Oprah factor: How celebrities can make – or break – your brand

Will she, or won't she? Will Oprah Winfrey join the long list of public celebrities – including various army generals, numerous lawyers, a newspaper owner, a movie star, not to mention the incumbent real estate developer and reality TV star – who have served as presidents of the United States since 1789?

The public debate on the possibility of Oprah’s candidature made me wonder about the pros and cons of a celebrity endorsement to a business or start-up.

Many young – and also mature – businesses seek the PR exposure that a well-known public face can give.

Richard Branson, founder of the Virgin Group, is frequently invited to be associated with new ventures, and indeed was in Dublin recently to open the Cool Planet Experience at Powerscourt House.

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William Shatner, who plays Captain Kirk in the sci-fi TV and movie series Star Trek, has endorsed several start-ups, among them Priceline. com. He is rumoured to then have made multiple millions by cashing out stock options granted to him by the company, after Priceline.com went public during the dotcom boom. Oprah herself not only endorsed Weight Watchers, but also directly invested and joined its board of directors two years ago. Her holding is now worth over $300 million (€246 million).

Sometimes really thoughtful gifts can achieve considerably more impact than a fee or equity

Celebrity endorsement takes careful thought. Advance preparation is critical: if your smart device app and website are not sufficiently attractive; if your social media and phone teams are under capacity; if you cannot fulfil a flood of product orders, then all those thousands of enquiries generated by the announcement of a celebrity behind your brand may well rapidly disappear.

Worst response

Even if you are adequately prepared for a deluge of potential inquiries, the surge will only be temporary unless you can encourage your evangelist to periodically return to promote your brand. You have to think through in advance how you are going to continue to have access to your chosen star. A business update perhaps once every quarter, ideally face to face even just for a few minutes, will remind your advocate that your company still exists. The worst response from your celebrity to an inquiry about you sometime in the future, from a potential investor, or journalist, would be: “Who?”

If what your start-up is offering is only mediocre, a celebrity endorsement probably will not make it a more acceptable product. If, however, your product is cool and exciting, how much are you willing to pay for an endorsement? Many celebrities will seek a cash fee, usually very substantial. But others, like Shatner with Priceline.com, may seek stock options: the right to buy your equity in the future, at a low price agreed today. And some, like Oprah in the case of Weight Watchers, may even directly invest. Equity and stock option schemes carry the advantage over plain old cash in that it may be possible to negotiate a vesting schedule, over which the issuing of reward is tied to future performance. If your celebrity ceases to appropriately promote your brand in the future, despite your best efforts at providing regular business updates, then any unvested equity lapses and returns unissued to your company.

Sometimes really thoughtful gifts can achieve considerably more impact than a fee or equity, and certainly do not cost as much. The founders of My1stYears.com, an online, personalised baby gifts store, sent an embroidered teddy bear, personalised baby booties and blanket to Elton John and David Furnish when their first son Zachary arrived. The reaction was captured on video, and has been highly valuable to the company.

Lapsed angel

Despite your best considerations and strategic reflection, there remains the risk that, for some reason well beyond your own control or influence, your chosen star falls from grace in the public eye. Having a lapsed angel associated with your brand, and perhaps even as a shareholder in your start-up, could certainly be disastrous. Anti-social or even criminal behaviour by well-known personalities does occasionally occur and can be very public. You would do well to prepare a contingency plan in advance.

Personal networks operate with informal but definite mutuality

But perhaps you value a celebrity endorsement not for the PR that could be generated, but rather for the accompanying Rolodex and network of business contacts which your target may have. You do not seek mass media attention, but rather appropriate high-level business introductions in your target market, made by your chosen celeb. You want an evangelist who knows your market, and can bring business contacts rather than consumer eyeballs and mass media attention. In my experience, such personal networks operate with informal but definite mutuality. If an interesting start-up is introduced by one VIP to another, then a quid pro quo is unsaid but nevertheless expected at some point in the future. It is probably prudent to understand what consequences may be latent: for example, in being introduced by your celebrity to a new business contact and thus a new opportunity, might you then be expected to work with their own pet start-up project?

Ultimately it comes down to your judgment of the likely reaction in your designated market of the announcement of a celebrity visitor. As, no doubt, Donald Trump is musing about Oprah.