October 2011

The value of fame

By Cathy Wang

Chinese athletes are becoming mega-stars at home and abroad. But are they able to cash in?

Yao Ming has ended his basketball career, but his face still flashes on Chinese Television screens everyday, currently in a recent campaign with him pushing Mini Oreos.

For dozens of consumer product companies around the world, Yao is irreplaceable. Despite his recent retirement from the court, they still believe Yao, a national hero in China and cultural ambassador, is a key to help them unlock the huge Chinese market.

A recent report, "Middle Kingdom’s Celebrities to Be," published by Ogilvy & Mather, analyzes trends in celebrity branding in China and addresses the importance of beliefs and values in advertising from historical and cultural perspectives. The authors give high scores to Yao in all three categories of awareness, talent and values – making him an ideal celebrity endorser.

Yao's success in endorsement is well established, and has made him by far the richest Chinese athlete according to rankings in Sports Illustrated. Yao has been earning over US$35 million a year, with $25 million of that coming from endorsements for local products as well as global brands such as Apple and McDonalds.

These endorsements are carefully chosen by Team Yao, a group of advisors and agents who steer his career. The team, which includes agents, PR professionals and even an economist, plans each step of his superstar career, considering each deal, from sports goods to financial products. When Yao first entered the NBA, thriving brands, eager to grow such as McDonalds were chosen. When Yao became a more mature player, they chose brands like China Life Insurance. As he started a family, brands like Oreo cookies were added to the mix.

What do you believe?

Values are important in advertising, especially in today’s China, where many people are very much in the process of figuring out what is right and wrong and what is important in a person’s life. The “belief vacuum” is a phenomenon advertisers play to, and use in the choice of celebrity brand champions. The combination of star quality and integrity carries a high price tag.

What qualities do sponsors look for in athletes? Tom McCarthy, who has 17 years of experience working in the Chinese sports field, thinks the first is superior talent, the second is a good personality and the last is a desire to contribute to society. “Yao Ming is just that kind of star. He is a role model for youth.”

The Chinese sports industry has grown tremendously, especially since the 2008 Olympics in Beijing, and international brands like Nike, Addidas and Rokee, and domestic brands such as Li Ning, all want a bigger slice of the pie. Statistics from the government agency responsible for sports indicate that by 2008, value added in the sports industry has reached US$24.3 billion, a 16% increase over 2007. By 2010, this number was $31.3 billion, 80% of which came from the production and sale of sporting goods. According to the 12th five-year plan for the sports industry released in May, value added could reach $62.6 billion by 2015.

The new youth

Influence in the China market is a key factor for advertisers in choosing an endorser, whatever their nationality. In this respect, international sports stars who compare with Yao Ming have included Tiger Woods, Michael Jordan and David Beckham. Historically, Jordan's influence is incomparable. During his trip to China in 2004, 800 pairs of 19th generation Air Jordan shoes sold out in just one week. Priced at US$231, this was twice the average monthly salary of migrant workers in Shanghai at the time.

“I dreamed of having Air Jordan shoes when I was in high school,” says Gao Bicheng, a 25-year-old sports fan, “Although the main reason was to show off in front of other boys.”

Gao belongs to the 1980s generation, who were born after the enactment of China’s One Child Policy in 1979. Often called a generation of “little emperors” and “little empresses,” they are brand- and fashion-conscious, think more individualistically, and have significant purchasing power.

Celebrity endorsement has a big effect on young people. In China, 40% of youth product advertisements feature at least one celebrity, making the effect of this tactic on young people a particularly important issue, according to a report in the Journal of Advertising Research.

But celebrity endorsement has gradually been losing its effect in China. Ogilvy contrasts performance of celebrity advertising in China with that of India, another large, rapidly-growing economy. Their research shows the impact of celebrity advertising in India has remained more or less constant over the past ten years, while China has witnessed a steady decline. Overall, brand linkage, enjoyment and persuasion of celebrity advertisements are declining.

Most advertisers in China do little to personalize their relationship with an endorser. A recent sample of celebrity TV commercials aired between 2008 and 2009 revealed that close to 90% use the celebrity simply to say that the product or brand is of good quality or is the celebrity’s personal choice.

With so much and such similar-looking visual and media noise, celebrity endorsements for brands struggle to be unique. Many domestic sponsors have a short-term focus and choose the endorser casually. During the 2008 Beijing Olympics, many domestic brands clamored to get their products in the hands of athletes. TCL, a Chinese electronics company, chose the Chinese women’s tennis team. “They endorse women's tennis mostly because of the Olympics, and only required a three-year deal,” said Zhang Qing, president of key-solution Sports Consulting Corporation.

He also compared domestic brands with advanced multinational brands, like Nike. Also choosing a tennis athlete as an endorser, Nike has cooperated with Li Na since 1997. Li Na was discovered when she was 15 years old, and won her first Grand Slam this summer at the French Open. “It’s rare that a sponsor would consistently support an athlete for 14 years,” says Zhang Qing.

We need heroes

Another approach for advertisers is to identify with the millions of unsung heroes in China and contribute to a new ‘construction of values.’ Images of success in the media are a strong contrast with the reality of life for many Chinese.

Brands may be able to offer an opportunity for the average citizen to “rise above the ocean of billions of nameless faces.” It highlights the role of values and value-based role models in a society searching for meaning beyond materialism.

To help marketers make good decisions in celebrity advertising, Ogilvy has proposed a framework “to leverage the changing landscape of social values and the new needs that it has thrown open”.

They encourage leverage of an endorser from three perspectives: awareness, skills and values. Concentrate always on their strengths, and downplay their weaknesses, the report said, but stress that values and beliefs are core to celebrity valuation in the advertising market.

Chinese athletes are becoming mega-stars at home and abroad. But are they able to cash in?