Brands want celebrity endorsement fee to be cut in light of covid effects

Companies, hit hard by the lockdown imposed to prevent the spread of covid-19 pandemic, have been pushed to relook at their advertising strategies, including celebrity endorsement deals, says a report. The report released by the Indian Institute of Human Brands (IIHB), which conducted a survey of 110 companies, states that the majority of marketers (64%) said celebrity endorsement fee should come down. The sentiment is backed by sharp decline in consumer demand, market uncertainty and a long road to recovery.

The report states that 22% of respondents said endorsement fee of the top 10 celebrities, including the likes of Virat Kohli, Akshay Kumar, Deepika Padukone, Ranveer Singh and Alia Bhatt, should come down by 20-30%; 15% felt it should reduce by 30-40% ; 12% felt it should reduce by 40-50% ; just 11% felt that the downward revision should be 10-20%.

Only 4% marketers said celebrity endorsement fee should come down by 50% or more.

According to industry estimates, Virat Kohli is the most expensive celebrity. He charges ₹5 crore- ₹5.5 crore a day to endorse a wide variety of brands, such as Puma, Boost and Manyavar ethnic clothing. Alia Bhatt's popularity is steadily rising among brands as she charges ₹1 crore- ₹2 crore a day for promoting Frooti, Garnier, Vicco toothpaste and Lay's, among others.

For the top 10-20 second tier celebrities, such as MS Dhoni, Rohit Sharma, Hrithik Roshan and Kangana Ranaut, 25% marketers felt the fees should come down by 20-30%; 14% marketers felt it should come down by 30-40%, while 12% marketers felt the reduction should be in the 40-50% range.

Even in the current contracts in force, 65% marketers felt that the celebrity should reduce fee by a significant amount. As much as 25% marketers said a 30-40% reduction should be offered by brand ambassadors on their own; 19% marketers said the reduction should be at least 20-30%.

Simultaneously, 64% marketers felt celebrities should offer to extend the tenure of current contracts. As much as 41% marketers felt that the extension in tenure should be three months or more; 21% marketers felt at least a three-months extension would be fair to both parties. Meanwhile, 36% marketers wanted both reduction in fees, and an extension in tenure of contracts.

According to Tuhin Mishra, the managing director of Baseline Ventures, some brands had approached the company looking for an extension of window or slight delay in fee payment along with contract extension by few months owing to the situation arising from the spread of covid-19. Baseline Ventures manages players such as P.V. Sindhu.

"These requests are backed by genuine reasons and athletes understand the situation. It's not rampant but some brands are facing challenges and we are working with them to negotiate the terms which serve both the parties," he noted.

Despite downturn in economy, companies still believe in celebrity endorsements and its impact on sales. 54% marketers said that even if the Indian Premier League (IPL) does not happen this year, they would still want a cricket endorser. 51% marketers said that even if India does not play internationally this year, they would still want a cricketer as an endorser.

When asked if the value of the Bollywood celebrity would diminish if movies start to release only on video streaming platforms such as Netflix, 54% said it did not impact their selection. 55% clients said they would continue to hire a celebrity ambassador despite the sluggish economy.

Fee reduction is something I don’t think celebrities will agree to because they are also in bad shape said a senior talent management executive on the condition of anonymity.

"The most amicable solution would be to suspend the contract for the term of lockdown or simply extend it by another four to six months. Ending a contract would be a stupid decision because celebrities are not going to get brand deals of similar value in the current situation. The best way forward is to negotiate so that it serves both parties," added the executive.

Meanwhile, a separate survey conducted by IIHB, in which it interviewed 110 corporate customers and 550 consumers to rate the performance of celebrities during the lockdown revealed that Bollywood actor Sonu Sood topped the list.

Sood was rated best with a 78.5% positive rating by corporates and 86.4% positive rating by consumers, owing to his selfless work with migrants in the past few months. A large number of corporates were of the opinion that Sood would be surely on their consideration list as a potential brand ambassador, especially with products targeted at non-metro markets.

Akshay Kumar, with rating of 68.4% among corporates and 78.7% among consumers, occupied the second spot because of his donation to PM Cares Fund and public service campaigns. Amitabh Bachchan, with 59.1% rating by corporates and 65% by consumers, ranked third in the survey.