The Value of Celebrity Endorsements: a Stock Market Perspective

Ever since the start of commercial radio in the 20’s and the since the first silver screen entered the market, broadcasting messages by celebrities has been a tool employed to endorse products.”Just about every star was associated with one sponsor’s product he or she plugged.”(1). Over the years celebrity endorsement became an essential part of marketing (more than 25% of television ads feature celebrities)(5), for the endorser it became an easy way of generating an income while for the endorsing company it became a guaranteed way to reach a wide segment of potential clients.

When people typically view professional athletes they see the lavish lifestyle, they see the big contracts, and figure that they must be set up financially for the rest of their life. This is not the case though as becoming a professional athlete is similar to hitting the lottery just genetically. Being an athlete creates a large amount of income early in life, but that income decreases to zero once retirement comes around. The documentary Broke is a compilation of interviews and incidents that occurred which showcase the poor money management done by professional athletes. Whether the athlete played basketball, baseball, football, or was a boxer it did not matter there were multiple instances where an athlete that made millions in

The research shows that the earnings announcements of firms within an industry can impact the share prices of other firms in the same industry. This effect has been labelled as the ‘information transfer effect’. The ‘information transfer effect’ highlights the belief that share prices react to public information emanating from various sources—including

In thirteen years of golf, Tiger Woods has made over a billion dollars making him the highest paid athlete ever. He has been the highest paid athlete now for five years in a row. We all know that many people in the world watch him play every weekend and admire him, but is the amount of entertainment he provides really worth 128 million dollars a year? Tiger is only one of many professional athletes who are extremely overpaid. “People forget that sports is entertainment,” says Leonard Armato, a sports agent. Although professional athletes provide entertainment for millions of viewers around the world, they are overpaid because the millions of dollars that they make could be distributed more evenly throughout society and go to things of a

1.The athlete isn’t technically making money off their playing ability they’re making the money from the name on the back of their jersey.

cash receipts. Its total worth was $2.8 billion. Of this, 60% came from farm sales of milk and

hundred sixty-five million to be exact. Each former player got at least five million dollars in

around 6 million dollars a year. Most argue that the athletes are paid enough when it comes to

Candidates are allowed to have a maximum of: $2,700 per election, limit applies separately to each election. Primaries, runoffs and general elections are considered separate elections. $5,000 per calendar year to a PAC (political action committee) that supports the candidate and to fund other election-related activities. $10,000 per calendar year to a State or local party committee. $33,400 per calendar year to a national party committee. $100 in currency (cash) to any political committee. (Anonymous cash contributions may not exceed $50.) Contributions exceeding $100 must be made by check, money order or other written instrument “Fec gov”. End of the year financial reports filed with the Federal Election Commission shed some light on where congressional candidates are positioning themselves ahead of the June primary and, looking further, to the general election in November. Philanthropist Susie Lee reported $646,563 cash-on-hand and took in $724,774 in contributions during 2015. She's also lent her campaign $150,000, filings show. Her cash-on-hand comes within striking distance of Hardy's war chest. He reported $659,592 cash-on-hand in his filing. Lee also had support from the gaming industry, including $5,400 from Horn buckle,

The NCAA produces $6 billion every year from, selling tickets, university apparel, luxury suits and boxes, and television packages such as ESPN Full Court. All of these factors deal with either the players on the field or court.

Attention material/ Credibility Material: Wouldn't it be great to make 31.3 million dollars a year and an additional 47 million dollars in endorsements simply to play a game? Michael Jordan, along with many other professional athletes thinks so. In the 1996 season, playing 3,106 minutes Michael Jordan made 170,000 dollars a day whether he played or not, equalling out to be 160 dollars a second. Even more unbelievable are Mike Tyson's earnings in his match with

To most people one million dollars a lot of money, to most people one thousand dollars is a lot, but even though it is hard to believe, to some people these figures mean nothing. It is no secret that professional athletes particularly those who play soccer, golf, and race F1 cars make big bucks, but people do not realize to what extent.

controlled 37 percent of its market with revenue of about $1.2 million. Immediately after the

Furthermore there are other researches as well which suggest that the approach of using a celebrity to endorse a product can not be viewed as a general practice of using any celebrity for any product endorsement. Pornpitakpan (2003), while discussing match-up hypothesis, describes the results of a study by Erdogen et al (2001) which suggests that "British advertising agency managers considered various criteria like celebrity- target audience match, celebrity-product match, overall image of the celebrity, cost of hiring the celebrity, celebrity trustworthiness, controversy risk, celebrity familiarity, celebrity prior endorsements, celebrity likeability, risk of celebrity overshadowing the brands, celebrity expertise, celebrity profession and celebrity physical attractiveness". A match between the target market and the endorser is important for effectively transmitting right message to target audience. For example, the advertisements which are produced by Pepsi, are mostly targeted for youths and so the celebrity endorsers that they use in their advertisements are young personalities. The match up hypothesis goes true for the multiple celebrity advertising as well. A good example of this is the Pulse Polio campaign taken up in India to eradicate the polio

million in 5 companies in 1999 to approximately $12 million in 4 companies in 2000.