What was Michael Phelps thinking?
Last week, the most decorated Olympian of all time and arguably one of Under Armour’s most valuable brand ambassadors to date appeared on the cover of Sports Illustrated with six medals around his neck and a Nike swoosh clearly visible on his pants.
While there’s plenty of speculation as to why Phelps appeared in the photo donning clothing bearing the trademark of one of his key sponsor’s top rivals, the bottom line is that Under Armour likely isn’t happy about it. Sports Illustrated reaches more than 18 million people, resulting in about $453,000 worth of brand exposure for Nike, according to Apex Marketing Group Inc., and that’s before the photo went viral.
Those skeptical of endorsement deals may not understand why Phelps’ Sports Illustrated appearance was so cringe-worthy. The simple fact is that Phelps’ influence (along with other celebrity endorsements) generate a great deal of value for Under Armour. Ad Age reported that Under Armour apparel sales have gone up 28 per cent year-over-year with the help of endorsement deals with athletes like Phelps, PGA golfer Jordan Spieth and NBA All-Star Steph Curry, and are expected to hit $7.5-billion by 2018.
Endorsement deals can be extremely beneficial to both the brand and the ambassador if executed correctly and authentically. Celebrities have vast and engaged followings with a receptive fan base. From a brand perspective, an endorsement can be used to build brand equity and establish a deep connection with consumers.
Brand partnerships also offer a lucrative opportunity for athletes. In fact, many of the top athletes make more in endorsements than they do in salary. Their value as a brand is in their ability to be a pitchman and a source of inspiration to fans.
For instance, last year Puma signed sprinter Andre De Grasse for $11.25-million (U.S), the largest opening contract in the history of track and field. And this was before the 21-year old had even set foot on the Olympic stage.
Although it was a risky investment for Puma, clearly it has paid off. With Usain Bolt also on its roster, Puma has aligned itself with two of the fastest men in the world and placed itself at the epicentre of the marquee event at the Summer Olympics. At only 21 years of age, De Grasse is a valuable investment for the future.
But history has proven that not all endorsements result in a winning relationship. The recent fiasco involving U.S. Olympic swimmer Ryan Lochte has resulted in the Olympian losing his major sponsors, including Speedo, Ralph Lauren and Gentle Hair Removal. Lochte came under fire after admitting to “over-exaggerating” an armed robbery incident during the 2016 Rio Olympics that drew a firestorm of media attention, causing high profile brands to break ties with the athlete, not unlike what happened with Tiger Woods several years ago.
Brand partnerships can be a great investment but should always be approached with caution. Here’s a few things for athletes and brands to keep in mind:
You’re always on
The proliferation of social media means that every celebrity and athlete needs to be “on” at all times. Smartphone video cameras and instant downloads make it easier to spot inconsistencies, therefore, celebrities need to take precautions in both their personal and professional lives, or else risk losing out on major sponsorship deals. Gone are the days where one could show up to a public event wearing one brand and head home in another without anyone taking notice. Consistency is key.
Authenticity
Since athletes must be “on” at all times, choosing a brand that feels authentic is imperative. If you truly like and believe in a brand, it can make everyone’s job easier and minimize opportunities for contradictions.
Remember the partnership between NBA powerhouse LeBron James’ partnership with fast food chain McDonald’s? From the outset the relationship was doomed, with fans challenged to find the connection between consuming sausage McMuffins and being a high performance athlete. Inauthenticity was clear, especially when James said eating McDonald’s was one of the unhealthy habits he kicked since coming into the NBA. James and McDonald’s weren’t fooling anyone.
Prepare for the worst
Brand ambassadors are human beings and that means they make mistakes, just like everybody else. The level of severity of those mistakes can determine whether or not a brand chooses to end a partnership or stand by their athlete. Regardless, brands need to be prepared for the worst. This means conducting media training, having PR professionals available for consultation 24/7 and having a contingency plan in place in case you find yourself in a less than desirable media position.
Just Creally is the co-founder at North Strategic. This post originally appeared on LinkedIn.
