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Luxury brand ambassadors: how to manage the reputational risks

August 2, 2022

Celebrity brand ambassadors can supercharge sales of luxury products and help reach new audiences. But be ready to protect your brand against reputational damage should your ambassador fall from grace.
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It’s a fact of modern marketing that celebrities sell. Fans who follow them on social media often feel they know them, almost as a friend. They want to look like them, dress like them and get a little bit of the lifestyle for themselves.

An endorsement from a high profile celebrity can see sales rocket and raise your profile overnight.

It’s a very potent force, especially in luxury, where brand associations are so important. But, as we’ve seen from high profile cases, it doesn’t always work out as intended.

It’s a very potent force, especially in luxury, where brand associations are so important. But, as we’ve seen from high profile cases, it doesn’t always work out as intended.”

Alexandra Walker | Broker Assistant, WTW

So how can you manage the risks of celebrity endorsement while still reaping the rewards?

Just as with any investment, brands considering going down this road need to do careful due diligence and have a plan for how to respond if things go wrong.

The power of a brand ambassador

The brand ambassador relationship is different to other affiliations such as sponsorship. They don’t just wear or advertise the product, they’re an advocate who can talk about the brand and actively promote it through their platforms.

If they do this well, it can not only lift sales, but also create a well of social capital that can benefit you, for example by building goodwill that makes you more resilient should your company take a mis-step.

By bringing their fanbase to your products, ambassadors can enable you to sell into markets that were previously underdeveloped or out of reach.

We’ve seen this with members of K-pop bands endorsing high-end products from Dior, Tiffany and Bulgari, helping to expand the appeal of those brands to younger audiences in Asia and globally.

The risks of getting it wrong

The downside of working so closely with a celebrity is that you’re effectively employing someone to be the face of your brand, yet you may have very little control over their actions.

People will instantly connect your product with them, meaning you need to manage the fallout if they do something bad.

People will instantly connect your product with them, meaning you need to manage the fallout if they do something bad.”

Alexandra Walker | Broker Assistant, WTW

Similarly, if they say something on social media that offends, even if that wasn’t their intention, it can cause a storm that travels round the world in minutes, potentially resulting in significant reputational damage.

Even without a scandal, there can be pitfalls in the relationship. If the celebrity does not genuinely use or like your product, this can be found out on social media, and could erode trust in your brand.

There’s also the risk that their other current, or previous, endorsements may conflict with your brand, or that something that happened a long time ago could come to light that blows up negatively and undermines the value they add to the brand.

How to minimize the risks and maximize the benefits

There are steps you can take to make sure your ambassador is good fit for your brand, reduce your reputational risks and respond effectively if a crisis occurs.

  1. 01

    Do thorough due diligence

    Invest in the selection process. Research the previous collaborations, projects, and personal actions of the potential ambassador.

    Make sure your chosen ambassador doesn’t have any conflicts of interest before signing up with them. Write detailed moral clauses in your contracts so that you are protected financially if the ambassador does not live up to your values.

  2. 02

    Make sure they are credible

    A brand ambassador not only needs to be compatible with your products, but also have an authentic interest in them. They must be able to talk about them convincingly, respond to media interest, build connections, and engage their fans positively.

  3. 03

    Be wary of influencers

    A famous social media influencer might seem a good choice as a brand ambassador. But be careful. In the UK, the Committee of Advertising Practice has issued guidance that all endorsement posts by influencers need to be marked as advertising which they’ve been paid to do.

    This can undermine the purpose of the celebrity being an advocate for the brand.

  4. 04

    Be quick to respond

    When a brand ambassador does or says something wrong, it’s important to get on the front foot immediately.

    Research has shown that brands that make no public statement and take no action generally do poorly, while companies that engage with a situation and handle it well come out ahead.

  5. 05

    Avoid kneejerk reactions

    Acknowledging the situation quickly and being proactive does not mean making instant judgements or cutting ties with the celebrity without having all the facts.

    We’ve seen high profile cases where brands stuck by a star whose reputation was questioned and reaped the rewards when they won their case.

  6. 06

    Have a plan if things go wrong

    If a brand ambassador falls from grace they can threaten to bring your reptation down with them. You should have a comprehensive crisis plan in place backed by the right resources and know-how.

    The plan should cover how to respond to the situation, minimizing financial losses and rebuilding any unavoidable damage to your reputation.

A helping hand: WTW reputational risk

WTW has partnered with some of the global leaders in this field to develop a holistic solution that can help prevent a crisis happening and support the response and recovery if it does occur.

Planning

Our Reputational Risk Readiness Review can help organizations define and quantify their reputational risks, identify the potential impacts and map any gaps that need mitigation.

Prevention

To get ahead of events and prevent potential reputational issues escalating into a crisis, the powerful Polecat platform offers real-time horizon scanning.

AI-powered algorithms synthesize data from online and social media channels into dashboards and risk alerts for relevant media.

Response

WTW offers access to experienced crisis communications experts who have managed crisis situations of all types around the world, from advice on media handling and strategy to leadership statements and speeches.

Risk transfer

Our reputational risk insurance product offers up to $50 million cover for loss of gross profit as a result of a significant adverse publicity event. This includes immediate interim payments to get through the crisis and support spread over up to 12 months to help you stay afloat in the aftermath.

Rehabilitation

Our experts will work with you over the longer term to develop campaigns and communications to help you turn the tide of public opinion back in your favor.

To find out more about our Reputational Crisis Insurance and Risk Management Solution, please get in touch.

Disclosure

Willis Towers Watson offers insurance-related services through its appropriately licensed and authorised companies in each country in which Willis Towers Watson operates. For further authorisation and regulatory details about our Willis Towers Watson legal entities, operating in your country, please refer to our Willis Towers Watson website.

It is a regulatory requirement for us to consider our local licensing requirements.

Contacts

Richard Sheldon
Head of Specialty Broking & Senior Director, Carrier Management

Kevin Velan
Director, National Product Recall Team

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