Increasingly, companies are turning to celebrities to hawk their wares, often with successful results, and it might be paying off for some exchange traded funds (ETFs) in the long run.
Celebrity endorsements have been around many years, but in the last decade, corporations have increasingly turned to big names to help them sell their goods, reports Julie Creswell for the New York Times. Famous people showed up in 14% of ads in 2007. But if you think we’re oversaturated, in India, celebrities are in 24% of ads. In Taiwan, they’re in 45% of the ads.
Some endorsements can backfire, though. Christian Dior (4.5% of the Claymore/Robb Report Global Luxury (ROB)) had to dump Sharon Stone after she said the earthquakes in China were karmic retribution for the country’s policies toward Tibet. Stone didn’t seem to make much of a difference in her time as spokeswoman, as ROB is down 16.5% year-to-date.
NASCAR runs on sponsorships, and its drivers appear in ads on a regular basis, especially the more charismatic ones, such as Tony Stewart for Home Depot (HD) or Jeff Gordon for Pepsi (PEP). And there is seemingly nothing that Tiger Woods doesn’t sell.
Pepsi is 4.7% of the PowerShares Dynamic Food & Beverage (PBJ), while Home Depot is a component of several funds, including the iShares Dow Jones US Consumer Services (IYC), with 3% of the holdings. The funds are down 5.3% and 6.8% year-to-date, respectively.
Whether celebrity endorsements help generate returns down the line for ETFs is still up for debate, but one thing is for certain: if any of these celebrities bug you, you’re probably not going to be getting away from them anytime soon.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.