Ad Agencies: Reputation Insurance Is on the Rise for Celebrity Endorsements

The New York Times is reporting that insurers are being “inundated” with inquiries from companies seeking to protect their brands.

“Many companies take out death and disability insurance to cover themselves in the event that an athlete or celebrity endorser dies or is injured while under contract. In a new wrinkle, more companies are trying to insure against the potential loss of sales when an athlete product endorser is involved in a scandal,” according to the Times article.

After all, if someone like Tiger Woods can suddenly become a liability to companies that were linked to him through his endorsements, how many celebrity/athlete endorsements are really safe bets?  That’s exactly the point of my previous posts on this subject.

“Insurance policies can cover money paid to athletes as well as the cost of producing and booking television commercials, print advertisements and other promotions,” the Times article notes. “Some insurers will also cover the costs of new commercials with replacement athletes.”

Insurers say they base their assumptions on how much revenue grows after an athlete or celebrity became a company endorser, but no amount of insurance is going to protect a good corporate name if it gets tied to a scandal.

As one underwriter put it in the Times story, “Tiger Woods has made people think about their reputations. These days, people don’t worry about the office burning down, but about their intellectual property being damaged.”

Don Beehler provides public relations consulting services to small- and medium-sized advertising agencies and businesses.

Celebrity Endorsements Can Be Problematic for Ad Agencies

Michael Vick, the former NFL quarterback who recently was released from prison for a dog-fighting conviction, is having a hard time finding a team that wants him. No doubt one of the reasons is the public relations baggage he’d bring and the controversy he’d generate.

If he ever plays football again, it’s hard to imagine companies lining up with endorsement offers. At one time Vick was an admired athlete and an attractive endorsement prospect. But, once his criminal activities came to light, public admiration quickly turned to revulsion.

Even though Vick has served his time, his tarnished image will be difficult, if not impossible, to repair. No company wants to be tied into a PR nightmare like animal cruelty or have its product or service associated with someone who committed such heinous acts.

Don Beehler provides public relations consulting services to small- and medium-sized advertising agencies and businesses.