As of 2006, Nike was spending $475 million annually on endorsement deals with athletes.
LeBron James made $33 million in 2013 from endorsement deals with companies like Samsung, Nike, and Coca-Cola (Sprite).
Why such huge spending on endorsements?
Based on 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.” (1)
Why do endorsements have such a significant impact on consumer decisions?
And can we use the same rationale to explain why connecting with influencers in your industry or niche is a critical path to growing your brand?
Yep, and here’s how…
Fritz Heider’s Balance Theory
Balance Theory addresses how a person alters their attitude to keep sentiments toward other people or objects consistent (balanced).
Essentially, it attempts to explain how people reconcile cognitive dissonance – the state of having inconsistent or competing thoughts and ideas.
For example, let’s assume for the sake of discussion that Buick cars are currently perceived by younger drivers as being a brand for elderly people.
Let’s also assume these same younger consumers view LeBron James in a positive light and as an influential person.
In balance theory terms, we would say younger consumers hold negative sentiment toward Buick and, naturally, this would discourage them from purchasing a Buick model.
Similarly, they hold positive sentiment toward LeBron and may find his endorsement of a product to be persuasive.
So, Buick’s marketing team recognizes these perceptions and sees a growing market of young drivers, which they would like to attract.
The Buick team decides they want to break into the market for younger consumers and they enlist the help of LeBron in their advertising campaigns.
Here’s what we have:
- A positive sentiment (+) between Younger Consumers (C) and LeBron James (L)
- A negative sentiment (-) between Younger Consumers (C) and Buick (B)
By bringing LeBron into their advertising picture, Buick has created a relationship in the minds of younger consumers between LeBron and Buick cars.
Remember, on one hand, younger consumers think Buick cars are for elderly people and hold negative sentiment.
On the other hand, younger consumers hold a positive view of LeBron and find him influential.
By creating a relationship between Lebron and Buick, Buick has created an imbalance in the minds of these consumers — cognitive dissonance.
According to the principles of Heider’s Balance Theory, younger consumers have a choice to make, assuming they want to get rid of the cognitive dissonance.
In theory, these consumers will alter their attitudes toward Lebron and/or Buick in a way that returns their minds to a state of consistency and equilibrium.
- Younger consumers may decrease their positive attitudes toward LeBron, reducing cognitive dissonance by holding more negative sentiments toward both LeBron and Buick.
- Younger consumers may break the connection between LeBron and Buick entirely (convincing themselves LeBron is only endorsing the car for the money and he isn’t genuinely endorsing Buick).
- Younger consumers may increase positive attitudes toward Buick, reducing cognitive dissonance 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 you use this concept in your digital marketing strategy?
Balance Theory’s Application to Digital Marketing
There are tons of avenues we could go down in this discussion, but let’s look at just a couple examples of how the Balance Theory concept could be applied to digital marketing.
Balance Theory, SEO, and Search Rankings
Google’s rankings are based on how authoritative and genuinely useful a website is to users.
In order to increase your website’s authority and usefulness in the eyes of Google, you ultimately need other authoritative websites to link to your website.
(Oversimplifying, but you get the main point.)
One common way of obtaining these authoritative links is to guest post on blogs in your industry or find methods of getting mentions in the press.
Let’s say you operate a small fashion and lifestyle website and you manage to get an opportunity writing a guest article in the Huffington Post Fashion section. At the end of the post in your “About the Author” section, they’ll give you space for a small blurb about yourself and your brand, along with a link back to your website.
Break this down in Balance Theory terms…
- Google has very positive sentiment toward the Huffington Post and their website generally ranks high.
- Google probably doesn’t have a negative sentiment toward your website, but the level of positive sentiment Google has for your website is quite low compared to the Huffington Post.
By creating this relationship, the Huffington Post is essentially endorsing your fashion expertise and, by extension, your website — signaling to Google that your website has authority in the fashion niche.
Google has to take this into account, because they’re in the business of providing the most relevant, authoritative search results to their users.
And if a high-authority fashion website is linking to another fashion website, there’s a safe bet that the other website could be useful to people searching for fashion information.
So now Google’s algorithm is experiencing a bit of “dissonance” and the dilemma would likely be resolved by a couple potential outcomes.
- Google may increase positive sentiment toward your website and move it higher in the search rankings, bridging the inconsistency the algorithm is experiencing.
- Google may decrease positive sentiment toward the Huffington Post to reduce the inconsistency (this isn’t going to happen, of course, because Google wouldn’t penalize such an authoritative site unless they were serial pushers of bad backlinks on a massive scale).
Long story short: by publishing a guest post on an authoritative website, you’re website is getting “endorsed”, which signals that your site is more valuable than search engines currently view it.
If a successful endorsement, search engines will transfer some of their positive sentiment from the endorsing site to your site in order to lessen dissonance in the system and move closer to a point of equilibrium.
Balance Theory and Social Media
Balance Theory’s application to social media is much like the example we discussed with Buick and LeBron earlier.
If you look at celebrity Instagram pages, you’ll often see plenty of photos tagged #ad with an endorsement of a product or brand.
Take Kylie Jenner, for example.
(I apologize…but it’s an easy example)
She has more than 82 million followers who eat up just about every one of her Instagram posts. Tons of influence over her audience.
Naturally, brands are drawn to Jenner’s level of influence, because when she endorses a product, the positive sentiment her audience has towards her gets transferred to the product being endorsed.
And she’s proven time and again that her endorsement drives massive engagement — 1.75 million engagements per post on average.
In a world of ad blockers and commercial-less Netflix, this is a golden marketing opportunity.
Of course, you don’t need Kylie Jenner to endorse your brand for this concept to apply.
Go on Instagram or Twitter right now and spend 15 minutes searching for users who have influence over a consumer base that you want to reach.
I guarantee you there are plenty of opportunities regardless of your industry.
People operate niche pages in just about every category and subcategory you could fathom — there are even active Instagram accounts solely devoted to men drinking coffee and women taking pictures with their cats, so don’t come back and tell me you couldn’t find anyone!
These social influencers who have loyal, huge audiences offer prime real estate for brands willing to pay for product placement and endorsements — no different than product placement in TV shows or movies.
I’m not implying you have to get featured on the biggest blogs in your industry, get linked on the Huffington Post, or pay big money to be endorsed by a celebrity on Instagram to make use of this brand-building concept.
However, this is an approach worth keeping in mind for growing your brand and, more specifically, your digital marketing presence.
If authoritative, influential people endorse your brand and make it transparent they think your brand provides value, this sentiment is probably going to extend to the perceptions of their audience (consumers).
It can even be as simple as getting a shoutout on Twitter from a blogger who writes about happenings in your industry. Or it could be a guest blog post from someone with great influence in your niche. Think…
- Mom bloggers endorsing your baby products and toys or teen clothing line.
- Fashion bloggers endorsing your make-up line or your Etsy jewelry store.
- Travel bloggers endorsing your hotel, lodge, tourist attraction, etc.
- Photographers on Instagram with huge followings endorsing your new camera, lens, etc.
The purpose is to build a bridge between your brand and other influential people, so that consumers see your brand in a positive light and as an authority — trustworthy, valuable, reliable.
With authority comes something great: people will want to follow you, want to listen to you, and, ultimately, want to pay you to help them solve their problems.
And that’s what we’re all after in this game, isn’t it?