Brands want celebrity endorsement fee to be cut in light of COVID effects

Companies have been forced to reconsider their advertising strategies, including celebrity endorsement deals in the wake of the lockdown imposed to prevent the spread of the Covid-19 pandemic. As per the report of a survey conducted by the Indian Institute of Human Brands (IIHB), 64% of the 110 firms polled are in favor of a reduction in fee of celebrities endorsing brands.

The respondents have divided opinion on the percentage of cut in fees of the top 10 celebrities including cricketer Virat Kohli and Bollywood Actors Akshay Kumar, Alia Bhatt, Ranveer Singh, Deepika Padukone. 22% feel that the endorsement fees shall come down by 20-30%, while 15% feel it should be 30-40% whereas 12% are of the opinion that minimum 40-50% cut should be considered.

Going by the industry estimates, it is known that Virat Kohli is the most expensive celebrity charging ₹5-5.5 crore a day to endorse Puma, Wrogn and Manyavar ethnic clothing among others. Increasing popularity of Alia Bhatt has her charging ₹1-2 crore a day for promoting Frooti, Garnier, Vicco toothpaste and Lay’s etc.

M.S. Dhoni, Rohit Sharma, Hrithik Roshan and Kangana Ranaut falling under the category of ‘second tier celebrities’ are not to be spared either as similar percentage  of marketers demand similar percentage reduction in the endorsement fees.

With sharp decline in consumer demand and uncertainty in the market, 65% of the marketer respondents expect brand ambassadors to offer a significant reduction in the fees themselves, even in the contracts currently in force.

It is still not known whether celebrities would welcome this proposed reduction by the marketers or resort to ending the contract, latter being an imprudent decision in the face of the current economic scenario.

However, a senior talent management executive said, “The most amicable solution would be to suspend the contract for the term of lockdown or simply extend it by another four to six months. The best way forward is to negotiate so that it serves both the parties,” 

Tuhin Mishra, managing director of Baseline Ventures said, “Owing to unprecedented times that covid-19 has brought, some brands have approached us looking at an extension window or slight delay in fee payment along with contract extension by a few months,” 

“These requests are backed by genuine reasons and athletes understand the situation. It’s not rampant but some brands are facing challenges and we are working with them to negotiate the terms which serve both the parties,” he added.

However, the ongoing crisis on the financial front has not deterred the belief of the marketers in the power of celebrity endorsements.