As of 2006, Nike was spending $475 million annually on endorsement deals with athletes.
LeBron James made $33 million in 2013 from endorsement deals for companies like Samsung, Nike, and Coca-Cola (Sprite).
Why such huge spending on endorsements?
According to a 2012 study by Anita Elberse and Jeroen Verleun in the Journal of Advertising Research, signing top athletic endorsers corresponds with “around $10 million in additional sales annually and nearly a 0.25% increase in stock returns.” [Click to Tweet This Stat]
Why do athlete endorsement have such a significant impact on consumer decisions and can we use the same rationale to explain why connecting with influencers in your niche is crucial to success?
Fritz Heider’s Balance Theory
Balance Theory addresses how a person alters their attitude to keep sentiments towards other people or objects consistent (balanced).
For example, let’s assume Buick is currently perceived by younger drivers as being a brand for elderly people.
In balance theory terms, younger consumers would be said to hold a negative sentiment toward Buick.
Buick’s marketing team decides they want to break into the market for younger consumers, so they enlist the help of NBA Superstar, LeBron James, in their advertising campaigns.
Since LeBron James is often viewed positively by younger people, Buick believes they can positively influence how younger people view Buick cars.
So, here’s what we have: LeBron James (L) :: Buick (B) :: C (Young Consumers)
By bringing LeBron James into the picture, Buick has created a relationship between LeBron James and Buick cars.
This relationship creates an imbalance — cognitive dissonance — in the minds of younger consumers who have a negative view toward Buick, but a positive view toward LeBron.
According to this idea of the “balance principle,” younger consumers will alter their attitudes in a way that returns their minds to a state of consistency.
- Younger consumers may decrease positive feelings towards LeBron James, creating consistency by holding negative sentiments toward both LeBron and Buick.
- Younger consumers may break the connection between LeBron James and Buick (convincing themselves LeBron is only endorsing the car for the money; he doesn’t genuinely like Buick cars).
- Younger consumers may increase positive feelings toward Buick, creating consistency by holding positive sentiments toward both LeBron and Buick.
Of course, the goal of any endorsement arrangement is the third option, where a consumer’s positive sentiment toward the endorser is transferred to the product being endorsed.
While this is a simplified look at how consumers’ attitudes shift, it’s an important framework that helps understand why endorsements and connections have potential to make a difference.
But I know what you’re all thinking…
Great, now get me out of this consumer behavior classroom! How can I use this in my digital marketing?
Balance Theory’s Application to Digital Marketing
Each year, Social Media Examiner releases the results of their Top 10 Social Media Blogs contest.
This essentially makes Social Media Examiner an endorser of these blogs.
Most people in the digital marketing field have a positive view of Social Media Examiner — they’re generally regarded as an authoritative, credible source of digital marketing information.
So, when Social Media Examiner chooses to feature blogs in this way, it’s likely people will transfer the positive sentiment they have for Social Media Examiner to the blogs that were endorsed.
Balance Theory’s Application to SEO
Although SEO is changing, authoritative inbound links still play a significant role in how well your website ranks in search engines.
If we think about SEO from a balance theory perspective, we could say Google sees a link as an “endorsement” of another website.
Let’s say out of sheer insanity, you get a link from CNN.
Since Google has positive sentiments toward CNN, this positive sentiment may be transferred to your website thereby improving your search engine ranking.
That’s obviously beyond simplified, given Google has hundreds of ranking factors in their algorithm, but the principle should be clear.
Here’s the Lesson For You
I’m not implying you have to get featured on the biggest blogs in your niche or linked to by CNN.
However, if you want to build authority for yourself, it needs to be clear that other credible, authoritative people in your niche think you know your shit, for lack of a better term.
It can be as simple as getting a shoutout on Twitter from a well-known blogger in your niche or as extensive as a full-on endorsement like the Social Media Examiner example above.
The point is that a bridge needs to be built between yourself and other credible people if you want to build a strong online presence and rise to a level where people see you as an authority.
With authority comes something great: people will want to follow you, want to listen to you, and, ultimately, want to pay for your expertise.
How do you create that bridge from nothing? That calls for a follow-up post! Stay tuned…
Citation: Elberse, Anita, and Jeroen Verleun. “The Economic Value of Celebrity Endorsements.” Journal of Advertising Research 52, no. 2 (June 2012): 149–165.