How Important Are Celebrity Endorsements? Do They Help Marketing or Is It a Double-Edged Sword?

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In the conventional advertising world, celebrity endorsement is very effective. Among the factors for effectiveness includes the fame of the celebrity, the connection with the product or service, whether or not the celebrity is a user, and whether or not the statements of the celebrity appear as truly authentic or merely a “pay for endorsement.”

The use of celebrity endorsement is far less successful in the direct selling industry. In fact, the advertising model for direct selling is quite different than conventional advertising. In conventional distribution, such as retail stores, internet or broadcast media, companies pay advertising dollars and endorsement fees to promote the brand. However, in direct selling, the commissions and rewards paid to distributors are effectively the advertising dollars that would be paid in other channels of distribution. Instead, the branding, in direct selling, is accomplished by the promotion of the sales network of the direct selling company. Looking at the success of major companies such as Avon, Mary Kay, Tupperware, Herbalife, etc., the branding task has been accomplished by the consultant force, and generally without the use of celebrity advertising.

One final note on celebrity advertising: The FTC has adopted significant rules on endorsements and testimonials to require clear disclosure to consumers of relationships between endorsers and the advertising company. For a detailed discussion, see www.mlmlegal.com’s article on this subject:

FTC Guidelines on Endorsements and Testimonials Resource Center:

http://www.mlmlegal.com/FTC%20Guidelines%20Testimonials/FTC%20Guidelines.html

For more information on the network marketing industry visit www.mlmlegal.com and www.mlmattorney.com.

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Topics:  Celebrity Endorsements, FTC, MLM Industry

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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