India for her continued success?

For all its documented history, humans have enjoyed their lives and lifestyles in the social hierarchy. Quite reasonably, they believe that adopting the personal practices or accoutrements of the people they worship may give them the unspeakable charm of some of these celebrities. Therefore, in the 19th century, when large-scale product promotion formally formed advertising, approval of celebrities was one of the earliest ways of gaining widespread acceptance.

Other tropes and arrogance come and go in the advertising world, but celebrity endorsement remains a reliable basis for brands in every conceivable category and geo-demographic segment. In material fitness, the lucrative income that celebrities earn from commercial endorsements comes with certain responsibilities. The obligations are, above all, to collect favorably affected customers and approved product from the messenger rather than the message.

Advertising regulation, both statutory and self-governing, has directly addressed a number of issues surrounding the approval of celebrities for several decades. The US Federal Trade Commission policy on the endorsement of celebrities makes it clear that “endorsements should reflect honest opinions, findings, beliefs or the experience of endorsers.” In a similar vein, the United Kingdom’s Advertising Standards Authority advises celebrities that, among others, “endorsements must be true” and “rights are accurate.”

India has on Friday announced new guidelines applicable to celebrity endorsers in the continuation of the rules enacted under the Consumer Protection Act 2019. The new guidelines don’t exactly break new ground, to be sure. Celebrities are directly responsible for undertaking “due diligence” before promoting brands. And, if they fail to do so, they will face fines 10 lakh for the first offense, and 50 lakh and simple sentences of up to five years for subsequent offenses. Do these numbers make you feel a lot? Even the 100th most valuable celebrity endorsers now probably charge more 1 crore per year to promote the brand. The lowest paid ones in the top 10 still pull north 5 crores annually.

Is this policy – legally required by celebrities to do their homework before they rush to increase their popularity – fair and reasonable? In the immediate aftermath of World War II, Carl Howland, a professor of psychology at Yale University, defined basic credibility as “the positive characteristics of communicators that affect the reception of the message.”

This definition has played a crucial role in developing “propaganda” models. To Howland’s credit, his research insights have been used by millions of brand communicators consciously or unconsciously (often the latter) and generated billions or even trillions of dollars in consumer spending. Endorsements generate more revenue than revenue that leads directly to the primary profession of a particular celebrity. Cricket stars in India began earning crores of endorsements a decade or two before their direct revenues from the sport became close.

Advertisers do not pay anything because of their generosity. The returns on marketing investments in each business are closely monitored. Big ticket endorsers are able to keep their commercial prices because their economic value to brands is more attractive than what they charge. In the present era, when millions of new influencers, in some sense, democratize former special enclaves, the task of ensuring that consumers are not deprived of misleading rights and false representations is more urgent than ever.

Can statutory regulators do the job: keep a close, broad spectrum view of what is happening effectively and efficiently, in a world of celebrity (or influencer) approval?

The good news is that it is not alone. The Advertising Standards Council of India passed its own guidelines for celebrities a few years back. This was followed by guidelines for nouveau celebrities, aka influencers. The council maintains a raft of complaints about these issues each month, which showcase the approval of floating celebrities. Celebrities should stop complaining and start showing responsibility to fans and followers who follow their role models unquestionably.

Paritosh Joshi is a media professional

The opinions expressed are personal

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