Compensation Options for Celebrity Endorsement

The ways a celebrity can receive compensation for their endorsement are as varied as the products themselves that the celebrities are asked to endorse. There are plenty of different kinds of deals that can be made, but a large part of determining what kind of deal to offer has to do with your business plan and operating costs. Let’s take a look at some of the more common and relevant compensation options available to someone running a startup clothing brand.

one_off_paymentOne-off payment

Like the name implies, this compensation structure involves a one-time payment to the celebrity for a predetermined amount of work. What the celebrity does as part of this agreement is entirely up to you; maybe you want them to wear your clothes at a red carpet event. Or, if the celebrity is a musician, maybe you want them to shout out your clothing line in one of their songs- the options are practically endless.

equityEquity

If you’re a little cash-poor at the moment but really need a celebrity endorsement to elevate your brand to the next level, another option to consider is giving the celebrity an equity stake in your company. This option really only works when the conditions are absolutely right; for example, you need to be sure that the celebrity is committed to maintaining their support of your brand over the long haul and won’t just stop pushing your product after a while.

revenue-sharingRevenue sharing

Similar to offering equity in the company, revenue sharing is a good way to secure a celebrity endorsement without putting down more money up-front than you can comfortably afford to spend. Revenue sharing is simple: you partner with a celebrity who will represent your brand in the public eye; in return, the celebrity will receive a percentage of your sales. Unlike equity, however, the celebrity does not have an ownership stake in your company.

free-merchandiseFree merchandise

Offering free merchandise is a great way to get your brand’s name out there without incurring costs you can’t afford. Many clothing companies will send free merchandise to celebrities in the hopes that the celebrity will be photographed wearing the clothes; if the brand is really lucky, the celebrity will be so happy with the new clothes that they’ll post about them on social media for free.