Celebrity Endorsement of Advertisements Boosts Sales and Product Image - Research Paper Example

Celebrity Endorsement of Advertisements Boosts Sales and Product Image Introduction The use of celebrities in advertisement has been a common phenomenon in modern business. The claim that has been observed by many organizations holds that advertisements endorsed by celebrities increase the effectiveness of their advertisements and enhance persuasion on the part of the consumer. According to Gunter, Oates and Blades (20), the intention of organizations adopting this form of advertisement would be to transfer the attributes perceived of the celebrity to the product being advertised so that the two become linked automatically in the mind of the consumer.

This claim has been widely accepted in the marketplace, making almost 15% of the advertisement in the US to incorporate this strategy with an estimated $50 billion being spent globally on endorsements and corporate sponsorships (Crutchfield 23). Michael Jordan Endorsement of Nike’s Advertisement Nike is said to have spent over $475 million out of its $1.7 billion annual advertisement budget for the endorsement of athletes for its products (Elberse and Verleun 23). In this paper, focus shifts to how the endorsement of Michael Jordan affected the company’s sales and the company as a whole.

Michael Jordan has been in the headlines as one of the most successful athletes according to Kellner, remaining relevant in the media even after his retirement in 1999. His achievements include leading the Chicago Bulls of America to NBA championships in six out the eight seasons when he played for the team which made him be associated with winning and deification of own prowess. Simmers, Damron-Martinez and Haytko refer a celebrity to that person known for “well-knowingness.” A celebrity endorser in addition has been defined as that person enjoying public recognition which would be used by such a person, on behalf of consumer products by appearing in advertisements with it (Gunter, Oates and Blades 19).

In the commercial culture which blends image, product and celebrity, it would be natural for sports shoes such as Nike to purchase such a celebrity as Michael Jordan for the promotion of its products through advertisements as posted by Shahtoosh. For such a star like Jordan to endorse Nike, a brand of sports shoes, the idea was to matchup the standards of the shoes to that of Jordan, the reason for the success of Nike as a brand. According to Elberse and Verleun (23), signing up of endorsers such as Michael Jordan to be used in advertisements such as the one featured by Shahtoosh causes a 4% sales increase.

For Nike, this would be equivalent to about $10 million sales increase. Such endorsements assure customers of the quality of such products. It would nonetheless be important to note that such endorsements do not impact on competitor’s sales. Michael was perhaps selected because of his prowess in basketball as a sport which augers well with Nike’s target market – sportspersons. Elberse and Verleun (6) point out on the importance of selecting an endorser in the organization’s advertisement that would effectively propagate the image of the focal product.

More so, the stock returns would increase by about 0.25% when celebrities appear in advertisements (Gunter, Oates and Blades 21). This expresses the confidence that shareholders have in the celebrity which translates down to the inclusion of the celebrity in advertisements, boosting the image that consumers would have on the products. In their research, Elberse and Verleun (5) found out that the returns on stock for Nike with the endorsement of Michael Jordan in 1995 rose by about 2% for the products endorsed which represented a market value of over $1 billion.

This would by all standards pose greater impact favoring the endorsed brands as opposed to their unendorsed counterparts. With persistent exemplary performance by the endorser of a product in an advertisement, Elberse and Verleun (23) noted that both sales and returns in stock would increase with returns on stocks being more stable than for sales which would be greatly affected. Conclusion Researchers in advertisement concur with the claims that use of endorsement strategies where celebrities are incorporated in advertisements propagates sales of the focal brands in both the absolute terms and in comparison to competitors.

With exemplary performances of these celebrities, the sales of the focal products rise even further. More so, the organization benefits more from increased shareholder confidence which would be reflected in the subsequent increase in stock returns. When Michael Jordan, a celebrity athlete in basketball endorsed Nike, sports shoes brand, there was a 4% increase in sales, an equivalent of about $10 million with its stock return of about 2%. This explains Nike’s massive expenditure in endorsing celebrities in its advertisements.

Works Cited Crutchfield, D. “Celebrity Endorsements Still Push Product: Why in the Era of Social Media, the Rewards Continue to Outweigh the Risks.” Ad Age 22 September 2010: 23. Print. Elberse, A. and Verleun, J. “The Economic Value of Celebrity Endorsements.” Journal of Advertising Research. 1 (2011): 1 – 34. Print. Gunter, B., Oates, C., and Blades, M. Advertising to Children on TV: Content, Impact and Regulation. Lawrence Earlbaum Associates Inc. Publishers: Mahwah, New Jersey, 2008. Print. Kellner, D.

The Sports Spectacle, Michael Jordan and Nike: Unholy Alliance? N.d. Web. 6 October 2012. Shahtoosh, Michael Jordan Nike ‘What If’ Commercial. 17 December 2007. YouTube. Web. 6 October 2012. Simmers, C. S., Damron-Martinez, D., & Haytko, D. L. “Examining the Effectiveness of Athlete Celebrity Endorser Characteristics and Product Brand Type: The Endorser Sexpertise Continuum.” Journal of Sport Administration and Supervision. 1.1 (2009): Web. 6 October 2012. .