How do celebrity endorsements work?
Celebrities have a significant impact on advertising. A classic example is that of Marilyn Monroe’s “Chanel number 5,” which has now become a catchy phrase of popular culture and the perfume itself enjoys a celebrity status due to its association with the legendary actress. In other instances, advertisement campaigns involving celebrities have failed. Vasily Klucharev, a Russian researcher applied neurobiology to understand how celebrity endorsements affect customers. However, we can analyze this problem using networks.
The process of celebrity endorsements can be explained by generalizing the concept of structural balance. Structural balance as it is defined applies only to complete graphs. In this case, the graph involves three nodes: the celebrity, a potential customer and the product. The advertisement will be successful if the customer likes the product. Initially the link that connects the customer and the product is missing. If the effects of human perception are ignored, and we look at this problem from a purely rational perspective, there are two possibilities.
In the first case, the advertisement is successful and in the second case the advertisement fails. In either case, the network is balanced. Now consider the situation, in which the link between the customer and the product is missing, we can choose to fill it in such that the network is balanced. “In other words a non-complete graph is balanced if it can be completed by adding edges to form a signed complete graph that is balanced.”[1] But in the real world, advertisements campaigns do not always work even if the customer likes the celebrity. This is because the sign of the celebrity-product link is something that is perceived by customers. The article describes the failure of Celine Dion in a Chrysler advertisement despite her success in advertising English tuition classes of a Japanese college. The article states that this is because customers thought Celine Dion was less related to cars than she was to singing in different languages.
Using the idea of balanced networks, we can interpret this situation as follows. The customer likes the celebrity, but perceives a negative sign for the link between the celebrity and the product. And using the balance principle, we add a negative link between the customer and the product and the advertising fails. However in the case of the English tuition, a positive link balances the graph and the campaign succeeds.
[1] Klineberg and Easley: Networks, Crowds and Markets: Reasoning in a Highly Connected World, 2010
The article states that this is because customers thought Celine Dion was less related to cars than she was to singing in different languages.