In this celebrity-soaked culture, an endorsement by a movie star or professional athlete can help bring a product free publicity, boost its market share, and endow it with a little caché. After all, marketers and product strategists find that many people take cues from celebrities on the proper choice of shoes and soda, hotels and batteries, cars and underwear. Whether it’s Bill Cosby pitching Jell-O or Jerry Seinfeld singing the praises of the American Express card, it seems to work.
But is it a sound strategy for investor relations professionals to cultivate celebrity endorsements? After all, selling stocks is famously a retail business. And in a world where investors have a seemingly endless array of stocks, bonds, mutual funds and exchange-traded funds to choose from, it seems that a celebrity’s backing could help provide an edge.
Indeed, there is a small and growing culture of celebrity stock-picking, although it involves mostly minor celebrities. Wayne Rogers, who played Trapper John on the popular 1970s-era sitcom M*A*S*H, has been appearing on Fox News Channel’s Cashin’ In. Mind you, Rogers is a Princeton University graduate with his own financial advisory firm. Last September, Lenny Dykstra, the former star baseball player for the New York Mets and Philadelphia Phillies, began writing a column for theStreet.com, an online news site.
Meanwhile, Playboy and Tradingmarkets.com are running a year-long stock-picking contest in which models assemble model portfolios. Whoever is up the most at the end of the year will receive $50,000 to donate to the charity of her choice. Through early March, Amy Sue Cooper (‘cybergirl of the year’) was up an impressive 21.84 percent and Deanna Brooks (‘Miss May 1998’) was up 10.25 percent – their portfolios were healthily beating the broad stock market indices. While these celebrity stock pickers generally stick to large-cap names like Microsoft or Amgen, it’s a sure bet Amy Sue Cooper has introduced some of her fans to lesser-known choices like Pacific Ethanol, an alternative energy firm that she picked because she’s a self-described ‘tree hugger’.
On the other hand, celebrity – not to mention celebrities themselves – can be fickle. So the tactic of trying to build a base of long-term shareholders by having big names endorse stocks doesn’t always work. Take the case of Howard Stern, the shock jock with a huge following. In January, he made a long-planned jump from Viacom to Sirius Satellite Radio, which offered him a $500 mn compensation package and several million shares. In the run-up to the changeover, the self-promoting Stern promoted Sirius the company – and, indirectly, Sirius the stock. And it performed quite well. But once Stern set up shop at Sirius in January, the promotion ceased – and Sirius’ stock has since lost more than 20 percent.
Of course, for any well-known individual to serve on the board of directors of a publicly held company is another form of endorsement. And here, too, the record of celebrities is less than stellar. Tour de France Champion Lance Armstrong is on the board of directors of Morgans Hotel Group, whose tragically hip portfolio includes London’s St Martins Lane. The company went public in February, and is down about 9.5 percent. Sidney Poitier served on the board of Disney during a period in which the media giant’s stock underperformed.
And there are plainly times when having the fate of your stock intertwined with the fate of a celebrity can bring more trouble than it’s worth. Infinity Broadcasting, the radio company that first brought Howard Stern to prominence, faced a dicey situation when its celebrity board member, former football great OJ Simpson, was arrested and charged with the murder of his wife in 1994.
