We may all be familiar with the idea of paid endorsements by athletes, thinking of Michael Jordan’s 1984 deal with Nike to create Air Jordans, but he’s certainly not the only celebrity that has been paid a substantial sum to get behind Nike product. In recent years, Nike has made a 5-year, 100-million-dollar endorsement deal with Tiger Woods, and a lifetime endorsement deal with LeBron James that may be worth as much as $1 billion!
Why are these athletes worth so much as endorsers to Nike? Is it only because of their sports prowess that consumers may want to emulate them?
That may start the phenomenon, but it’s also likely that the influence they are able to leverage is because of the good works, charitable donations, and philanthropy to which they dedicate their time off the courts and greens. One can quickly be inspired by LeBron James’ charitable efforts on his website: https://www.lebronjames.com/. Tiger Woods chartable efforts aren’t limited to his playing in the “Champions for Charity” golf match, as one can see through his foundation to promote education: https://tgrfoundation.org/
Their public personas have grown, as has their base of followers, to the point that they aren’t merely providing an endorsement as sports superstars, but becoming brand ambassadors. Their good works and public persona reflect well on Nike, and Nike’s consumers are happy to have those ambassadors associated with what they wear, so it’s a win-win.
Who else can leverage their reputation?
A newer term on the landscape is an “influencer”, which is generally used to refer to social media marketing involving endorsements and product placement from influencers, people and organizations.
Anyone can become an “influencer” if they develop a base they can influence, and this has quickly turned into a multi-billion-dollar industry. Every industry has those that float to the top, and it’s not easy to become a superstar with a base to leverage. According to Pew Research looking at a week of usage in 2019, only 10% of the most popular videos on YouTube drew 79% of the views.
Social media stars and influencers can gain revenue through a variety of sources. A primary source is one that is easy to understand: advertising revenue. An original content creator has a large following of subscribers and viewers on a platform such as YouTube, ads are shown to the viewers as that content is consumed, and the creator gets a cut of that revenue. The creator isn’t necessarily choosing or endorsing any products in this dynamic.
If they wish to further leverage their reputation, they can use affiliate links to direct their viewers to particular products or companies, specify that content is sponsored, and platforms such as YouTube, Twitch, and Snapchat even have built-in tools to help them disclose and promote paid partnerships. This can represent serious income. According to The WIRED Guide to Influencers: “Luka Sabbat, a model-turned-actor with two million followers on Instagram can charge upwards of $40,000 to promote products in story and feed posts”. The cost of a single promotional photo posted by an Instagram Influencer with a million followers starts at $10,000.”
However, they are not limited to overt endorsements. Product placement can be important part of their story, as well as a direct callout to particular products or even posting negative reviews of competitors’ products.
The goal for an “influencer” is authenticity. Trust isn’t built overnight, and it can be quickly broken if their audience thinks their content is becoming commercialized or if they make a recommendation that their audience doesn’t approve of. Just like Lebron and Tiger, they must become the ambassadors of whatever brand they are working with.
Who is the ambassador for Garden State Trust Company?
One of the essentials of the trust business is to protect financial privacy, so we aren’t able to promote our services in a conventional way based on our clients. However, the greatest influencer of all time has never been a celebrity, or social media icon that’s built a following, or even an expert reviewer who has done a non-biased comparison of products.
The greatest influencer has always been someone giving a direct referral based on their own experience.
When someone gives a referral to Garden State Trust Company, they are becoming our brand ambassador, and wagering their reputation on the fact that we’ll do a good job. We are proud to handle each referral with care, without any sales pressure, so that trust continues to foster and grow for our current and future clients.
If you think of anyone who might benefit from our trust and wealth management services, please let us know.