How brands can protect themselves when celebrities misbehave or breach the terms of their endorsement deals? What behaviour is deemed legitimate or not? Are these misbehaviours of brand ambassadors really impacting the brands?

1. ialci law of luxury goods & fashion series –
22 July 2014
What to do when
celebrities get it all
wrong? How brands can
protect themselves from
‘damaged reputation’
spillage

2. 2
Celebrity endorsement: time-tested tradition with
advertisers
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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So what’s the big deal?
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Kate Moss’ coke fiend
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Luis Suarez’s biting habit
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Tiger Woods’ womanizing & subsequent messy divorce
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

7. 7
Are luxury & fashion brands really affected by endorsers’
misbehavior?
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Threat of a serious hit on sales volumes!
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Risk especially high in largest luxury-consuming countries
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Other reasons brands may terminate a celebrity
endorsement?
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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It does not fit the bill, babe!
Ambassador’s overexposure
by constant appearance &
overshadowing of the brand
Lack of coherence
between the celebrity’s
personality & the brand’s
value & image
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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So what can luxury & fashion brands do to avoid being
affected by endorsers’ misbehavior?
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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The winning formula for
an endorsement deal
CELEBRITY
ENDORSEMENT
DUE
DILIGENCE
CONTRACT
TERMS
INSURANC
E
ONGOING
MONITORING
TERMINATION
RIGHTS
PRE-PLANNED
“CRISIS
MANAGEMENT”
MEDIA
STRATEGY
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Perform due diligence on proposed endorser
•Research whether proposed celebrity has done or said anything
in the past that might harm the brand
•Detailed, professional, thorough research
•Request celebrity to disclose all incidents in the past that could
affect the endorsement value
•Understand & accept the existing reputation of celebrity
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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The importance of getting the right match
•Choose celebrity endorsers who align with values
represented by brand
•Choose celebrity who resonates with 2 audiences:
1. Brand’s core demographic (current customers)
2. Brand’s aspirational demographic (target customers)
•Carefully selected celebrity partner + well-structured
endorsement deal = massive economic benefits for any
company
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Protective & thoughtful contractual terms
ENDORSEMENT
CONTRACT
MORAL
S
CLAUSE
DISCLOSURE
NO DEFAMATION
NO PUBLIC DISREPUTE
NO OFFENCE OF PUBLIC MORALSEXCLUSIVIT
Y CLAUSE
‘REVERSE
MORALITY
’ CLAUSE
GOOD CORPORATE CITIZEN
SUSPENSIO
N
EXTENDED INJURIES
SUSPENSION BY GOVERNING
BODY
‘MORAL CLAUSE’ EVENTS
TERMINATION
MISSED SCHEDULED APPEARANCES
WEARING COMPETITORS’ PRODUCTS
DISPARAGING BRAND
CELEBRITY
RETIRES/ABSENT
MISBEHAVIOR
CLAW BACK

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Insure yourself!
• Death, disability and disgrace insurance policies
• Emergence of several insurance products to address risks
exposures
• “what-if” scenarios
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Ongoing monitoring (offline & online)
• Measure the impact of traditional media and digital media
• Monitor the press, social medias, blogs for quotes about endorser
• Brand damage mitigation measures
Axelle Despiegelaere v L’Oreal
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Pre-planned ‘crisis management’ media strategy
• Gain control over how a damaging story is handled
• Establish whether or not the allegations are true
• Decide whether brand stands by the celebrity or terminate the
association
Nike v Tiger Woods
Nike v Lance Armstrong
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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Conclusion
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage

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ialci law of luxury goods series @ Pullman London St
Pancras:
What to do when celebrities get it all wrong? How
brands can protect themselves from ‘damaged
reputation’ spillage
Annabelle Gauberti
Founding partner
annabelle.gauberti@crefovi.com
@Crefovi on Twitter
What to do when celebrities get it all wrong? How brands can protect themselves from ‘damaged reputation’ spillage