Trends of Celebrity Empires

There has been a trend in the entertainment industry for entertainers to expand beyond their specialty and branch out into other markets for financial stability and marketability. These people have become classified as the quadruple-threats and entrepreneurs. Actors, musicians and celebrities alike have ventured into other avenues, such as investing in restaurants, launching perfumes, clothing lines and a variety of other products that include and go beyond commercial endorsements. In a time where many artists are simply 'one-hit-wonders' and celebrities come and go in popularity, it is important to establish a stable financial income by reaching outside of your specialty and investing in other areas.

OVERVIEW: TRENDS OF THE MARKET

It is important to be selective when choosing where to invest or what to put your name on in order to maintain your marketability and credibility. You need to consider both the type of products you are endorsing and the number of products you have already endorsed. Celebrities generate profit through information about their daily lives, merchandise and advertising. You make no money when tabloids put you on the cover of their magazines, but you can make money by putting your name on products or endorsing products.

Ways to expand your name:
- Endorsing one or more products through commercials and ad campaigns
- Putting your name on an item, such as a clothing line, perfume or cosmetic line
- Investing behind the scenes, such as a restaurant chain, club, etc.

Endorsements: Exposure versus over-exposure

One reason you might want the extra income is so you can take a break from working on a daily basis or work in an area that generates less income. Some stars, like Julianne Moore, have decided to focus on independent films rather than box-office hits. Signing a cosmetic contract with Revlon, gives her the financial stability she needs while making low-budget films.

I would suggest taking advantage of your celebrity appeal by endorsing a product or two for financial income. Years ago, celebrities used to think having endorsement deals was a bad career decision and would lead to over-exposure or lower their reputation. But with the success of tabloids, celebrities are already over-exposed and advertising can give them a chance, as Lennon says, to "present themselves to the public in a more controlled way than the tabloids do."

Many stars have gone this route and in moderation it can give stars substantial income and positive exposure. Two notable stars include Catherine Zeta-Jones, who signed significant contracts with T-Mobile and Elizabeth Arden and Nicole Kidman, who was given $4- $5 million dollars for a Channel No. 5 ad. Most of the top 10 earners on the Forbes Celebrity List in 2006 used other means besides their main job as a source of income. Tiger Woods, for example, has deals with Nike, Accenture, GM and American Express, which earn him more money than his golf winnings. Oprah Winfrey has expanded her market into Broadway plays, talk shows, movies and a book club. Expanding your name can bring you long term results by reaching out into other areas besides your expertise.

In almost every magazine you look celebrities are in advertisements for clothing lines, shoe brands, cosmetics and a variety of other products. Snoop Dogg, for example, has ventured outside of the rap-world into movies, endorsements and products. His endorsement deals include T-Mobile, Orbit chewing gum, XM Satellite Radio, Nokia and Chrysler. In a world where music and movie sales are dwindling, endorsements provide another way to garner income and maintain exposure outside of the tabloids.

Endorsements: The Importance of Credibility

When considering what to endorse, also take into account how many products you already endorse, whether or not it is believable that you like that product and how that product affects other products you endorse. Appearing in multiple ads can make consumers questions whether you truly like any of the products at all. If people dislike one product you endorse, they may have a tough time buying into your other endorsements. Likewise, if they have been satisfied by a product you endorse, they may see your image as credible.

This is why you don't want to be over-exposed in the media. I would not suggest endorsing every product that comes your way. It is important to be selective. If you endorse too many products, consumers will look at your products and not be able to tell which ones you truly like. One study suggested that when a celebrity endorses multiple products, their appeal and credibility is weakened.

People will question your credibility if you endorse products you do not really use. For example, Cybill Shepherd was in a campaign for the Beef Industry Council in 1987, but she lost credibility when she admitted she didn't eat meat. Similarly, Britney Spears, who was endorsed by Pepsi, received criticism for brand loyalty when she was seen drinking a Coca-Cola.

Additionally, consumers know you are paid for the ads and you can afford products that the general public can not afford. This begs the questions: Why would you use a cheaper product if you can afford a more expensive one? People want to believe celebrities use and like the products they endorse. I would only recommend endorsing products you truly like and use.

Branding: Putting your name on a product

One trend has been for celebrities to put their names on products. Jennifer Lopez, Paris Hilton, P. Diddy, Mary Kate and Ashley Olsen are examples of celebrities who have expanded into accessories, clothing lines and more. Snoop Dogg has put his name on a variety of products that even include hot dogs, liquor, skateboards, toys, clothes and candy.

One popular trend has been to put your name on a fragrance. Lopez and Britney Spears are two of the most successful fragrance launches. Lopez's fragrances, brings in $100 million a year, while Spears's perfume, Curious, was the No. 1 fragrance in 2004-2005. It seems almost every celebrity has a perfume including Sarah Jessica Parker, Danielle Steel, P. Diddy, Kimora Lee Simmons, Mary Kate and Ashley Olsen, Beyonce Knowles, Enrique Iglesias, Celine Dion, Hillary Duff, Shania Twain and David Beckham. Celebrities normally receive between 5%- 10% of sales for the use of their name on a fragrance, giving Lopez $5 - $10 million a year for the sale of her fragrances.

But not all have been a success. Paris Hilton and Donald Trump are two examples of fragrances that didn't do as well as expected. Trump's, has even been called a "disaster." Trump is a great example of a celebrity who has put his name on anything from hotels, cologne, water bottles, board-games, TV shows, golf courses, etc. Although he is very successful, not all of his products have been successful. While people may want to live like him - stay in his hotels or play golf at his courses - they don't want to necessarily smell like him.

It is important to be practical and not try to expand into areas outside of your persona. I would suggest taking advantage of your name recognition but do not put your name on a product that doesn't fit. For example, Mary Kate and Ashley Olsen turned down a request to put their name on fruit chewy candy. Once again, the importance here is being selective.

Investments: Using your name for long-term results

One trend that has continued to increase is celebrities investing behind the scenes in restaurants. Their name can bring attention and credibility to a new restaurant, and even when the excitement has fizzled down, a successful restaurant or chain can bring a good source of income.

Innovative Dining Group's restaurant launched Sushi Roku, which was such a success, they opened three more in Las Vegas and California and opened three Boa restaurants and the now popular Katana. Those restaurants were backed by celebrities including Tori Spelling, Brett Ratner, Ryan Seacrest and Rob Lowe. Robert DeNiro is another celebrity who has invested largely in restaurants. He invested in the popular chain Nobu and he is now working on opening DeVito South Beach in Miami. Other celebrities who have jumped on the bandwagon and include Jeri Ryan, Jennifer Lopez, Wesley Snipes, Justin Timberlake, Jimmy Fallen, Jay-Z, Francis Ford Coppola, Ridley Scott, Harvey Weinstein, P. Diddy, Magic Johnson, Michael Jordan, Ashton Kutcher, Wilmer Valderrama, Danny Masterson and Jaime Kennedy.

Not all ventures have been successful. Restaurants are one of the riskiest investments and celebrity backing does not always result in success. Some restaurant failures include Britney Spears's Nyla, Patrick Swayze's Mullholland Café and Maria Maples's Peaches. Most notably, the restaurant chain Planet Hollywood has gone bankrupt twice, which had the backing of mega-stars Arnold Schwarzenegger, Sylvester Stallone, Bruce Willis and Demi Moore. I would highly recommend investing in something long-term like a restaurant, but I would not be the sole investor. If the restaurant fails, it is better if you are not the only person it falls on. Using your celebrity name, however, can gain attention and popularity to the restaurant and it can be a great long-term investment.

Maintenance: financial stability

There are many ways you can maintain financial stability in a 'one-hit-wonder' world by taking advantage of endorsement opportunities, giving your name to products you believe in and making smart investments. You need to consider maintaining credibility as an endorser by not supporting too many products or endorsing products you clearly do not like. If your name appears on too many products, consumers will assume you are only endorsing the brand for the money and not because you truly like the product.

It is very easy in this industry to be popular one day and out of the headlines the next, which is why you should also look into investing long-term. One popular trend for entertainers has been to invest in restaurants. A successful restaurant chain can bring in a substantial amount of income and offer you new options if you career fades. The most important thing is maintaining your credibility as a brand. You want to always stay marketable and being selective in what you endorse, put your name on, or invest in will ensure that.