From Clothing to Crypto, Celebrity-Owned Brands and Endorsements are Bigger Than Ever

For more than a century, celebrity product endorsements have been a mainstay of Americana and its countless advertising campaigns for one simple reason; they work. Usually.

While far from foolproof, the use of a familiar face or popular person to move merchandise or boost brand awareness has proven time and again to be a sound investment that is usually worth every penny it costs.

But at a time when social media and streaming video platforms have become dominant purveyors of news and information and leveled the content distribution game that was once controlled by TV, radio, newspapers and magazines, a growing number of celebrities and athletes are cutting the middleman out of the picture and plying their likeness to their own product — rather than somebody else’s.

In the case of Sean Combs, the rapper turned designer turned serial entrepreneur who just repurchased his namesake clothing line out of bankruptcy for pennies on the dollar just six years after he sold it, the buy-it-in trend makes perfect sense.

“I’m ready to reclaim ownership of the brand, build a team of visionary designers and global partners to write the next chapter of Sean John’s legacy,” Combs said after his winning bid late last month. While he pointed to the emergence and ongoing popularity of streetwear fashion as part of the reason he bought back the brand, the move clearly is on-trend and comes at a time when scores of other celebrity-backed brand deals have been filling the headlines for the past year.

Sneaker magnate Michael Jordan, whose off-court endorsements deals have exponentially eclipsed his earnings from 15 seasons in the NBA, was back in the news recently after making his 19th Wheaties cereal box appearance.

Never to be outdone — or outsized — the 7’1” 350-pound basketball legend Shaquille O’Neal has worked up a monstrous portfolio of endorsements and deals, but none greater than his stake in Authentic Brands Group, or ABG.  O’Neal is reported to be the second largest shareholder in the New York-based firm that owns and manages more than 40 media, entertainment, and lifestyle retail brands ranging from Marilyn Monroe to Eddie Bauer.

So large and topical has the celebrity-owned brand watch concept become that outfits like the U.K’s Online Bettors Guide publish an annual ranking of the highest earning celebrity businesses, which is currently topped by Kanye West ($1.7 billion in sales), Dr. Dre with $1.5 billion, and Jessica Simpson in third place overseeing her namesake clothing line that is sold in 600 stores and nets over $1 billion a year in sales.

Kim Kardashian is another self-branded tycoon who has forsaken endorsement deals in favor of outright ownership of most of the products she promotes, a strategy that has made the 41-year old style icon a billionaire.

To be sure, there is a long history and a wide array of goods and services that are either owned by a celebrity or affix a famous name to themselves, a trend that is especially deep among athlete-owned restaurants or actors who have launched health and beauty care lines, but is expanding into new product areas such as non-fungible tokens (NFTs) and cryptocurrencies.

While some might argue that Elon Musk is a corporate executive rather than a true celebrity, his notoriety, name recognition, clout and influence in the cryptocurrency markets are second to none and he is notoriously not shy about using them.

Other big-name backers lending their likeness to the budding digital domain include NFL quarterback Tom Brady and his supermodel wife Gisele Bundchen, Paris Hilton and rap star Snoop Dog, to name a few.

Backfires and Bumps

As much as Hollywood is famed for its happy endings, one celebrity endorsed and owned company that has not had a great year is actress Jessica Alba’s personal care products firm, The Honest Company. In less than eight months, the newly listed company has seen its stock go from over $20 per share to around $8 as no amount of star-power, testimonials or celebrity endorsements seem sufficient to stem the slide.

Colin Kaepernick’s recent efforts to launch a SPAC is another example of an endorsed product that went south last month.

To be sure, the catalog of busted celebrity endorsement or ownership deals is small in comparison to those that work out, the disproportionate embarrassment and shame associated with an endorsee gone bad can be as ruinous for a brand as it is for the fallen celebrity. Cyclist and cancer survivor Lance Armstrong’s rapid fall from grace — and banishment from endorsement deals — is one example of the risk involved in making these types of high-profile but narrow business bets.

It’s part of the reason why retailers, such as Walmart, are investing heavily in lesser-known names and internet-famous influencers to push new products and partnerships, at a fraction of the cost.

While it is clearly easier to simply sign on to a celebrity endorsement deal and be done with it, the big money being made, and shift being seen, in this arena is not coming from lending out fame, but rather, from taking control of the whole process via the rise in outright ownership.