Some say it started with Lillie Langtree.
The British actress and socialite, known as “The Jersey Lily,” is credited with being the first celebrity to endorse a product when she became the poster girl for Pears Soap in 1882.
Others say that it dates back to the 1760s, when Josiah Wedgewood, a British businessman, created a tea set for Queen Charlotte, which people began to call “Queensware”.
“The idea of celebrity sponsorship, of course, goes back forever,” said Robert Thompson, a professor of television and popular culture at Syracuse University. “We probably had a Cro-Magnon backing certain saber-toothed tigers over others.”
Athletes, actors, and celebrities have all taken turns promoting a product or service, and by some estimates, between 14% and 19% of ads aired in the US featured celebrities endorsing products and brands.
A Harvard Business School study found that celebrity endorsement increases a company’s sales by an average of 4% relative to its competition, and also increases a company’s stock value by 0.25% .
In the early 1900s, sports stars like Ty Cobb, Babe Ruth, and Cy Young were used to back tobacco companies. Mark Twain endorsed fountain pens, his own co-branded cigars, clothing, and Old Crow Whiskey, among other products.
The celebrity endorsement train has continued to roll on into the Cryptocurrency Era, with the likes of Jimmy Fallon, Jamie Fox, Paris Hilton, Larry David, and Matt Damon all singing the praises of digital currency, right up until the drop in cryptocurrency prices. cryptocurrencies.
“Celebrity sponsorship is especially tempting for all these companies because cryptocurrency is something that a lot of people don’t understand,” Thomson said, “even when it’s explained to them, they don’t fully understand it. It’s a nebulous concept in the first place, so You have to think of some way to get people involved.”
These endorsements, he added, go with “the old idea that if someone this famous and successful thinks this is a good idea, then it must be a good idea.”
Damon, who Thompson described as “the poster child of celebrity endorsements,” has fired himself on Twitter for his Crypto.com (CRCW) “Fortune favors the brave” after cryptocurrency prices plummeted.
Thompson also pointed to Larry David’s ad for FTX, which featured the comedian popping up over the years downplaying everything from the wheel to democracy to the lightbulb and finally FTX.
“He took the idea of fear of missing out and put it into his entire economic future and then it became FOMO as a major historical issue,” he said. “It’s a brilliantly devious commercial.”
“Celebrity endorsements of crypto probably encouraged a lot of people to make their first crypto investment,” said Frank Corva, senior digital asset analyst at Finder. “However, the problem with that is that these newcomers who bought because celebrities endorsed certain digital assets often didn’t learn the spirit behind assets like Bitcoin or how to guard digital assets.”
‘A gray area’
Corva said that many newcomers buy digital assets “without knowing how these assets differ from traditional assets or how much more volatile the prices of these assets can be than the prices of traditional assets.”
“Cryptocurrency crashes happen in part because newcomers get discouraged and sell at a loss when they see the prices of the coins or tokens they bought drop precipitously,” he said. “Most celebrities don’t encourage people to research the nature of these assets and then buy a small amount.”
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Instead, Corva added, “certain celebrities promote specific coins or crypto platforms during a bull market, when the hype machine is in full swing, and fail to warn buyers of the downsides or many risks involved in owning these assets.”
Jenna Drenten, an associate professor of marketing at Loyola University Chicago’s Quinlan School of Business, said that “for digital investments like NFTs and cryptocurrencies, celebrities need consumers to invest every day because it potentially generates its own financial gains.”
“Today, there is a gray area between celebrity as a patron and celebrity as an entrepreneur,” she said. “In the past, celebrity images were only used as window dressing to promote products; now, celebrities often have a vested financial interest in the products they promote, but are rarely prepared to take ownership of how their powers of persuasion could be exploited.
Drenten added that “celebrities have teams of experts who work for them and with them to manage their financial investments.”
“Most everyday consumers don’t,” he said. “This also means that any fallout from a celebrity-sponsored product, digital or otherwise, leaves consumers struggling, while celebrities themselves are better equipped to weather a storm, such as a market downturn.”
Edward Moya, senior market analyst for the Americas with Oanda, said that “too many celebrities and athletes have a significant influence on young people and were some of the most aggressive adopters of crypto.”
Celebrity Kim Kardashian, boxer Floyd Mayweather, and former NBA star Paul Pierce were named in a lawsuit for allegedly scamming their followers into investing in EthereumMax, which Moya said was “one of the biggest scams ever highlighted.” .
“Most celebrities will get a pass for endorsing cryptocurrencies in general, but many social media influencers who supported tokens that ended up being scams will likely be in legal trouble,” he said.
Back in January, “The Tonight Show” host Jimmy Fallon and Paris Hilton discussed their Bored Ape Yacht Club NFTs when the market was hot. However, the weather changed and Fallon removed her Bored Ape image from his Twitter profile.
“The hype around the Bored Ape Yacht Club that started earlier this year has led to a proliferation of NFT projects and strategies that are opaque, questionable in their motives, often purely profit-driven, and sometimes downright fraudulent,” said Martin Hiesboeck, director of blockchain and crypto research at Uphold.
Hiesboeck said that “the very concept of unregulated and unsupervised non-fungibility, that is, digital assets, whose price is unique to an individual item and the marketing that surrounds us allows for abuse on many levels, which is why the space is currently concerned about repeated hacking attempts and bad actors.”
Vadym Synegin, Co-Founder and Vice President of IR of the Web3 WeWay ecosystem, said that “there is a massive attack on the global financial sector due to rising inflation and unbalanced monetary policies and this fall in cryptocurrencies is not an exclusive fact.”
“For what it’s worth, the digital currency ecosystem needs credible personalities to help publicize the inherent potential of some of these innovative protocols,” he said. “The only celebrities who can be held accountable are those shilling scam projects.”
Overall, Synegin said, “the digital currency ecosystem needs celebrities to bring disruptive products and services to the mainstream.”
And to be fair, not all celebrities have calmed down.
Corva said that Snoop Dogg and Eminem, both owners of Bored Ape NFT, recently performed at Ape Fest, an event affiliated with NFT.NYC.
And Jay Z teamed up with Twitter (TWTR) – Get the report from Twitter Inc. founder Jack Dorsey, to begin educating those living in New York City public housing about bitcoin.
“It seems like some celebrities are true believers, while others were just there to take their paycheck while the getting is good,” Corva said.