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Each contract negotiation is unique and individual. There is no standardized formula or checklist that can be relied upon. Yet, there are actually many common reoccurring concepts that are unique to hiring celebrities. Here are four:
1. The amount of exposure dictates the price of the celebrity, not the number of workdays. If he or she works one day, and you run the campaign in Boise, Idaho, only for one week, the celebrity might cost $500. But, if the celeb works that same one day, and you air it national for a year, he or she might be $500,000. How many days you air your test, and the markets in which you test, will determine the initial cost. 2. All celebrity appearances in a commercial are considered endorsements no matter how many seconds they appear in the campaign, or how light their dialog. So, appearing in your campaign will eliminate the celebrity from appearing in other campaigns, even if the product categories are not similar. Even a cameo testimonial in a fitness campaign would take that celebrity out of all other fitness-related commercials, and that figures into the price and his or her decision to work for very low fees. 3. There are celebrities for any budget. There are many lower priced celebrities who would appear in your campaign who are very recognizable, if not by name by face. The more credible (the most sought after category) the household name, the more widely recognized group that gets asked often to endorse products. So, the more commercials they turn down, the more money they can demand. 4. Celebrities don't want royalties; they want large bundles of cash, all paid upfront, like most of the commercial campaigns involving such mainstream advertisers as Pepsi and Chevrolet. The DR world typically alters that structure in order to pay lower amounts to test air the campaign. Paying flat fees instead of royalties, albeit more expensive initially, will always save money in the long run. If you want the normal DR deal, you would be paying much lower cash advances against 1 or 2 percent of gross on all sales of the product. You actually get the advances back since you don't have to pay the celebrity until he or she has cleared the advanced amount.
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May
1, 2003
