A product’s endorsements by celebrities can induce the endorsed product’s sales. Celebrities source their fame from either their professional activities (i.e. traditional celebrities) or their social media activities (i.e. Internet celebrities). When managers decide to hire celebrity endorsers, they must decide whether to hire a traditional celebrity or an Internet celebrity. The authors contribute by measuring the increase in product sales resulting from endorsements by traditional celebrities and Internet celebrities, and the decrease when the endorsements are lifted. A staggered difference-in-differences (DiD) design that captures the reversible treatment history of endorsements reports that a product’s endorsement by a traditional (an Internet) celebrity in a week raises its sales by 80% (86.2%). Next, the authors measure the sales effects when the endorsement is lifted. Consistent with the evidence on post-promotion dip, they find that lifting a traditional (an Internet) celebrity endorsement causes a drop of 103.4% (112.4%). This study is the first to quantify endorsement effects and the negative impact of withdrawal by comparing across celebrity types and between positive and negative effects. Therefore, the net effect of each endorsement type is negative, indicating that managers should be cautious of a myopic reliance on celebrity endorsements and account for post-endorsement declines.
Sheng et al. (Sun,) studied this question.