Why some celebrities are associating with brands as co-owners?

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Traditional fixed fee or fixed-term celebrity endorsement models are giving way to partnership structures

By Venkata Susmita Biswas

A number of celebrities have partnered with brands — across categories like fashion, lifestyle, food and beverages — to co-own and co-create product labels. True Blue from Arvind Fashion Brands and Sachin Tendulkar, YWC from Yuvraj Singh and Suditi Industries, Deepika Padukone’s All About You in collaboration with Myntra, and Tiger Shroff’s Prowl with Mojostar are a few examples of celebrity-led fashion brands that have hit the market recently.

What this means is that the traditional fixed fee or fixed-term celebrity endorsement models are giving way to partnership structures, through royalty arrangements, joint ventures, equity share or merchandising partnerships. Aviral Jain, MD, Duff & Phelps, says, “Deals like these mean more skin in the game for the celebrity and a long-term upside if the brand does well. Additionally, such structures give brands the advantage of low upfront cash investment.”

In the West, Hollywood celebrities like Rihanna, Gwyneth Paltrow, Jessica Alba and George Clooney have all tread this path, either by launching their own product labels, lending their names to other brands or investing in businesses.

“Because stars stand to gain high dividends over a period of time, some tend to see co-ownership as an exit plan or a retirement plan,” says Jogesh Lulla, COO, Cornerstone Sport, a sports management firm.

Say it like you own it

Ideally, the celebrity invested in the brand takes design and business decisions, thus truly ‘owning the brand’. At least, that’s how it is portrayed to consumers. For example, when Puma launched the Basket Classic One8 sneakers in collaboration with Virat Kohli, a video of how the cricketer conceived the shoe was put out.

In most cases though, brand endorsement is marketed as co-curation or co-ownership. “The brand still stands to gain because people view these brands as an extension of their favourite celebrities,” says Harish Bijoor, CEO, Harish Bijoor Consults. He adds that the co-ownership model could find more takers especially in the fashion space, as brands can get high returns in a short period with the support of a celebrity who is willing to pick up some stake.

Tricky wicket

Alagu Balaraman, partner and MD, Indian operations, CGN Associates, a management consultancy firm, says that although this tactic may attract attention, “its credibility is weakening”. Having the celebrity actually participate in the brand as a part owner, and not just be seen as endorsing it commercially, is crucial.

Another challenge is making the celebrity understand that in an entrepreneurial set-up, there are bound to be setbacks. Unlike brand endorsements, the gains could be delayed in a co-ownership set-up. Pallavi Barman, head, marketing and operations, HRX, says, “A true investment is when the celebrity reaps benefits only after a period of time, and not instantaneously, in which case the deal is merely a glorified brand endorsement.”

Abhishek Ganguly, MD, Puma India, says that such collaborations seem easy, but “not everyone can pull them off”. Puma claims to have earned Rs 100 crore from the sale of Kohli-backed One8 sneakers in the first year of its launch, and attributes it to the “strong match between the brand and celebrity”.

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