Celebrities have long been adored by marketers looking to pedal their product. But with some firms turning their back on stars, is the curtain finally coming down on celebrity endorsements?

‘Sex sells', or so the saying goes. But if there's one thing that businesses believe sells even better than sex, it's celebrity. Marketers have long clamoured to encourage high-profile stars to endorse their product or service. Coca-Cola used glamorous actresses and opera singers like Hilda Clark and Lilian Nordica in its advertising campaigns at the turn of the last century. And in the late ‘30s, Grand Ole Opry country musicians were regularly singing the praises of sponsors on the radio.

But celebrity endorsements are commonplace in the modern market - and the sums of money involved are a world away from those pocketed by Hank Williams Sr and his country companions. Catherine Zeta-Jones recently pocketed a staggering US million, two-year deal with T-Mobile according to AdWeek. But even that pales into comparison to the US million that PepsiCo is rumoured to have paid Britney Spears for her promotional run with the Pepsi brand.

So what is it that companies expect to get in return for these enormous sums? Certainly a campaign headed by a high-profile star provides valuable differentiation for a product, service or company in a crowded marketplace. And these can be particularly effective in a market where there is little difference between various providers' offerings, such as telecom services.

And celebrity marketing is also a valuable way to build instant name recognition, attaching yourself to a person who is well-known to achieve awareness that otherwise might have taken years of marketing. "Because of the very nature of being a celebrity these people are well-known and so brands try to tap into their fame," says William Grobel, Consultant at brand management firm Intangible Business.

"In a sense it is extension of word of mouth, which is the most influential decision-maker - we feel we know these celebrities and so we trust what they say, the same as we would trust what a friend told us. They may also look to deflect some of the celebrity's values on to their own brand They may hope that by employing the celebrities they can engender some of what they stand for themselves and consumers will be able to identify with that. It helps give the brand a personality that the market can engage with."

Million dollar hunt
When it comes to choosing which star will be the face of a new campaign, companies choose according to what quality they want to engender. If they want to lend the product or service an air of credibility, for instance, firms may hire a celebrity expert, such as a TV chef for a food store's marketing. The choice will also reflect whether the company is looking to reinforce or re-establish their brand.

"Somebody like Coca-Cola would look to Britney Spears to reinforce its position because she is a teen icon and that is the company's core audience," explains Gavan Stewart, Founder of Touchdown Brand Affinity Marketing. "Whereas a company like Brylcreem, for instance, which was a pretty tired and dated brand, wanted to work with a celebrity to change and update its image, which is why it hired David Beckham. So you can reinforce your position or change perception of your brand with a celebrity because the public has a perception of that star."

Nevertheless, irrespective of the celebrity-brand fit sought out by some firms, the celebrity world's biggest names naturally remain those most in demand. The world of sports is a particularly aggressive battleground as companies bid enormous sums to capture the services of the biggest stars. Tiger Woods, for instance, signed a five-year US0 million endorsing contract with Nike shortly after his 21st birthday, which at the time was the largest endorsing deal ever signed by an athlete.

Swooping for sports stars such as Woods while they were still young is a well-worn tactic for firms looking to save cash in the long-term. A generation after Nike revolutionized the marketing of athletic footwear by signing a 21-year-old NBA rookie, Michael Jordan, to an endorsement deal, firms are looking to middle schools to find the next megastar to wear their equipment. Brands such as Nike, Adidas and Reebok lead a multi-million dollar hunt, inviting exciting young players from ninth and 10th grades to attend special sports camps run by the company and where they receive free branded shoes and other gear.

"The sums are vast in sports, but the rewards are also vast if you get the right talent and you nurture them," says Stewart. "You have a variety of different brands and large sports clubs scouring the country for sportspeople because if you can sign them early then you can hopefully get a degree of loyalty from the celebrity and get them at a better price. These sorts of schools of excellence are not just operating in the area of sports - you can also have McDonald's and Burger King sponsoring schools and education."

Celebrity scandal
But with Nike signing LeBron James to a US million contract before he even received his high school diploma, is the whole process spinning out of control? Certainly there are signs that the celebrity endorsement era may be showing cracks. Xavier Adam, Managing Director of the Adam Media Consultancy, believes that the problem lies in the growing belief that celebrity endorsements are a cure-all solution.

"I see it all the time - companies see that things aren't going well so they slap a bit of PR on it and hope that it will sort it all out," he explains. "Quite often celebrity endorsements aren't all that well thought through. They should be asking themselves whether the person is right for what they're trying to do, but instead it's just a case of "they're famous, people know them, let's go ahead and do it." To the outside world it can seem a lot more planned than it is and it is actually quite haphazard and can be done on a whim."

Some recent celebrity signings certainly lend credence to this suggestion - both Wal-Mart's campaign featuring Beyonce Knowles (can you imagine Destiny's Child walking up the frozen food aisle at Wal-Mart?) and Reebok's recent decision to team with film star Scarlett Johansson have raised eyebrows.

But even the cutest celebrity campaigns can come unglued unexpectedly from time to time. When Britney Spears was the face of Pepsi she was famously photographed drinking Coca-Cola, for instance. More seriously, LA Lakers' Kobe Bryant saw many of his endorsement contracts terminated in the wake of a rape allegation in 2003. Most recently, companies including Chanel, Burberry and H&M all dropped Kate Moss from their publicity campaigns when a British tabloid published pictures of the supermodel allegedly snorting cocaine.

A celebrity scandal can wreak havoc on a company that has spent millions on marketing based around the star. Celebrities are often committed to a large schedule of events as part of their contracts and if the digression is serious enough such events would have to be pulled, having a serious impact on a global marketing initiative that may have taken up to 12 months to create, produce and execute.

"If you are working with a celebrities you are dealing with human beings and they are fallible," emphasizes Stewart. "That means if they get up to something that has an impact on your brand, it could cost you an awful lot of money. So you have to be aware of the positives and the negatives when you are dealing with celebrities." Concerned about the negatives, a growing number of brands are now seeking alternative arrangements to boost their marketing profile, according to Stewart. Highlighting the recent example of Motorola's hook up with D&G, he suggests that there may be a move away from endorsements towards the importing of robust brand value from other firms.

"More and more brands are choosing to ignore celebrities and work with other brands simply because it is a safer bet. You don't have to pay a fee to them and you can get a deal up and running by reciprocal marketing. This trend is really starting to emerge because large global brands have got to be very protective over their image and working with a brand is less of a risk than working with a celebrity."

The cult of celebrity
There are other signs that firms are becoming disillusioned with the cult of celebrity. Some brands are shying away from big names and ditching endorsements not because of the skyrocketing fees or scandals but because marketing execs are expressing concerns over their brands being overshadowed by the stars who are promoting them. Soft drink giant Pepsi, for instance, has recently indicated that it dropped Beyonce Knowles and Britney Spears from a campaign because the Pepsi brand didn't get the promotion they were paying for, with the stars instead getting all the attention.

"The celebrity and the agent tend to be the winners," suggests Adam. "With the amount of money that companies pay out to celebrities, they have to get back a lot and there are probably cheaper ways they could make that number of sales. Having a celebrity helps you, but does it help you to the degree of X million dollars? I'm just not sure. But with a lot of the bigger firms, especially if they see a competitor doing it, they assume that they also need to do it. For the celebrities the endorsement also gives them coverage and helps them shift records or films."

There certainly appear to be the beginnings of a shift away from the trusted endorsement strategy in the marketing world. An increasing number of advertisements are now featuring, for instance, customers and staff - Dove, for example, has built a whole campaign around the general public, featuring users of its moisturiser in an ad for ‘real' people. "Celebrity endorsements are coming to maturity," suggests Grobel. "We are saturated by celebrities, day-in-day-out in all different mediums and advertisers are beginning to feel that too. So we could see slightly less celebrity endorsements in the future, maybe going back to just using staff or suppliers or fictional characters - which obviously cost less money, are easier to control and there is less risk attached to it."

So if the endorsements start drying up, where will the celebrities get their meal tickets now? It seems you shouldn't underestimate the power of celebrity, for although the future may see fewer stars peddling products and services, another door is opening up - in the boardroom. A share package worth almost US million recently secured supermodel Elle Macpherson's place on the board of surfwear fashion firm Hot Tuna. As an Executive Director, Macpherson will advise the company on product development, brand positioning and sales strategy.

She is the latest in a string of celebrity boardroom signings that also number former Pink Floyd drummer Nick Mason, who sits on the board of HR Owen, an upmarket car dealer. "Maybe this is a way of changing from endorsements to actually bringing them into the businesses and using their contacts and network skills and image internally," concludes Grobel. "Rather than just use their image, they are actually using the qualities that the celebrities have built up for themselves over the years, applying their knowledge and experience. And it is a lot cheaper!"