Mumbai: Commitment usually takes a knock or two in tough times. The world of celebrity endorsement is proving no different, with advertisers and celebrity management firms increasingly looking at cheaper alternatives to long-term, expensive brand endorsement contracts.
Cost savers: Experts say that in these times of slowdown, more brands are opting for shorter-duration contracts that block less cash.
One way out attempted increasingly by celebrity management firms is to buy a celebrity’s time for a year and then sell it piecemeal at a higher price to various brands. This is similar to media buyers buying ad time and space on mainstream media such as print and television at wholesale rates on behalf of clients.
Percept Talent Management, the celebrity management division of Percept Holdings Pvt. Ltd, started running its Celeb Shoppe TM system a month ago. Through Celeb Shoppe, it buys in bulk the time of B- and C-grade celebrities, such as models, television stars, video jockeys, or VJs, and lesser-known cricketers, and then sells the time slots and appearances of the celebrity to different clients.
Take, for example, a VJ who would traditionally charge Rs50,000 per appearance. Under this scheme, the agency would buy a certain number of days of the VJ at a cheaper rate because it is buying in bulk and then sell at markup rates to a client who needs a VJ for a launch or function.
Manish Porwal, chief executive officer of Percept Talent Management, says that while it may buy celebrity time at substantially lower rates, the income is assured and the celebrities are paid for the days booked by the agency, even if they are not used.
Celebrities have the option of picking the brands or businesses they want to work with. They also get assured bookings in these tough times since smaller businesses such as a jewellery store in a small city such as Raipur, the capital of Chhattisgarh, could now have access to a star for the launch of a new outlet.
The scope for a talent management firm to make money under this model is sizeable, since the celebrity endorsement market in India is between Rs800 crore and Rs1,100 crore, with 60% of the market not managed by professional agencies, Porwal adds.
Big firms can also tap this pool for their events. For example, Kansai Nerolac Paints India Ltd used Celeb Shoppe for an on-ground dealer meet which had Indian Cricket League cricketers and Miss India contest winners performing together, among others.
Says C. Venugopal, general manager, marketing, Kansai Nerolac Paints India: “For us, it was not an association for consumer advertising. It was more a temporary association with the objective of rewarding our dealers for surpassing sales targets for two of our premium paint brands.”
Not only was the programme a hit with its dealers, but the company spent just around 2-3% of its brand revenue on this.
While this strategy has worked with big-ticket celebrities such as cricketers, it may be hard to implement for Bollywood stars such as Shah Rukh Khan who are over-booked on time. Again, instead of going for long-term exclusive contracts, various advertisers are seeking campaign-based deals with celebrities or endorsement deals of shorter tenure. In days of restricted cash flow, these deals block less cash, say experts.
“With the economic slowdown, we are seeing more and more brands opt for contracts that are of shorter duration as it eases the pressure on their ad budgets,” says Anirban Das Blah, chief executive officer, Globosport India Pvt. Ltd. The deal that Bharti Airtel Ltd struck with actors Vidya Balan and R. Madhavan was campaign-centric and then the brand decided to use them for additional days because the first campaign worked well for it, he says.
The Tata Sky deal with Gul Panag was also campaign-based, says Blah. However, this was not so much a function of a slowing economy as of strategy, says Vikram Mehra, chief marketing officer, Tata Sky Ltd, explaining that its association with actors Aamir Khan and Asin Thottumkal for the new campaign was sealed in long-term deals because the two were the face of the brand. In the case of celebrities such as Gul Panag, Hrithik Roshan, Paresh Rawal, Boman Irani, Kirron Kher and Sonali Bendre, the associations were campaign-based as each celebrity was selected for a specific creative campaign or promotion.
Another way to avoid exclusive contracts is to offer performance-linked payouts, where the star stands to make money only if the company does. Also, the star may sign up on a discounted rate with a promise of substantially higher payouts when the company does well, says Afsar Abbas Zaidi, director, Carving Dreams Entertainment Pvt. Ltd, which manages stars such as Hrithik Roshan and Bipasha Basu.
There are caveats for new models such as Percept’s. Says Hiren Pandit, managing partner, GroupM ESP, the entertainment, sports and partnership division of media specialist GroupM, part of WPP Group Plc., “This business model can work if you have a huge network of event managers in place across smaller cities as they will bring in the business.” Also, as long as one is not using them in mass media, B-grade celebrities would work well for businesses looking to create some excitement on the ground through consumer or dealer gatherings, among others, he adds.