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CHAPTER 1

INTRODUCTION

1.1 Advertising

Among the wonders of the twentieth century has been the ability of the mass media repeatedly to

expose audiences numbered in millions to campaigns of coordinated messages. In the post-

World War I years it was assumed that exposure equaled persuasion and that media content

therefore was the all- important object of study or censure (Krugman, 1965).

Advertising is a public announcement to inform and persuade people to buy a product, a

service or an idea.

An advertisement would include any notice, circular, label, wrapper or any other document or

any announcement made orally, or by means of producing or transmitting light, sound or smoke.

1.1 (a) Origin and Development

Prior to the nineteenth century, printed advertisements were primitive in both their styles and

their means of communication. With a few exceptions, advertisements were little more than

announcements of whatever goods a merchant had to offer or whatever services someone desired

or offered. Indeed, until about 1800, the meaning of the word “advertisement” was not yet

clearly distinct from “announcement”; both commercial and governmental announcements

appeared side by side in newspapers and on tavern doors. The announcement format sufficed,

however, for marketers and consumers alike because the goods and services offered before 1800

were traditional ones. There was no need to educate the public about their uses and desirability.

Also, demand generally exceeded supply, so there was no need for promotion. It was only

necessary to announce their availability, quality, and affordability of one’s product to sell it.

People already knew what they wanted (Lurito, pp31-32).

The first advertisement may have been a sign painted on a wall of a building. The early outdoor-

advertising competitors were town criers employed by merchants to praise their goods. People of

Mohenjodaro, the city of the Indus Valley Civilization, used to walk down the streets of

Mohenjo beating drums and shouting their own and others’ messages. Then there used to be

signs on shops or drinking houses to indicate the name of the shop or the shop owner. The highly

urbanised cities of Harappa and Mohenjodaro employed signs to sell the many types of art and

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craft items that our ancient civilizations were famous for. In the Indian subcontinent, during

Emperor Ashoka’s reign, stones or pillars were used for making public announcements. There

have always been advertisements of some sort or the other. The form of advertising for the

transmission of information dates back to ancient Greece and Rome, when town criers,

drummers and signs were used to carry information for advertising goods and services.

Excavations in the ancient Roman town of Pompeii have shown evidence of some form of

advertising. The ancient Romans painted notices of theatre performances, games, entertainments

and public events on the walls of the busy centres of the town. Roman dairies had a sign outside

with a goat on it and their schools had a picture of a boy being whipped. These signs were often

used because many people could not read. It was much later that public notices were placed in

the ‘Acta Diurna’, a wall newspaper that provided daily news of politics in ancient Rome in 131

BC (Exhibit 1.1).

Exhibit 1.1

Acta Diurna- AWall Newspaper of Ancient Rome

1

Exhibit 1.2

An Ancient Gazette of Ancient Rio de Janeiro

1 http://chester..br/archives/2005/07 

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2

2 http://informeparasita.blogspot.com/ 

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Lost-and-found advertising on papyrus3 was common in Ancient Greece and Ancient Rome.

Exhibit 1.3

Lost-and-found advertising on papyrus

4

It was Gutenberg’s invention of the moveable-type printing press in 1450 that resulted in the

mass production of posters and circulars. The first advertisement printed in English was a

handbill printed in 1472. It was primarily an announcement of a prayer book for sale.5 As

consumerism became more formalized in seventeenth century Europe, newspapers emerged in

the great centers of Paris and London. They were quiet popular, and as early as the 1680s, ad-

only shopping guides appeared in London. Outdoor advertising became so prevalent that King

Charles II stepped in with likely the first gesture of government regulation. Apparently, he

outlawed any banners that blocked the all- too- scarce London sunlight.

In 1704, a wealthy plantation owner wanted to sell his estate in Oyster Bay, along the Gold Coast

of Long Island, New York. To sell it, he had to let people know it was for sale. But this seller

was shrewd enough to realize that the bigger the market, the better his chances were of getting a

3 Paper made from the papyrus plant by cutting it in strips, was used by ancient Greeks, Egyptians and Romans. 4 http://www.jamescumminsbookseller.com/news/ 5 Roshan Tolani,encarta.msn.com/encyclopedia_761564279_5/Advertising.html#s21 

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good price. So he bought some space in the Boston News-Letter and announced that his house

was for sale. This is how the advertisement appeared:

At Oyster Bay on Long- Island in the Province of New York,

There is a very good Fulling- Mill, to be Let or Sold, as also

A plantation, having on it a large new Brick House,

And another good house by it for a Kitchin and work house,

With a Barn, Stable and so on, a Young Orchard, and

20 acre clear land. The mill is to be Let with or without the Plantation:

Enquire of Mr. William Bradford Printer in New York,

And know further.6

By the 17th century, classified ads were appearing regularly in England’s newsweeklies. These

ads featured simple descriptions of products and their prices. Illustrations and color appeared in

advertisements in the late 19th century. The first advertising agency, which was set up by

Volney Palmer in Boston in 1841, introduced the commission system to the business by offering

a discount of 25% on ad space in newspapers. This move marked the formal beginning of space

selling. Initially, most ad agencies were nothing more than brokers for ad space in newspapers.

Advertisers created their own ads. N.W. Ayer & Son became the first full-service agency in

1869. The first modern ‘advertising agency’ started operating around 1875 in the United States

of America, when Mr N. W. Ayer and Sons of Philadelphia offered to produce advertisements

and also to contract for space in newspapers. During World War I, advertising became a

medium for propaganda. Governments used advertising to persuade their citizens to join the

military. This period also saw increased mechanization of the industry, making ads more costly.7

The field of advertising was revolutionized with the advent of radio and television as popular

media of communication in this century. While the press would cover only the literate

population, the radio and television have widely covered both literates and non-literates.

Television and radio remain the most popular media in urban as well as rural areas. During the

1990s, the arrival of satellite television and internet has resulted in significant changes in the

field.

6 New York Times (January 12.1896):29 7 encarta.msn.com/encyclopedia_761564279_5/Advertising.html#s21  

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1.1 (b) Advertising in India

The history of advertising in India parallels the history of the Indian Press. The first issue of the

first newspaper of the Indian subcontinent was the ‘Bengal Gazette’ or the ‘Calcutta General

Advertiser’, started by James Augustus Hicky on January 29, 1780, carried a few advertisements.

During the early years the newspapers announced births, deaths, appointments, arrival and

departure of ships and sale of furniture. By the beginning of the 19th century the pattern of

advertising revealed a definite change. Even the daily newspapers announced themselves through

advertisements in existing periodicals. The power of advertising increased rapidly with the

growth in trade and commerce. By 1830, around three dozen newspapers and periodicals were

being published on a regular basis from India. With the rise of new industries, advertising, even

from British companies, increased. The growth of advertising in India is also linked to the

Swadeshi Movement (1920-1922), which gave impetus to Indian industries. Mahatma Gandhi

described Swadeshi as “a call to the consumer to be aware of the violence he is causing by

supporting those industries that result in poverty, harm to workers and to humans and other

creatures.” Swadeshi Movement was an attempt to take economic power from the British by the

use of domestic made products. Spinning the Charkha and wearing Khadi became a very

powerful tool to fight the British government.

The first Indian ad agency, the Indian Advertising Agency, was launched in the very early years

of the 20th century. On the other hand, B Dattaram & Co, located in Girgaum in Mumbai and

launched in 1905, also claims to be the oldest existing Indian agency! This was followed by the

launch of the Calcutta Advertising Agency in 1909. By the 1920s a number of Indian agencies

were working from the major Indian cities, the most important being the Modern Publicity

Company in Madras, Central Publicity Service in Bombay and Calcutta and the Oriental

Advertising Agency in Tiruchirapalli. In 1931, the first full-fledged Indian ad agency, the

National Advertising Service, was established. During the post independence era, the advertising

business was well on its way to growth and expansion. The Indian Society of Advertisers was

formed in 1951 and in May 1958, the Society of Advertising Practitioners was established and

advertising clubs came up in Bombay and Calcutta to promote higher standards of work.8

8 http://download.nos.org/srsec335new/ch17.pdf 

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1.1 (c ) The Emergence of New Mass Media

When new mass media—radio and cinema—became commercially available in the first part of

the 20th century, the advertising industry quickly took advantage of their reach, spread, and

popularity. This period of prosperity came to an end with the Wall Street crash of 1929, followed

by the Great Depression and World War II. Initially, a single business would sponsor a radio

program for a brief mention of its name. Later, sponsorship rights for a show were sold to

multiple businesses, a practice that soon became the norm.

The industry became more scientific in the 1960s. This period witnessed some of the most

creative ads of all time. Instead of focusing on the product, ads endeavored to strengthen the

brand and create an image for the company. Advertising also became subtler and more

intelligent, often adopting a conversational style. Advertising also turned into a major industry

in the 20th century. The advertising of the age cleverly used all media, including newspapers,

television, direct mail, radio, magazines, outdoor signs, and, of course, the Internet.

Two characteristics are held to typify present- day advertising: a sophisticated and subtle us of

persuasive techniques to encourage consumption (O’Shaughnessy & O’Shaughnessy, 2004), and

pervasive coverage through the use of a wide variety of media. In contrast, earlier advertising

practices are seen as being simpler and more information- based, with advertisements restricting

themselves to announcing the availability and utility of a product, and appearing to be less

pervasive (Leiss et al. 2005).

1.2 Celebrity Endorsements

1.2 (a) Introduction There has always been a joke in our house and probably many across the country about those

actors and actresses that endorse advertisements. "They really must be short of cash", we say,

although is it more than a lull in career that makes these people appear on advertisements? Many

are for cosmetic products, and you are lead to wonder how real the endorsements are, or whether

a celebrity will endorse a product just because they need the money.

Some instances are obvious. See the girl with the beautiful hair and try to be like her? Don't we

all do that from a very young age in life? What happens when beautiful actresses endorse beauty

products is that they become very real and those younger people are influenced by seeing their

favorite star saying that products that are available in the shops are the ones they use. It's a clever

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marketing strategy, and does work. Children and adults are influenced by celebrity

endorsements. The celebrities are raised to hero status and somehow this reputation translates

into big bucks for marketers. The thought process goes if a celebrity uses it; then it must be good.

This is great for the companies that use celebrity endorsements to advertise their products. But

what about their audience? Some adults have lost a lot of money pursuing a dream that a

celebrity handed to them. Celebrities advertise get rich quick schemes, exercise and weight loss

programs and easy real estate transactions. The public is then misled into believing in these pipe

dreams. Then we have the children to consider. When a child sees a celebrity, one of their

heroes, advertise a product they want to rush out and get it. This isn't always reasonable and

sometimes it is even harmful. It isn't too bad when a sports figure advertises running shoes but

what about when he advertises a tobacco or alcohol product. Celebrity endorsements mean big

bucks for the advertisers and manufacturers of a product. This is good for the economy. But,

caution must be used in choosing the products to endorse. We need to protect the young and

vulnerable9.

Celebrities are people who enjoy public recognition and who often have distinctive attributes

such as attractiveness and trustworthiness (McCracken 1989; Silvera and Austad 2004).

Endorsers of products or brands (sponsorship advertising) take on many forms including

identifiable people, unidentifiable (e.g. typical consumers), corporations or organization, and

inanimate figures (e.g. cartoon characters) (Stout and Moon, 1990). Recently, the public's

attention has focused on endorsements of identifiable people, more often referred to as

celebrities. In the U.S. alone, advertisers spend billions of dollars on celebrities in hopes that

they will cut through the clutter of advertising and bring positive effects such as increased brand

awareness and advertising recall, favorable attitudes toward the advertised brand, and increased

sales and profits. In addition, celebrity endorsements can also generate extensive PR effects and

provide an opportunity for the new brand be known to the public (Erdogan, Baker, and Tagg

2001). Given these benefits, celebrity endorsement has been a popular tactic not only in the U.S.

but also abroad. For example, in the U.S., approximately 25% of all television ads feature one or

more celebrities (Erdogan, Baker, and Tagg 2001). By comparison, the more extensive use of

9 Cynthia Harlan, “Celebrity endorsements: Assessing the trend of celebrities doing commercials”, www.helium.com

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celebrity endorsement has been reported in Korea and Japan where over 70% of TV commercials

feature celebrities in one form or another (Kilburn 1998; Kim 2006).

It seems that everywhere you look today; celebrities are becoming staples for corporate and

charitable events and campaigns. Their star power seems to enhance a brands image in the public

eye and adds interest to a story for a reporter or producer. Overall, celebrities help marketing and

PR departments create buzz.10 The word 'celebrity' might conjure up visions of beauty, glamour,

fame, fortune and all that is shiny and new. Added to this are images of celebrity diplomats and

activists, including Bono, Angelina Jolie and Bill Gates, meeting with world leaders to discuss

humanitarian issues of global significance (Mittal, Bhatnagar, 2011).

1.2 (b) History of Celebrity Endorsements

The history of celebrity endorsement of products dates back to the 1760s. Josiah Wedgwood, the

founder of the Wedgwood brand of pottery and chinaware, also called the father of the modern

brand ‘used royal endorsements and other marketing devices to create an aura around the name

of his company that gave the brand a value far beyond the attributes of the product itself.’11

Celebrity endorsing has been used as a tool for promoting brand awareness for over one hundred

years. One of the first signs of the potential marketing power of celebrities was discovered in the

late 1800's. Goodwin & Co, who produced Gypsy Queen, Old Judge, and other well-liked

cigarette brands, have been credited as the first company to issue tobacco baseball card on a

large scale. This New York firm devised this innovative marking strategy in order to gain a

competitive edge on its rivals. They soon realized the potential of inserting baseball cards

directly into packets of cigarettes and quickly added other famous celebrities ranging from

actresses to boxers. The age of the celebrity endorser was here to stay (Rudd, 2002).

Between 1875 and 1900, the trade card, either handed along with the product to the customer or

inserted in the packaging itself, popularized celebrity endorsing. The card had a picture of the

celebrity and a product description, but had no quote or a direct testimonial by the celebrity.

Trade cards featured actresses like Lily Langtry and Sarah Bernhardt and baseball players like

Cy Young and Ty Cobb. Author Mark Twain featured on three brands, Great Mark Cigars and

Mark Twain Cigars and Mark Twain flour.12 The cigarette industry signed on entertainment

10 Dana Marciniak, “Event Planning Intersection: Where Brands Meet Celebrities”, Public Relations Tactics, March 2009 11 A “Mindshare” Manifesto, Eric Almquist and Kenneth J. Roberts, http://www.lippincottmercer.com 12 Ketcham, Steve, “Celebrity endorsements are a thing of the past (and present)”, The Old Times, February 2001 

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personalities like comedians Fatty Arbuckle and Harry Bulger when Murad Cigarettes used them

in its ads in 1905. Later cigarette brand endorsers were Henry Fonda, Jack Benny, Ethel

Barrymore and Fred Astaire. Kodas Cigarettes began including baseball cards in their packs of

cigars. These baseball cards were intended to be given away as gifts to loyal customers. People

soon started buying the cigarettes for the cards and endorsements caught on fast with marketers.

Though no evidence exists to show whether these brands had the express permission of the

celebrities, it is known that Honus Wagner, a baseball player stopped a tobacco company that

was using his name and baseball card to sell its products. They became so famous later, that one

of those cards was sold on eBay in July 2000 for $1.1 million.13 One of the oldest brands of

breakfast cereal in America, Wheaties had sport-stars like Babe Ruth, Joe DiMaggio, Jackie

Robinson, Chris Evert, Micheal Johnson, Micheal Jordan and Tiger Woods endorsing it.

Wheaties aggressively adopted celebrity endorsing and 46 of the 51 players selected for the 1939

Major League All-Star Baseball Game endorsed Wheaties at the time.14

Till the early 1930s, the major endorsers were athletes, but by 1945, movie stars like Charlie

Chaplin were more sought-after. With the rising popularity of the color TV in 1965, TV

personalities and entertainers also became popular. By 1975, one in eight TV commercials

featured a celebrity. Researchers Robert Clark and Ignatius Horstmann of Boston University

studied a collection of 1000 endorsement advertisements from 1920-1970 and found from that

they were predominantly used by cigarettes, beauty products, beverages and audio equipment.15

By 1980, companies started making products around celebrities. Standard Brands Inc, for

example, created a new candy bar called “Reggie”, after New York Yankees’ superstar Reggie

Jackson. Faberge Inc., introduced an entire new line of Farrah Fawcett hair-care products.

Athlete endorsements picked up again in 1984 when Nike discovered a young and extremely

talented basketball player, Michael Jordan (Exhibit 1). Nike relied heavily on Jordan’s ‘image’ to

make itself a global mega-brand. In 1989, out of 59 celebrities employed by Coke, 48 were

athletes. Almost 75%of all sports-related products like clothes and shoes used athletes to endorse

their brands. Athletes like Jordan, Bo Jackson, Chris Evert and Bill Cosby dominated the late

1980 s. The growth in the number of sports endorsers was attributed to changes in the sports

industry that began in the 1970s with free agency. Free agency allowed an athlete to market

13 ibid 14 www.wheaties.com 

15 op cit “Celebrity Endorsements” 

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himself or herself for the best possible price to any team upon the expiration of a contract.16 “It

allowed salaries, because of competition, to really increase exponentially. And when the salaries

started to go up, the popularity of sports in general started to go up. You had a combustible

combination that really spawned the sports marketing industry that we’re in now, and the dollars

that athletes earn for endorsements are directly tied to how much they earn on the field,”17

explained Bob Williams, President of Burns Celebrity Sports, a 20-year-old firm that represents

companies in sponsorship contracts with celebrities.

Exhibit 1.4

“His Airness” Micheal Jordan

Since 1984, when he was drafted by the Chicago Bulls, Michael Jordan has endorsed around 70

products including brands like Nike, Gatorade, MCI and McDonalds in nearly 100 television

commercials. The range of products varied from cars, toys, cereals, bubble gum and greeting

cards to underwear and lotteries. As early as in 1998, he was known to be more successful as a

corporate spokesman than a basketball star. His earnings from corporate deals fetched him $45

million, and his earnings from sports stood at $35 million18. Jordan was credited with blurring

the lines of ethnicity in consumer appeal. “Michael made advertisers come to terms with the fact

that, in today’s market, consumers are colorblind,”19 said Bob Wiliams, president of Burns

Celebrity Sports. “A lot of Michael Jordan’s heroic status came from advertising itself. More

people have seen him in advertising than they have seen him play basketball. Nike had become

iconoclastic, and their advertising is omnipresent. His commercials made him so popular he was

able to secure other commercial deals,20” added Bernie Washington of Washington Daniels

Advertising Inc. in Chicago.

Jordan was followed by several athletes who signed on high-paying endorsement deals like Tiger

Woods, Shaquille O’Neal, and recently, the Williams sisters, but Rick Burton, director of the

sports marketing center at the University of Oregon calls him ‘the most amazing endorser ever’.

“He’s handsome, articulate, classy. He had a purity to his performance on court and off. It’s

16 op cit “The celebrity sell: advertisers use black celebrity endorsers to pump up sales” 17 Ibid 18 Peyser, Marc, Ehrenfeld Temma and Davis, Alisha, “No Heirs to Air Jordan”, Newsweek, January 25th 1999 19 op cit “The celebrity sell: advertisers use black celebrity endorsers to pump up sales” 20 op cit “The celebrity sell: advertisers use black celebrity endorsers to pump up sales” 

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hard to find the perfect celebrity these days,”21he said. Companies justified the heavy investment

in endorsements by the fact that these deals resulted in substantial increases in sales. In his first

full season under the Nike logo, the Air Jordan line, for example totaled $153 million in

revenue.22There are many who would call him the greatest athlete endorser of all times.23

Exhibit 1.5

Michael Jordan Endorsing Nike

24

Exhibit 1.6

Michael Jordan Endorsing McDonald’s

21 op cit “No Heirs to Air Jordan” 22 Vancil, Mark, “Micheal Jordan: Phenomenon”, Hoop Magazine, December 1991 23 Rovell, Darren, “Jordan’s 10 greatest commercials ever”, http://espn.go.com 24 http://www.advertolog.com/nike/print‐outdoor/michael‐jordan‐340355/ 

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25

Exhibit 1.7

Michael Jordan Endorsing Wholegrain Wheaties

26

In the late 1990s, companies took endorsements to a new level by holding press conferences to

announce deals with celebrities. Celebrities were no longer just endorsers. They had become

spokespersons for the brand. In the case of sit-coms (Friends) and movies, the celebrities’

characters promoted the brands. In 1998, it was estimated that companies in the US spent $800

million on acquiring celebrities for advertisements, promotions and PR campaigns.

25 http://www.ioffer.com/c/Collectibles‐150000/michael+jordan?page=2 26 http://manitoba.inetgiant.ca/winnipeg/addetails/michael‐jordan‐signed‐wheaties‐box‐250/4276916 

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The total estimated endorsement commitments for 2004, for one company, Nike totaled $338.6

million. Multiple endorsements – both the company signing on several celebrities to promote a

brand and one celebrity endorsing various brands, sometimes switching between competitors had

become de rigueur. In 1999, one in five advertisements on TV featured a celebrity. An AdAge

study of the 20 most effective television ads of 2002 (Table 1.1(a)), celebrities like Britney

Spears featured in two-thirds of the ads.

Table 1.1 (a)

The Top 20 Most Remembered Spots – Jan., 1 to Dec., 15, 2002 RANK BRAND AD DESCRIPTION RECALL INDEX 1 Toys "R" Us Geoffrey prank calls competing toy store,

Nikko toys 254

2 Pepsi Twist Austin Powers punches Britney Spears 238 3 Toys "R" Us

Geoffrey reads to kids, Big Toy Book 237

4 Toys "R" Us Geoffrey at press conference, Chicken Dance Elmo

235

5 Burger King Burger King Black Stack BBQ Griller--Men in Black are Back

235

6 Pier 1 Imports Holiday--Kirstie Alley gives woman "mallectomy"

234

7 Old Navy Rugby Bunch--"Brady Bunch" parody, Opening credits

233

8 Ford Make your getaway," post -"24" premiere (:180)

232

9 Clairol Herbal Essences

Shampoo: Blonde in shower is into herbs, squeals w/ delight (:15)

232

10 Hanes Michael Jordan in locker room (:15) 231 11 Pepsi Britney Spears, through the years, drive in

(:30) 230

12 Campbell's Chicken Noodle Soup--Snowman Becomes kid

229

13 KFC Blazin' Strips--Jason Alexander at club (:15)

226

14 Pier 1 Imports 40th Anniversary Sale--Kirstie Alley jumps out of cake

225

15 Sears Sears Washer, dryer, fridge--rancid milk, "Fridge is broken"

224

16 KFC Popcorn Chicken--Barry Bonds bobblehead doll (:30)

224

17 KFC Popcorn Chicken--Free on June 20 224 18 Ford "Start your day," pre-"24" premiere (:180) 223 19 Old Navy Rugby Bunch--Boys playing basketball,

girls cheering 219

20 Discover Discover 2GO--People amazed by Keychain card

219

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The fact that more and more celebrities were willing to lend themselves to endorsement deals,

contributed to the increase in the number and value of the deals. While the money involved was

considered as one of the main reasons for signing deals, there have been cases of endorsements

that were based on pure altruistic motives – like Pierce Brosnan’s appeal on behalf of Down’s

syndrome in Ireland.27

Companies have openly admitted the direct influence of celebrities on the sales of their products.

Since the company signed Woods in 1996, Nike golf balls saw a $50 million revenue growth by

2002 to reach $250 million. “He’s definitely influenced sales. There was a great deal of

speculation, with Nike getting into the golf business. Some thought that it wasn’t going to be

authentic, but think we’ve proven people wrong and Tiger has definitely been the foil for us to

do that,” said Kel Devlin, director of sports marketing for Nike Golf. Woods’ first contract with

Nike was worth $40 million. In 2000, it was renegotiated to create a five-year contract estimated

at $125 million.28 Woods was rated the top most influential celebrity player of 2002 (Table 1.1

(b)).

Table 1.1(b)

The Top 10 Most Influential Celebrity Players of 2002 in the US Tiger Woods Venus Williams Micheal Jordan Shaquille O’Neal Allen Iverson Kobe Bryant Serena Williams George Foreman James Earl Jones Tom Toyner

Source: “Tiger Woods Tops List of America’s Leading Celebrity Endorsers; BLACK ENTERPRISE Announces Its Ranking of Top-Selling Superstars”, PR Newswire, August 20th 2002

During the past one hundred years, the commercial use of celebrities has evolved from simple

cigarette cards to multi-media messages with million-dollar contracts (Agrawl & Kamakura,

1995). The variety of celebrity endorsers has been transformed from a few baseball players and

27 O’Shea, Geraldine, “Resorting to celebrity acts”, http://www.marketing.ie 28 op cit “The celebrity sell: advertisers use black celebrity endorsers to pump up sales”

 

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athletes and now encompasses men, women, boys, and girls from the worlds of sports, films,

television, radio, music, and obscurity (McCracken, 1989).

1.2 (c ) Celebrity Endorsements In India

The crescendo of celebrities endorsing brands has been steadily increasing over the past 20 years

or so. Marketers overtly acknowledge the power of celebrity in influencing buyer's purchase

decision. They have firm a belief that likeability or a favorable attitude towards a brand is

created by the use of a celebrity. Crores of rupees spent per year on celebrity endorsement

contracts show that celebrities like Amitabh Bachchan, Shahrukh Khan and Sachin Tendulkar

play an important role for the advertising industry. It is an established fact that celebrity

endorsement can bestow unique features or special attributes upon a product that it may have

lacked otherwise.

Figure 1.1 (a)

29

Figure 1.1 (b)

29 http://www.indiantelevision.com/tamadex/y2k8/apr/tam14.php 

Share of celebrity endorsements on TV by profession, 2007

Share of celebrity endorsements on TV by profession, 2009

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30

Figure 1.1 (c )

30 http://www.indiantelevision.com/tamadex/y2k9/aug/tam32.php 

Share of celebrity endorsements on TV by profession, 2010

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31

In India from late 1970's and early 80's the new trend in advertising started. Brands started being

endorsed by celebrities. Hindi film and TV stars as well as sportspersons were roped in to

endorse prominent brands. Advertisements featuring stars like Late Jalal Agha (Pan Parag),

Tabassum (Prestige cookers), and Sunil Gavaskar and Juhi Chawla for Dinesh Suiting, Ravi

Shastri and Vivian Richards (Vimal), Persis Khambhata and Kapil Dev (Palmolive Shaving

cream) became common (Joshi & Ahluwalia, 2008).

Exhibit 1.8

A Snapshot of Development of Celebrity Endorsements in India

31 http://www.tamindia.com/tamindia/AdexNews/Celebrity%20TV%20H1%202010.html 

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32

Figure 1.1 (d)

 32 http://www.shohilmeghani.info/?p=260 

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Rise in Celebrity Endorsements since 2003

33

Different types of celebrities are used as endorsers in marketing campaigns. The majority of

celebrities used are either athletes or entertainers. As an example, movie star Tom Cruise, was

ranked as number 1 in the 2001 Forbes Celebrity Power 100 List. The list was based on earnings,

prominence on the web, magazine covers, television, radio, and newspaper clippings (Forbes,

2002). Some endorsements contracts are now sometimes so lucrative that many professionals in

sports and entertainment direct their careers to this end (Belch & Belch, 2001). According to the

2001 edition of the Burn Sports and Celebrities, Inc. poll, where more than 1500 advertising

agencies and corporate marketing executives were interviewed, Tiger Woods is now the sporting

world’s most appealing product endorser. His three major golf championships in 2001 earned

him $9 million in prize money on the PGA tour. This is peanuts compared to a deal he signed

with Nike. The five- year contract is partially tied to Nike’s golf division revenues and could

earn him more than $100 million (Forbes, 2002).

Though marketers should remember that celebrities are mere living beings like us and if they can

highlight the benefits or advantages of a brand they can also have some uncanny negative

33 http://www.indiantelevision.com/tamadex/y2k8/apr/tam14.php 

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impact. Theory and practice suggests that the use of stars and their unleashing power in

advertising generate a lot of publicity and attention from the public but the underline questions

are, do these stars really help a brand by increasing its sales? On the other hand, can they really

have an impact on the person's consumption pattern, thereby changing his brand preference?

How an advertisement featuring a celebrity can influence consumers buying decision and can

create an association between a brand and a common man.

1.3 The Two Sided- Effect of Celebrity Endorsements

Celebrity endorsements are capable of manifesting both favorable and adverse effects for the

brands with which they associate. The general belief among advertisers is that advertising

messages delivered by celebrities provide a higher degree of appeal, attention and possibly

message recall than those delivered by non-celebrities. Marketers also claim that celebrities

affect the credibility of the claims made, increase the memorability of the message, and may

provide a positive effect that could be generalized to the brand (Cooper, 1984). Despite the

potential benefits they can provide, celebrity advertising increases the marketers' financial risk.

Indeed, it is believed that using celebrities are an unnecessary risk unless they are very logically

related to the product (Beverage Industry 1989; USA Today 199534). In the history of advertising

— products or services, political parties or ideas — celebrities have played a seminal role in

boosting the bottom line. Whether what's on offer is a soft drink, beauty aid, ideology or public

health message, it's the celebrity endorsement that makes the difference between recognition and

anonymity. Unique selling propositions are best boosted when a popular credible figure vouches

for it. A Govinda who claims to wear a particular brand of banian impels scores to switch brands.

An Aishwarya Rai pledging her eyes motivates thousands to queue up to pledge theirs. A

Jayalalithaa or an MGR mouthing the party manifesto sends millions to the polling booth. As

long as the public persona's charisma is being used to promote something that's not bad for you,

why complain? Among the most successful celebrity endorsements are those that carry a public

health message or that create an awareness campaign.

If there is heightened awareness of the need for vaccination, of HIV-AIDS prevention or even

the need to seek treatment for tuberculosis, the credit goes largely to advertisements or events

that persuade people through popular figures. A celebrity carries credibility. She has mass

34 USA Today. Ads with Sports Jocks Outscore Finger Pointers. November 20,1995. 5B. 

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appeal, attracts attention, and has the power to stimulate emulative action. So what if the

endorser gets paid a bomb for it? A picture is said to be more eloquent than a thousand words.

A picture of the celebrity using the product or service is enough to send a strong message across

diverse groups and locations, transcending all kinds of barriers. Sports-persons and movie stars

have popular appeal. Even a good brand needs a catalyst to achieve its due market share. And

that little fillip from an endorsement can help instant recall that translates into sales.35

There are not many researchers who have embarked on the concept of negative information,

which celebrities’ causes for consumers’ evaluations of endorsed brands (Till & Shimp, 1998),

but still there are many different aspects on how negative information can be viewed.

Furthermore, Soderlund (2003) argues that celebrities can be perceived less trustworthy when

they are advertising too many brands (multiple brand endorsements) since the consumers get

diverse information. On one hand, a celebrity who his linked with positive information has a

greater opportunity to reach out the targeted audience. On the other hand, negative information

brings an association that decreases the trustworthiness of a celebrity and the fit with the brand

(Dimed, Joulyana, 2005). The use of celebrity endorsers has a high potential risk to advertisers

if the celebrity is subsequently found to have transgressed society’s norms (Miller, 1994).

Consumers may also form preconceived notions of what celebrities are like as people (Misra &

Beatty, 1990) which may further limit the range of products for which they are credible

endorsers.

Floyd Landis's potential as a product endorser dropped faster than a cyclist speeding down a

mountain road when he tested positive for synthetic testosterone after winning this summer's

Tour de France. Within the span of a week, Landis went from obscurity to fame to shame with

hardly a moment in between to celebrate his (short-lived) victory. Sports columnists like Selena

Roberts of The New York Times denounced him as a symbol of the ills not just of professional

cycling -- which can't seem to root out performance-enhancing drugs -- but of all pro sports. And

his positive drug test seriously set back the companies that had invested tens of millions in him

and his team in hopes of profiting from a victory in cycling's highest-profile event. Within weeks

of the positive test, Phonak, a Swiss hearing-aid maker, announced that it would drop its

35 http://timesofindia.indiatimes.com/home/opinion/edit-page/Do-celebrity-endorsements-help-sell-products/articleshow/1507842.cms 

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sponsorship, as did iShares, a subsidiary of Barclays, a British bank. iShares also said that it

would no longer fund any pro-cycling team or event. In today's economy, athletes and

celebrities push all manner of products and services, and their travails can tarnish, by association,

the brands and companies that they endorse.

1.3 (a) Advantages and Disadvantages from Using Celebrity Endorsements

Advantages from using Celebrity Endorsements

A celebrity can enhance brand equity (Till, 1998)

Consumers’ attitude toward a brand can be changed or affected by celebrity (Till, 1998).

Celebrity can contribute, freshen and add a new dimension for a brand (Till, 1998).

Culture road block can be manipulated by using celebrity with worldwide reputation

(Kaikati, 1987).

Celebrity is able to build brand credibility in a short period of time (Abbot et al., 2001).

Furthermore, Mullikin and Petty (2006) state that “appearing of celebrity in advertising

can built some independent credibility to the advertisement”.

Atkin and Block (1983) suggests that “celebrities may help advertisements stand out from

surrounding clutter, thus improving their communicative ability”

Advertisers believe that consumers will buy products associated with people they admire

and respect (Wright, 2000).

Celebrity endorsement can underpin competitive differential advantage among other

companies (Wright, 2000)

Celebrities make advertisement believable (Kamins et. al., 1989)

They help in brand name recognition (Petty, Cacioppo, Schermann, 1983)

Enhance message recall (Friedman and Friedman, 1979)

Influence consumer’s purchase intentions (Tripp, Jensen, Carlson, 1994)

Create a distinct personality to the endorsed brand (McCracken, 1989).

Disadvantages from using Celebrity Endorsements

Consumers’ skepticism; consumers might not believe that the endorsers really consume

the product that they endorse (Hsu and McDonald, 2002).

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Consumers give less credibility to celebrities who endorse many products (Tripp et al.,

1994).

On the one hand, single endorser for one product might be seen as boredom. On the other

hand, consumers might get confused by using multiple celebrity endorsement (Hsu and

McDonald, 2002).

Louie and Obermiller (2002) state that “celebrities who are blamed for negative events

(e.g. accidents) can have detrimental effects on the products they endorse”.

Another risk can arise if celebrity loses his/her fame, his/her image changes resulting to

contradicting image of endorsed brand

Vampire effect’ or ‘celebrity vamping’ can be perceived, when endorsing celebrity is too

attractive, drawing attention away from the product (Rossiter and Percy, 1997)

endorser’s effectiveness is reduced when there is a bad fit between the endorsing person

and the product (Till and Shimp, 1998)

1.4 Choice of Product Category

FMCG goods were chosen for the purpose of the study. FMCG is the fourth largest sector in the

Indian economy. The term FMCG refers to those retail goods that are generally replaced or fully

used up over a short period of days, weeks, months and within a year. As the economy was

facing the slowdown in demand in 2008, the FMCG sector did not witness any visible sign of

demand destruction, but is growing with healthy pace. During the July-September 2008 quarter

the aggregate revenues increased by 22% despite cost inflation and aggregate net profit grew by

almost 20% on yearly basis. The bunch of factors like increased spending power in rural

markets, appropriate pricing policies by companies, better product mix and organic and inorganic

expansion has shown consistent growth for the industry and is expected to continue the drive the

growth further.

Figure 1.1 (e)

SENSEX v/s BSE FMCG Index

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India is among the world’s youngest nations, with a median age of 25 years as compared to 43 in

Japan and 36 in the US. This coupled with a large population and rapidly evolving consumer

preferences, has translated into a large market opportunity for FMCG players. Indian cities are

expected to add 379 million people to the consumer base for FMCG companies, as the

urbanization rate is expected to increase from the current 30 to 45 percent in the next 40 years.

Also, according to the recent estimates, household income in the top 20 boom cities in India is

projected to grow at 10 percent annually over the next eight years.36 According to FICCI-

Technopak report, India’s FMCG sector is poised to reach and by US$ 43 billion by 2013 US$

74 billion by 2018. The report states that implementation of the proposed goods and services tax

(GST) and the opening of the foreign direct investment are expected to fuel growth further and

raise the industry’s size to US$ 47 billion by 2013 and US$ 95 billion by 2018.37 According to

figures released by market research agency Nielsen, demand for personal care products grew

faster in rural areas than urban areas during the period January- May 2011. Furthermore,

according to data from Nielsen, the FMCG industry posted a 14 percent sales growth year- on-

year in April 2010, the highest in eight months.

36 http://www.unitedworld.in/wp‐content/themes/united‐world/pdf/FMCG%20Unitedworld.PDF 37 http://cifti.org/Reports/FMCG‐Report.pdf 

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Table 1.1 (c )

Key Players in FMCG Industry

COMPANY SALES * (US $ SEGMENTS HUL 3921.5 Personal care, Food products, Household, Baby care,

AMUL INDIA 1771.1 Food and beverage products

NESTLE INDIA 1155.4 Food and beverage products

ITC** 805.7 Personal care, Food products

BRITANNIA 759.9 Food products

DABUR 635.9 Personal care, Food products, Household

MARICO INDUSTRIES 449.3 Personal care, Food products, Household

GSK CONSUMER 447.9 Food products, Personal care

CADBURY INDIA 430.1 Food products

COLGATE PALMOLIVE 391.8 Personal care, Oral Care

PROCTER & GAMBLE 388.5 Personal care, Household , Baby care, Fabric care

GODREJ(GPCL) 280.5 Personal care, Fabric care

Source: Relevant company websites, IBEF report*Yearly sales as of March 2010, ** FMCG

business excluding tobacco

Figure 1.1 (f)

Key Categories in FMCG Industry

KEY CATEGORIES

2%12%

43%8%

4%4%

5%

22%Baby Care

Fabric Care

Food Products

Hair Care

Households

OTC Products

Others

Personal Care

38

Overall this segment accounts for around 80 percent of consumer spending in India. As with

many other retail segments, companies say the main driving forces in the FMCG segment are

rising disposable income together with changing lifestyle patterns in India. Low-priced products

38 http://www.consultbv.com/en/casestudies/BizVantage%20Consulting%20-%20FMCG.pdf

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constitute the majority of sales volume, and lower income and lower middle-income consumers

accounting for over 60 percent of sales. Rural markets account for around 56 percent of total

FMCG demand, although some companies believe that much more can be done by the organized

sector to tap rural demand. “Road infrastructure is improving and communications infrastructure

is improving,” says a vice president of a leading FMCG company; “There is no reason why as

many as 300 million new consumers cannot be brought into the ‘consumer basket’. Just by

increasing the geographical reach, there will be enormous growth in the FCMG sector.” After

four years of growth of between 1 and 1.5 percent, the segment saw revival in 2004, driven in

part by a surge in retail innovation. Retailers introduced price cuts, and launched new packaging

sizes together with discounts and promotional offers.39

1.5 Structure of the Dissertation The dissertation will include the following six chapters:

CHAPTER 1 – Introduction

The chapter one on introduction incorporates general backgrounds with respect to historical and

present development of celebrity endorsed advertising, current situation and types of celebrity

endorsers, and influences of celebrity endorsement in the Indian market will be introduced. The

historical background traces the development of advertisements and celebrity endorsements from

the eighteenth century till date. The advantages and disadvantages of celebrity endorsements

have been discussed on the basis of the findings of various studies on celebrity endorsements.

The choice of product category i.e. FMCG has also been discussed by quoting some figures

about the growth of the industry with the help of stock market quotes.

CHAPTER 2 – Conceptual Framework & Operational Definitions

Chapter 2 discusses the various models that have formed the basis of celebrity endorsements

like the communication process, source credibility model, meaning transfer model, match- up

hypotheses, attitude towards ad model, elaboration likelihood model etc. In the operational

definitions part, all the variables identified for the purpose of the study are defined. 39 FMCG Markets in India: The next big thing?, Electronic copy available at: http://ssrn.com/abstract=1137506

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CHAPTER 3- Literature Survey

The third chapter on literature review includes historical development of celebrity endorsements;

celebrity endorsers versus non-celebrity endorsers in terms of effectiveness in advertisements;

source credibility, attitude towards brand, and purchase intentions, and additional factors

predicting the effectiveness of celebrity endorsement advertisements. A number of national &

international research journals, magazines, books, theses and websites have been referred for the

purpose of literature survey.

CHAPTER 4- Research Methodology

Chapter four illustrates the type of research that has been undertaken, the methods used to collect

secondary and primary data, it will provide reasons for adopting the chosen approach. First, the

research aims and objectives are established in order to set up the research structure. This chapter

also explains in detail the hypotheses formulated for the purpose of research investigation. The

advertisements selected for the study have also been mentioned. All the details related with

questionnaire development are also discussed with complete details of the statistical tools to be used

to test the data collected with the help of instrument. The structure will demonstrate the different

methods used by the researcher to gather the information while explaining the reasons why they have

been chosen.

CHAPTER 5- Results & Discussions

The chapter highlights the statistical results of the study. All the results have been discussed

keeping in view the hypotheses. SPSS has been used to analyze the data collected through

questionnaire. It also includes the discussions of findings of the previous studies on similar

topics.

CHAPTER 6- Recommendations & Conclusions

This is the last chapter of the thesis which includes a summary of the findings and

recommendations based on the empirical analysis in the present theses. The insight gained from

this study would provide insights to stakeholders in the related field with crucial information and

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knowledge that will benefit them strengthening their brand equity. This chapter also identifies

the areas for future research as identified during the course of this research work.

1.6 Summary

The title of this study is “Celebrity Endorsements & Their Influence on Consumers’ Processing

of Marketing Communications”. This chapter aimed at introducing the concepts of advertising,

it history, advertising and its development in India, modern day advertising, celebrity

endorsements, its beginning and development. It also discussed the chapterization plan of the

theses. The next chapter will discuss the operational definitions of the variables identified for the

purpose of the study and conceptual framework explaining the various concepts related to

celebrity endorsements.