Celebs Behaving Badly? Brands Turn to Disgrace Insurance

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When the Tiger Woods scandal broke, some marketers featuring the golf star couldn’t distance themselves from him fast enough, while others tried to weather the storm. Woods reportedly dropped around $32 million in sponsorship money as a result of his marital meanderings.

But Woods was just one high-profile example of the risk associated with using a celebrity for a product endorsement. British soccer star Wayne Rooney, famously skewered by the British press for his lascivious liaisons, will be summarily dumped from a Coca-Cola campaign in the U.S. next year.

That accounts for an increase in something known as ‘disgrace’ insurance. No surprise, brands want their backs covered when their ambassadors don’t keep theirs covered.[more]

“There has been an uptake in interest in this type of insurance,” says Mark Symons, an underwriter with Beazley, the Lloyd of London’s insurance group, to The Independent. “We have probably seen an increase of about 30% in the last couple of years. Either you lose the money [invested in a celebrity endorsement] or you get a policy that will pay the cost of you restarting a campaign.”

Brand marketers taking out such policies generally pay between half and one percent of the sum insured, according to a spokesperson for Lloyds. The premium could be lower for someone who “seems unlikely to cause a scandal.” (Of course, that could have been said about Woods.)

Some branding experts think the damage to the brand is questionable, however. Stephen Cheliotis, CEO of Britain’s Centre for Brand Analysis, also tells The Independent, “It’s difficult to quantify how much damage a scandal has caused. It would require a robust tracking method of the brand performance before and after the scandal, and proof of a direct causal link.”

It seems that the old adage, “Bad publicity is better than no publicity,” may indeed hold true.

 

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