Kim Kardashian and Matt Damon convinced you to buy crypto? The danger of the celeb sell
Are celebrities to blame for the crypto crash? No, but they certainly didn’t help. Here’s what consumers, and brands, need to be really thinking about when it comes to celebrity endorsements.
Matt Damon is just one celebrity who has recently been promoting cryptocurrency
Everybody knows the Kardashians. As Kanye’s ex. Or Pete Davidson’s current squeeze. For Poosh. Or for modeling. Or reality TV. Or social networking. Or Instagram posts or magazine covers. But mostly they’re all known for, well, being known. Such is the lot of a celebrity.
A while ago the Kardashians had to sever ties with a bank promoting a prepaid debit card featuring the images of Kim, Kourtney and Khloe. Apparently, the Kardashian Kard (yes, that was the name) unfairly targeted financially unsophisticated young adults who were enticed by the Kardashian family’s lifestyle of extravagance and luxury. The cards, it turned out, had outrageously high fees. Plus, charges for ATM withdrawals and talking with a phone operator. Yikes.
Eventually, the Kardashians were forced to end that particular promotional endorsement. A representative of the Kardashian brand wrote: “Unfortunately, the negative spotlight ... threatens everything for which they have worked.” So, no harm, no foul, right? Wrong. It turns out, prepaid debit cards don’t have the same protections of traditional debit cards and many consumers, ensnared by the Kardashian image, ultimately found they had been bamboozled. The Kardashians are known for lots of things, but one of them is not their credit card acumen. Spending? Perhaps. Issuing? Not so much.
And therein lies the problem. Tying anything to celebrity alone can get consumers to say: “I want to be more like them. Rich and famous. Beautiful. With beautiful clothes. I want to live their lives. I want to be famous too.” But unfortunately, details related to the product or service the celebrity happens to be hawking often get lost in that fog of fame.
Lots of actors lend their names to lots of things. It’s an additional income stream. Short-term paychecks between long-term gigs. But in nearly all instances, these actors are, well, acting. Sure, they are presenting the product or service in a way the brands hope will engage consumers. But they don’t appear on screen as experts, although that’s the part that gets glossed over. They’re not category authorities. They’re, well, actors. Oh, and liking an actor appearing in a commercial really isn’t enough to rely on as an absolute certification of authenticity for a product or service. It’s likely they haven’t done a great deal of due diligence on the companies they promote. Their agents and managers brought them another deal, and filming was only a couple of days, so easy money. Expertise is more important than likes when it comes to real endorsements. Particularly those of the financial kind.
Enter the celebrity crypto crash
The Kardashian experience should have been a cautionary tale. But alas, it was not. Especially when it came to cryptocurrencies, where a lot of celebrities have appeared urging consumers to invest in it. There was Larry David on the Super Bowl joking about it. That was one funny commercial. It suggested you could end up laughing all the way to the bank. Matt Damon urged potential investors in cryptocurrency that “fortune favors the brave,” whatever that means today. But hell, there aren’t a lot of actors braver than Damon, so why not?
But just to keep things in the real world for a moment, neither Matt nor Larry were being altruistic. They got paid. A lot. And they weren’t alone in lending their names and celebrity and images to the world of cryptocurrency. The lure of celebrity endorsements convinced LeBron James, Jamie Foxx, Ashton Kutcher, Gwyneth Paltrow and Reese Witherspoon to urge consumers to invest in cryptocurrencies. Oh, and Kim Kardashian, who you would have thought had learned her lesson, but apparently not. A promotional fee is, after all, a fee.
I mention all this because a couple of weeks ago the price of bitcoin plunged, erasing more than $200bn in wealth in just one day. That amount looks like this: $200,000,000,000. And according to NBC News, who reached out to several celebrity endorsers of bitcoin for comment, no one responded. Nobody. Nada. Zippo. In fairness, Kim Kardashian’s publicist did decline to comment. So much for the earlier comment regarding promoting anything that “threatens everything for which [the Kardashians] have worked” comment.
The market sell-off raised troubling questions about the stability of crypto and digital currency’s long-term value, validating the skeptics who have dismissed crypto as a fad or scam, one in which celebrities have actively participated. None of them are actually responsible for the crash, but they were paid to engage consumers with what appeared to be a legitimate investment. The lure of easy money, ie promotional fees, was too much to pass up. How many of the endorsers actually understood the category is a question for the ages. The other question – this time for the consumer – is why would you trust the advice of an actor who literally makes their living in a world of make-believe? In this socially-networked world, consumers have become way too celebrity-compliant.
So, if you’re planning on picking crypto investments based on celebrity endorsements or social media influencer promotions, here’s some advice: don’t. If you’re buying a coin because a particular celebrity likes it, chances are you’re going to end up with the fuzzy end of the investment lollipop. Celebrities have financial incentives to promote a particular coin. They’ve been paid to do it. And even those who have good motives may have different investing goals than you. Matt Damon is reportedly worth $170m. Oh, and accountants. Celebrities have lots and lots of accountants who advise them.
Why brands need to be careful with celebrity endorsements
But no matter how many accountants a celebrity has, ultimately a celebrity’s investment is in themselves, and the values and level of trust they can engender among consumers is paramount. Think of it as a co-branding exercise in search of some synergy. Product + Celebrity = ? Trust in the celebrity image and values can be quickly eroded when the combination is wrong. What happens when a well-known brand finds itself in a precarious and uncertain situation? Lawyers and PR ‘spin doctors’ notwithstanding, the situation can cause devastating effects to a celebrity-brand’s equity and, shortly thereafter, the celebrity-brand’s profitability.
That’s a self-evident truth for any brand. But the effects are even more pronounced and consuming when the association is invested mainly in a human being. We see how impermanent these brands can be, how dependent upon different degrees of public whim they turn out to be. Any sudden change in public perception of that ‘celebrity’ has an immediate – and potentially devastating – effect on the trust levers, and soon after its profitability.
But even then, effects differ dependent upon the degree to which the brand is invested in the human being. Looking back at nearly 30 years of misbehaving brands, three patterns of public response reveal themselves:
A brand that is heavily invested in an actual human being (think Matt Damon) will suffer more devastating negative effects during bad times
Brands that have a human being’s name on the label but do not have their entire brand equity and image invested in a single individual alone will see less damage to the brand during bad times
A brand that has no human association at all but finds itself assailed by similar negative publicity and public accusations will see about half the negative brand effects felt by a celebrity-endorsed brand
Anyway, things have gone very wrong with crypto recently. Unless you know how to research crypto coins for their long-term potential and the risks involved, you probably shouldn’t be investing in cryptocurrency – no matter which celebrity tells you it’s a good idea.
By the way, I’m willing to bet (real) money that’s it’s safe to assume that Ms Kardashian, Mr David and Mr Damon and their crowd of celebrity co-promoters were compensated in real-world currency and not the bitcoins they were so vociferously promoting.
Because even in the world of marketing and advertising, it turns out there’s a limit to what a celebrity will do.
Robert Passikoff, PhD, is founder and president, Brand Keys.