Brands expect celebrity fees to drop 20-30%: IIHB

There has been overwhelming negative news on the business and economic front for the last 3 months. Retail has been shuttered; consumer buying has come to a screeching standstill; television has faced a complete drought because of non-availability of fresh content; WFH has meant that everyone is home and not getting dressed or buying new clothes or shoes or cosmetics … Brands have seriously been impacted, and the outlook in most categories continues to be tepid. As such, many brand managers have been talking in hushed tones about “sharing the load” with not just agency partners, media houses, content agencies but also their celebrity endorsers.

Read Also : 84% don’t want celebrities to endorse Chinese brands: IIHB

To quantify the expectations of brand owners, the Indian Institute of Human Brands (IIHB) conducted a survey, reaching out to 110 clients to figure out what they expect in terms of celebrity compensation, going forward.

64% clients said celebrity endorsement fee should come down

15% clients felt the fees will not come down despite the inclement business conditions; 22% had no opinion

Of the clients that felt that the endorsement fee should head southwards, for Top 10 celebrities like Virat Kohli, Akshay Kumar, Deepika, Ranveer, Ranbir, Alia and the like, 22% felt it should come down by 20-30% ; 15% felt it should reduce by 30-40% ; 12% felt it should reduce by 40-50% ; just 11% felt that the downward revision should be 10-20%. 4% clients went as far as to say that celebrity endorsement fee should come down by 50% or more

For the Top 10-20, second tier celebrities like MS Dhoni, Rohit Sharma, Hrithik Roshan, Kangana Ranaut and similar, 25% clients felt that the fees for such celebrities should come down by 20-30% ; 14% clients felt celebrity fees should reduce by 30-40% while 12% clients felt the reduction should be in the 40-50% range

Even in the current contracts in force, 65% clients felt that the celebrity should reduce fee by a significant amount : as much as 25% clients said a 30-40% reduction should be suo moto offered by the brand ambassadors; 19% clients said the reduction should be atleast 20-30%

Simultaneously, 64% clients felt that the celebrities should offer to extend the tenure of current contracts. As much as 41% clients felt that the extension in tenure should be 3 months or more; 21% clients felt that atleast a 3 months extension would be fair to both parties

36% clients wanted both reduction in fees, and extension in tenure of contracts

Despite wanting major concessions and reductions, the good news for celebrities is that the faith of clients in brand ambassadors has not really ebbed despite the downturn

54% clients said that even if the IPL does not happen this year, they would still want a cricket endorsee

51% clients said that even if India does not play internationally this year, they would still want a cricketer as an endorser

When asked if the value of the Bollywood celebrity would diminish if movies start to release only on Netflix/OTT, 54% said it did not impact their selection

55% clients said they would continue to hire a celebrity ambassador despite the sluggish economy

“The survey findings are interesting at two levels. They indicate continued trust and faith in celebrities by brand owners. The possibility of almost no cricket, and the diminishing of the aura of filmstars sans cinema releases, does not seem to be impacting clients in any negative way. However, given that the entire business and economy are in big trouble, brand owners expect celebrities to also take a hit in incomes, and also show visible concern by giving extensions in current contracts because of the hiatus of the past 100+ days that all businesses have suffered,” says Dr. Sandeep Goyal, Chief Mentor of IIHB.

The IIHB survey also covered the perceived performance of celebrities during the lockdowns. The survey results will be released separately.