Explaining the current advertising scenario, he says, "The dynamic rise in endorsement fees was being fuelled by corporates and MNCs who wanted to flaunt the growth of their business. But now, the scenario is different. Advertising budgets are being slashed and this will be passed on to endorsement fees as well." Kakkar said that the brand endorsement business functions on the economics of supply and demand. According to him, as of now, there are few takers for brand ambassadors. However, in the next few months, advertisers may realize that it is a major opportunity to sign new brand endorsement contracts at lesser prices and that too, for longer durations! A likely offset of the trend is also reduction in number of public appearances made by the stars. Translated literally, it means busy actors will have the option of signing more brands for lesser time commitment.
As such, bulk brand endorsements signed at lower fees may well be the silver lining. In fact, Kareena Kapoor, who is reported to have charged a whopping Rs 7 crore for endorsing Pepsico's snack food, is looking at signing a few endorsement contracts in January, according to a source associated with her business decisions. On the other hand, Emami, which is said to have roped in the actress for Boro Plus two years ago at a fee of Rs 2 crore, has not yet renewed their contract with the actress. Replying via email, Devadeep Ghosh, Emami spokesperson said that though most of the company's celebrity endorsement contracts are signed for a period of four years, they couldn't divulge the actress's contract renewal date since it can lead to 'unnecessary speculation'.
Meanwhile, responding to whether recession will see Emami replacing their current brand ambassadors that include Shahrukh Khan and Amitabh Bachchan as well, Ghosh answered in the negative with, "Since stars are brand ambassadors themselves, our association with them reinforces the communication of trust, the power of brand and image recall." It may be recalled here that the company has just renewed its contract with both the brand ambassadors earlier this year in July for a period of two and a half years. However, this is definitely not a universal strategy. For new entrants in the Indian market, there seems to be hesitation in going ahead with the best of Bollywood brand ambassadors. For instance, J.Hampstead whose contract with Priyanka Chopra is valid only till early 2009 has not yet initiated talks for renewal, confirmed Ajay Chandwani, Executive Director, Percept H, the advertising agency that created the campaign starring Chopra.
It is clear that brand endorsement contracts will continue to be signed as well as renewals scraped over the next one-year, each having its set of recession-sparked terms and conditions. As to which stars will use them to survive the recession wave, is something only time will tell.
At a time when several recession-hit producers are keeping ambitious projects on hold, brand endorsements once the biggest source of income for stars too seems to have taken a hit. Not only is there a major cut in the endorsement fees, but also there is also little demand for renewals of existing contracts. Though the huge slump in the advertising budgets and a drastic cut in celebrity endorsements fees is inevitable, the situation may actually help advertisers convince stars to sign endorsement contracts at lesser fees over the next year, according to Prahlad Kakkar.