Lloyd’s Comments on Celebrity Advertising Campaign Coverage

It’s nice to learn that Lloyd’s hasn’t turned its back on covering the perils that may strike the world’s movie, sports and assorted other celebrities. On the contrary, a recent article on its Website (www.lloyds.com) indicates that due to the increased use of big names to promote various and sundry products and services ” celebrity endorsement is fast becoming the marketing tool of choice.”

Lloyds noted: “A recent study by the advertising agency WPP found that one in four advertisements features a celebrity endorsement, compared with one in eight a decade ago.” In addition, “the costs involved are huge; Wayne Rooney [England’s star soccer player] reportedly received £5 million [$9 million] from Nike whilst Jamie Oliver’s [the U.K.’s star TV chef] longstanding relationship with supermarket chain Sainsbury’s has just been renewed at a reported £1 million [$1.81 million].”

There are, however, risks to the stars and the companies who use them. Lloyd’s pointed to the advertising contracts of British supermodel Kate Moss that were cancelled when she was linked to cocaine use. To help the companies that employed poor Kate, and others in their campaigns, Lloyd’s offers a “Death & Disgrace” policy. It “comes into play if the star of a publicity campaign becomes disgraced in the eyes of the public, or dies or suffers long-term disability.” As a result the company “could be left with a substantial loss if forced to withdraw an advertising campaign.” The D&D policy covers such risks.

Robin Walsh, UK media manager for the Technology, Media & Telecoms Division at Hiscox, commented: “We provide legitimate assurance that if an advertising campaign has to be withdrawn because a celebrity misbehaves, the advertising client won’t be left out of pocket after paying for a campaign they can’t use or have had to pull.”

Even if there’s a risk involved, which a background check on the potential advertising campaign star should reveal, the company might want to proceed anyway. Walsh indicated that “sometimes a ‘bad boy’ can work just as well as a clean cut hero. It depends on what you are advertising and the market you are appealing to.”

He also indicated the ironic circumstance where a “known hell-raiser,” has to “do something quite special to lower your estimation in the eyes of the public.” However, “if you are a clean cut family man, it doesn’t take anything quite as spectacular to render you a ‘disgraced’ character in the eyes of the public. It is quite a balancing act, especially from an underwriting perspective, as to who’s the better risk to underwrite.”

Ed. Note: Personally speaking I’d rather underwrite Kate than Rooney, especially if England gets knocked out of the World Cup. I wonder if Lloyd’s has issued policies on that eventuality.