Brand ambassadors: An illusory fascination

Last week Byju’s said it would be appointing Lionel Messi, the world’s richest footballer, as brand ambassador for something called its “social impact initiative”. That announcement came soon after the edtech giant announced that it would be laying off 2,500 workers, 5 per cent of its workforce, as part of an exercise in rationalisation. The careful wording of the Messi announcement did not deter angry commentary and black humour flooding social media. “Fire 1,000 more employees and hire Ronaldo too” went one of them.

 

Byju’s appointment of Messi is a good example of the illusory fascination that companies harbour for celebrity endorsements. The edtech major, a Unicorn and one of the most feted of the pandemic-era start-ups, has been a super-active mover and shaker in the brand-building associations with celebrities and celebrity-driven events. In 2017, it hired actor Shah Rukh Khan, also incidentally a university topper, as its brand ambassador. Two years later, it became the jersey sponsor of the Indian cricket team; the deal, which would have expired this March, has been extended by a year for a reported Rs 454 crore. It has also reportedly spent Rs 330 crore to become official sponsors of the FIFA World Cup. The price and details of the Messi deal has not been announced but the Argentine superstar is known to charge $6-7 million per year. He is no stranger to corporate India, having been, till not so long ago, Tata’s global brand ambassador.

 

The Tata deal attracted some awe because it was the first time an Indian company had hired a globally famous footballer at the height of his fame to endorse its products — though halfway through Messi inconveniently announced his retirement from international football (later rescinded). The Byju’s deal has attracted attention because it is a good example of the deep disconnect between its performance and that of its newly minted brand ambassador. Byju’s core market are young people; Messi is a youth icon, so the association with Byju’s is expected to have some sort of associative benefits.

 

But mass layoffs aside, Byju’s financial performance has also raised eyebrows. This year, the Bengaluru-based start-up had to delay its FY21 results to make some accounting adjustments. When the results were finally announced, losses had swelled 20 times to Rs 4,558 crore from just Rs 262 crore in the previous fiscal. This was principally on account of a significant change in revenue recognition: Revenues from online courses were re-adjusted from one-time earnings to earnings booked over the duration of the courses. Signing up Messi does not change this reality for this IPO-bound start-up.

 

So this begs the question: Why do companies sign up expensive brand ambassadors and sponsor mega-events? The marketing mavens say the association does good things for the brand in an intangible sort of way. But this unquantifiable benefit is open to doubt: Unless the “fit” is right (think Roger Federer and Rolex), most companies run the risk of merely throwing good money after indifferent results. Consider, for instance, the title sponsorship for the Indian Premier League (IPL). Since inception, it has been bankrolled by DLF, Pepsi, Vivo, Dream11 and now Tata. Almost all of these were and are established firms with well-entrenched brand-names. The IPL, arguably, is the most popular cricket tournament on the planet. Does exposure to the logo on the cricket field change its brand dynamics significantly among stakeholders?

 

When it bid $4 million for the Delhi IPL franchise (then called Delhi Daredevils, now Delhi Capitals), infrastructure major GMR had said the team offered an opportunity for brand building. Yet the company is still better known for its airports in Delhi and Hyderabad, the more frequent touchpoint with consumers than the ownership of a cricket team. The stock market still judges its performance on hard dynamics such as its debt burden, project completion record or revenues, not the performance of Delhi Capitals.

 

The tenuous link between celebrity endorsement and product reputation was rudely brought home in 2014 when Nestle was forced to recall Maggi instant noodles brand after lab reports revealed high levels of MSG in a product that claimed to have none. After five months, the product was back on the shelves — the company never really did explain what the problem was — but not before Madhuri Dixit, the actor who was endorsing it at the time was served a notice by the food and drugs authority.

 

Now, government guidelines say celebrities must carry out “due diligence” on a product before endorsing it. Messi’s involvement with Byju’s highlights the limits of this rule in a globalised world. But someone should urge the footballer to do a little more checking out. At age 35 and playing his last World Cup, the association with a company that has displayed such cynical corporate governance values cannot be good for him.