While Contracting With Celebrities To Endorse A Company's Brand Adds To The Competitive Power Of Its Product Offering Vis-A-Vis The Offerings Of Rivals, The Biggest Benefit Of Signing A Celebrity To A Contract Usually Comes From Preventing A Rival Company From Winning The Contract For That Celebrity. A Company Cannot Expect That Signing Celebrities To

 

 

 

 

While contracting with celebrities to endorse a company's brand adds to the competitive power of its product offering vis-a-vis the offerings of rivals, the biggest benefit of signing a celebrity to a contract usually comes from preventing a rival company from winning the contract for that celebrity. a company cannot expect that signing celebrities to contracts will lead to better company performance if its total contractual payments to celebrity endorsers exceed $10 million per year. a company can overpay to win the contract for a celebrity such that the costs of paying the celebrity the contracted amount outweigh the incremental profits on the added sales volume, with the result that the company's total profits fall rather than rise. the costs of paying a celebrity the contracted amount are likely to exceed any benefits gained from the celebrity's endorsement until the company wins additional celebrity contracts and has at least 2 celebrity endorsements each year. a company cannot expect that the benefits of winning a contract will outweigh the associated costs until the company's overall celebrity rating exceeds 150 in each geographic region. ht violation