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Does Athlete Endorsements Boost Sales and Stock Returns of Brands?

Written by admin | Dec 3, 2015 12:00:00 AM
How can brands directly benefit by enlisting celebrity endorsers? Recently a study of athlete endorsements finds there is a positive pay-off to a firm's decision to sign an endorser, and that endorsements are associated with increasing sales in an absolute sense and relative to competing brands (Elberse 2012)*.
 
The major achievement by the athlete can remarkably affect sales and even make stock returns jump. Examining 110 celebrity endorsements announced between 1980 and 1992, we can find evidence of a positive impact: statistically significant 0.44% abnormal return on the announcement date, and a 0.54% abnormal return over a two-day event period. When Michael Jordan returned to professional basketball in 1995, five brands endorsed by him found their stock returns increase by nearly 2% on average, corresponding with more than $1 billion in market value.
 
In a more direct sense, the endorsements drive up sales. When an athlete's name is in the news, whether it be team success, individual success, or an incredible accomplishment, some of the attention being paid to them is translated to the brands they endorse as well. A look at Gatorade's stock performance over the years shows a correlation with the success of tennis star Maria Sharapova- when she did well, so did Gatorade. Photos of these athletes circulate, which is valuable for brands who have logo placement on the athlete's uniform, and people are looking at their social media accounts more often and may come across their post(s) endorsing your brand.
 
The evidence is there that athlete endorsements can provide positive returns for brands for a number of different reasons. So- worth looking into, right? To start looking for the perfect athlete endorsement for your brand, reach out to an OpenSponsorship rep today or send us an email at info@opensponsorship.com. No matter what your brand is or what your budget is, the perfect fit is out there. Let us help you find it!