Celebrity Endorsements & Crypto

January 08, 2023

Has the FTX collapse undermined the usefulness of celebrity endorsements? 
FTX hired major celebrities, such as Tom Brady, Stephen Curry, Larry David, and Gisele Bundchen, who were featured in Super Bowl commercials and national magazine ads, but now those celebrities are facing lawsuits. While the legal system will eventually sort out what responsibility, if any, they may have in perpetuating a fraud, how are advertisers and other celebrities reacting to this development? 
Larry David, Tom Brady, Gisele Bundchen, Stephen Curry endorsed FTX
Advertisers have long utilized “testimonials” from trusted, authoritative figures and endorsements from stars of stage, screen, and broadcast. 
Sophia Loren endorses Lux soap
Although the FTC has occasionally cracked down on some endorsements and, most recently, has created rules that require endorsement social media posts to be labeled as such, for the most part advertisers have relied on celebrity endorsements as a short cut for getting audience attention. Advertisers hope that fans of a superstar athlete will be more likely to wear the shoes, drive the car, consume the drink, or, perhaps, put their money into a crypto exchange precisely because they admire and trust that athlete. The qualities fans might admire in a celebrity—beauty, wealth, success—might rub off on them if they use the endorsed product. Or, even if no one seriously believes they will gain much by buying the endorsed product, at least they might feel a bit closer to the person they admire. 
Serena Williams endorses Nike
Not all advertisers have relied on endorsements and many advertisers have avoided them. Endorsements have down sides: they might bind the brand too closely to the celebrity, and if that celebrity generates negative publicity, that could impact the brand. 
Michael Jackson endorses Pepsi
Furthermore, some advertisers have viewed celebrity endorsements as ineffective because, at least in conventional advertising, audiences might view it as insincere and inauthentic. Consumers might cynically view the celebrity’s relationship with the brand as purely transactional rather than as a genuine endorsement. 
And now, with the FTX collapse, celebrities are being associated with an extremely negative event that might damage their own celebrity image. Rather than smart successful players, athletes such as Tom Brady and Stephen Curry, might be viewed by their fans as either fools (they had no idea) or knaves (they knew but didn’t care)—in either case, undermining their fans’ faith in them. 
Sam Bankman-Fried and Tom Brady
Likewise, Gisele Bundchen, the supermodel recently divorced from Tom Brady, risks her reputation as a savvy, assertive performer in a cutthroat industry. She was either naive or a cynical instrumentalist when she signed up as FTX’s “Head of Environmental & Social Initiatives,” claiming to share a “passion” for philanthropy with Sam Bankman-Fried.  (Her appearance at a Crypto Bahamas event to promote Effective Altruism is especially passionate.)
Gisele Bundchen endorses FTX
Will celebrities watching the blowback to all the other celebrities who endorsed various crypto schemes (including Matt Damon, Gwyneth Paltrow, Reese Witherspoon, and Spike Lee) now think twice about signing an endorsement deal? As one observer noted last spring during a crypto downturn, “If I were Matt Damon or Reese Witherspoon, I would be questioning my willingness to take on this kind of gig.” 
Or are the problematic endorsements limited to crypto? And celebrity endorsers from here on out will simply confine themselves to more reliable brands?  Will advertisers continue to see endorsements as an effective shortcut? Or, if audiences turn even more cynical about celebrity endorsements after FTX, as a risky strategy?


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