BEHINDWOODS CELEBRITY COLUMN

The romance between brands and celebrities in endorsing a financial product / service has touched an abrasion by an investor alert campaign released recently by the Ministry of Corporate Affairs airing on the country’s widely reached AIR FM Channel and also on the Ministry’s website. Use of celebrities in advertisements from various fields as arts, sports, fashion, television and movies, as a widely accepted phenomenon, increases brand awareness within a short span of time and induces a stronger purchase intention. Unless the idea and execution by itself is outstanding without the need to use a well-recognized face, a celebrity endorsed campaign stands out or at least is more successful in grabbing those few seconds of your attention among the bombarded clutter of a million ads and messages across media.

Unlike buying a packet of chips or a soap based on what our favorite actor is vouching for and the option to change your next purchase based on the satisfaction of consuming the product, investment in financial products as deposits, mutual funds, chit funds or insurance policies is a high involvement category of both our hard-earned money and the benefit/consequence we derive out of it depending on how credit-worthy or dubious those avenues turn out to be. Any marketing textbook will tell you that a celebrity is brought in by a brand to generate extensive publicity to position or sustain a brand’s aura in the perception of its targeted audience thereby landing in their consideration set the next time they reach out to buy a product / service in that category. The flipside to using them however range from the celebrities getting mired in a controversy with a rub-off effect on the sales of the endorsed product or their career graph not going up as expected and constancy being affected, overexposure in multiple brands leading to losing their star appeal or the endorsed brand turning out to be a failure subsequently bringing down the trust value of the celebrity.

These are however purely from the brand and celebrity’s point of view. SEBI has been a constant policing body with disclaimers to mutual fund investors and stringent rules enforced on the financial companies for awhile now. But the new provisions in the Companies Act aim to bring the advertisers and endorsers accountable to what is being promised by them. The radio spot as part of a larger awareness campaign by Investor Education and Protection Fund insists that consumers should invest in a company on the basis of its credentials and not on the face value of the celebrities. The money that goes to paying them comes from our investments and is unlikely to give better returns is the added message in the aired spot.Under the new Companies Act, 2013, any person who makes a promise or forecast that is false shall be punishable with jail of six months, extending up to 10 years while the earlier punishment under the Companies Act, 1956 was restricted to a fine alone. Famous personalities ratifying the advertised offer will henceforth be liable to their decision with the silver lining being that to bring them to books, it has to be proved that the celebrity made the representation ‘recklessly’ without ascertaining the facts or he/she was aware that the statement was false / misleading.

Fraudsters, misleading advertisements, ignorant celebrities and innocent victims are all over the place and there’s no one simple solution that will break the system and put everything in place with the passing of an act or punishing the violators single-handedly. But it is certainly one step ahead in backing the interests of the consumer and ringing that ‘alarm bell’ to the celebrity to be extra careful with what is being endorsed by making them liable or answerable. Brand endorsements give celebrities easy money for all the toiling effort put in their profession and aids them to expand their dreams that money can afford. A villa by the beach or a legitimate source of income to justify their expensive standard of living could also come from taking up such endorsements. But they need to tread with caution henceforth not because they’ve taken their audience’s trust in them for granted all along but because they will be legally held responsible for any reckless decision without putting in much thought / research into it.

As for the consumers, the next time a celebrity tells you that we have an illness of taking less life insurance cover, take the message but also take an informed decision if you need to necessarily buy the insurance policy of that brand or another company that has a good track record of claim settlement. We love our actors, cricketers, musicians and artists but we definitely don’t need to follow their prescription blindly as they could have inadvertently missed the finer points that get printed in 5 point size readable only through magnifying glasses conspicuously tucked under a sub clause somewhere in the 90 page prospectus.Your interests in them are subject to the performances in their professions. Please read the discretion document of your sixth sense carefully before investing.