When Oprah Winfrey announced earlier this year that she would be investing in and serving as a spokeswoman for Weight Watchers, the celebrity endorsement world experienced another bellwether moment in the rapidly evolving relationship between brands and influencers.
A traditional endorsement deal from Weight Watchers would have commanded a six- or seven-figure annual fee. Instead, Oprah invested in the company and earned immediate paper gains of close to $70 million. While there will always be blue-chip opportunities for sports icons, the endorsement landscape in 2015 has changed dramatically. Participants in the process must adapt in order to capitalize on the new opportunities that are now emerging.
■ Competition
Until recently, athletes had very little competition when it came to endorsements. There was a stigma attached to pitching products that kept A-list actors and musicians out of the game. There were rumors of Brad Pitt spots in Japan, but in the United States, iconic actors and musicians wouldn’t touch brands.
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Peyton Manning is described by a former Gatorade exec as a true representative of the brand.
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Changes in the entertainment industry have forced celebrities to reconsider their aversion to aligning with brands.
Today, these partnerships are commonplace: Matthew McConaughey and Lincoln, Bob Dylan and IBM, Jennifer Aniston and Smart Water. No longer are athletes the only influencers willing to pitch product. Athletes must understand that this is a crowded market, and they need to commit to building their own brands in order to separate themselves from their new competitors.
■ Brand passion
Sponsors not only demand authentic fit between athlete and brand, but they also want to know that spokespeople are truly passionate about their products. Samsung won’t consider a partnership unless suggested athletes are members of its White Glove program. Kevin Love’s affinity for chocolate milk was well-known before he became a part of the “Built with Chocolate Milk” campaign.
Athletes should be pursuing partnerships with brands they truly love.
■ Audience development
Sponsors now demand access to ambassadors’ social media followers. Athletes who choose not to be active on social media are leaving real money on the table. And it’s not enough to simply launch Facebook, Twitter and Instagram pages. Athletes need to develop authentic voices and commit to frequent posting, and they need to be comfortable giving brands access to those platforms.
Dwayne Johnson accumulated more than 90 million followers with a dedicated content publishing strategy. Sponsors like Ford and Under Armour pay him handsomely for access to those fans.
It is equally important that athletes and their representatives work with sponsors to craft social posts that don’t turn fans off. Branded video content is an especially effective use of athlete social platforms, and athletes who participate in the creative process are even more valuable to brands. It’s a balancing act that requires cooperation and creativity on the parts of the brand, the athlete and their representatives.
■ Philanthropy
Brands are equally as interested in an influencer’s community involvement. Brands not only want to affiliate with spokespeople with integrity, they also want to align with ambassadors who are actively supporting causes they care about. This is especially true for brands that target millennials, who demand that the brands that they support are upstanding corporate citizens.
Athletes who want endorsement deals first need to make a genuine commitment to giving back to the community.
■ Partnership
Athletes receiving six- and seven-figure endorsement fees are earning as much as some of the highest-paid employees at the companies they represent. Sponsors expect their ambassadors to demonstrate loyalty and passion for their brands. I once asked Tom Fox, former head of Gatorade sports marketing, to name his best brand ambassador. He answered immediately: “Peyton Manning, without question. Peyton knows the names of our executives. He shows up at events in Gatorade gear. He’s a true representative of the brand.”
It’s no longer enough to simply fulfill the obligations of the contract. Athlete endorsers are expected to loyally represent the brands they pitch 24/7.
■ Equity and investing
While 50 Cent’s involvement with Vitaminwater is legendary, Jessica Alba’s Honest Company was the true watershed moment. Alba likely will earn more from Honest Company than she will during her entire career as an actor. Others are following in her footsteps. And while endorsement opportunities often decline when athletes retire, equity opportunities can generate revenue and value for athletes far beyond their playing years.
Many representatives are reluctant to recommend equity deals or investment opportunities that lack guaranteed revenue/return. And yet, these opportunities can be appealing and lucrative. Recent examples of celebrities forgoing traditional endorsement fees and investing in or receiving equity from the companies they endorse include Serena Williams and Mission, Jillian Michaels and Thrive Market, and Derek Jeter and The Players’ Tribune.
With startups like Uber and Airbnb achieving such tremendous success , athletes will continue to see opportunities to receive equity and invest in companies in exchange for traditional endorsement services. It will be up to their representatives to do the due diligence necessary to find the diamonds in the rough that offer calculated risk and sizable upside.
■ Moving forward
Athletes and agents who want to pursue brand partnerships need to recognize the changing landscape that is highly competitive. They need to make commitments to developing authentic personal brands through strategic PR and engagement in community efforts. They need to develop social media channels, develop creative branded content, and allow brands to access their audiences. And they need to be open to equity and investment opportunities.
Most importantly, athlete spokespeople need to commit to long-term, strategic planning of each and every brand partnership they enter into. It’s not enough to simply target blue-chip brands and wait for the phone to ring. Athlete ambassadors are expected to be active participants in the activation process, and they and their representatives need to be committed to every step of the partnership’s success.
Bill Sanders (bsanders@excelsm.com) is senior vice president of athlete and talent marketing at Excel Sports Management.
