The following article is a guest contribution from Giovanni Solazzi. Giovanni Solazzi is a Visiting Sports Law Researcher at Harvard School of Law, where he is writing his dissertation on Publicity Rights and Endorsement Agreements under the supervision of Professor Peter A. Carfagna. Giovanni is visiting from the Alma Mater University of Bologna, where he is a J.D. Candidate graduating on February â€˜18. There, he recently received the “2017 Study Grant for Research Abroad award” for his work in Sports Law.
It’s undisputable that the endorsement market has changed: social media is now the new big wave that has to be surfed.
Indeed, endorsements on social media are a rapidly growing business, especially among millennials, who have made a landfall from traditional media. Mediamix, a majormarketing firm for influencer, notes that some key demographic groups now receive media content solely through social media channels and the total advertising spent in the market of influencers will rise from $500 million in 2015 to between $5 billion and $10 billion by 2020.
According to the Economist, Snapchat reaches 40% of all American 18- to 34-year-olds every day; Instagram does the same with a stronger presence in Europe and over 90% of its users under the age of 35, making both social media platforms the ideal site for advertisers with a target market of 18 to 34 .
Finally, a research conducted by Captiv8 says that people with 3-7 million followers can charge, on average, $150.000 for a picture on Facebook, Instagram or Snapchat. Suddenly getting real instagram followers doesn’t seem like so much of a chore does it?
You see the wave right? It is huge, isn’t it?
New generations will come into the world asking for a selfie with the doctor to post on Instagram. The last generations are growing up in the parallel world of social media and my generation is going to become old with them. Long story short, the percentage of the people who will get daily access at social networks is going to grow and the wave is destined to become bigger and bigger! With the help of sites such as Buzzoid, we will continue to see that the amount of Instagram followers someone has does play a part in how they are perceived online and how they build themselves as a brand. This is very important as the rise of social media continues. We might as well use it to our advantage, considering it doesn’t look like it is going anywhere anytime soon. Being that many influencers, celebrities, and sports stars have already gained their popularity on the necessary social media platforms of the future, it can be increasingly hard for new talent to grow themselves to the heights that others have been able to in the past. This is why new growth and engagement tools and marketing agencies (as an example, Quantum Marketer loves Stellation Media as an Instagram growth agency and many others) are dedicated to helping those that are wishing to grow their social media accounts to allow for more followers and engagements.
Not only the market is growing, but also the advertisement themselves seem to be particularly effective. First of all they are direct. It’s a two way communication channel where fans have direct access to their favorite celebrities, who in turn can communicate directly to their fans in their own way. Through these platforms, celebrities are humanized and fans get to see the person behind the superstar: they can get access to their idols’ private lives, follow them during the days, enter their houses and join them for a virtual dinner or a virtual cheer.
Indeed, according to Professor Kineta Hung, Head of the Department of Communications Studies at Hong Kong Baptist University, celebrity endorsements are often effective because consumers aspire to escape their everyday life by living in the world of their favorite celebrities. Therefore, by purchasing a product that they endorse, people are somewhat connected to them. Well, social media improves this effect to the nth degree.
For this reason, these advertisements are also “wanted”. People look for them. In fact, fans can follow their favorite celebrities on social media in order to gain information on their lives without waiting for the next advertisement on TV or for the next magazine.
Finally, they have a high level of source credibility (the perceived trustworthiness), source attractiveness (the ability of the communicator to generate a positive effect) and a related low consumer skepticism (the disbelief towards advertisement claims). Indeed, we see how celebrities try to advertise their product as spontaneously as possible on Instagram, sometimes making their posts appear more as friendly recommendations than endorsements (don’t worry, I’ll come back to this matter at the end of the article).
However, most of the agents in the sports world seem afraid to surf this big wave. Instead of grabbing the board and having fun, they prefer to avoid it, go under the water and wait for waves they are familiar with, but in this way they give up a lot of fun (and fun in this case is equal to money)! If we give a look at the most paid celebrities on social media, or at the biggest examples of paid off advertising on social networks, we find very few endorsements made by athletes.
Why are they scared? I can bring to light different reasons. First and foremost, often “older” agents know almost nothing about this new world: they didn’t grow up in it, they don’t know how to exploit it and they prefer close their eyes. “There are questions that sports agents never had to answer in the past” explains Evan Morgenstein, President and CEO of Premier Management Group, “The first question asked by PR people is, what’s your “social media numbers”? What’s your engagement numbers? What kind of sell-through are you getting?
There are also price issues at stake that Mr. Morgenstein made clear: we are talking about endorsements for low five figures (very different from the 6-7 figures endorsement big agents are used to negotiate) and often the strong brand marketers are reaching out directly to athletes via direct message and many athletes are not compensating their agents for these types of tasks.
Finally, there are additional and extremely important implications that regard the public image of the athlete. Low five figures endorsements entail a player has to sign many deals in order to have a significant gain. But too much sponsored content from a given endorser could damage not only the endorser’s credibility outside the field, but also inside. In fact, people may think “he’s always making advertisements, he doesn’t train hard”, “he cares only about money and endorsements” or “he’s always using his phone…he’s not focus on the game” etc. etc. etc.. This is something that goes against the interest of agents, who could find themselves in a difficult position when they have to negotiate for a new contract.
Some of these reasons led Mr. Morgenstein to state “Social media has killed the sports marketing agent…The athlete market is dead”.
Now, I would like to disagree with Mr. Morgenstein (who, by the way, has shown to know how to surf this wave since he became also a successful agent for influencers). I don’t believe the athlete market is dead. I believe it is simply changing and sports agents can take advantage of this shift.
Take one of my favorite football players, Julian Edelman (to whom goes my best wishes for a great recovery, you’ll come back stronger than ever man), as example. He has 1.5 million of followers on Instagram, he can post a picture when he chills out on his sofa drinking a soda on a Friday night, perhaps with his little beautiful one-year-old daughter in his hands, and get a hundred thousand dollars from the soda company for just two minutes “of work”. Or take Danny Amendola, who has an Italian heritage. He may post a picture when he shots an espresso at 7am before a training and get enough money to rent a castle in Italy for his holidays (Danny, do you know you can rent a castle in Italy for just 5k $ per week?). These are only two fast examples that came to mind while I was writing this article, but there are millions of endorsements out there that athletes may sign without diminishing their public view but often finishing to improve it. Indeed, fans would be happy to see that Julian spends his free day at home with his daughter and he doesn’t go out partying or that Danny wakes up early in the morning as most hard workers do). A lot of times the message that players can deliver to fans through social media can be extremely powerful and they could also get paid a decent amount of money for it!
Now, I’m not referring to the 5% superstar athletes who get hundreds millions dollars from big brands, but I’m addressing to the agents of great players who nevertheless don’t have huge endorsements. The majority of NBA players, for example, don’t have deals. They get free shoes and that’s all…
So why don’t agents help them “grow their pies” through social media? There are no reason at all why they should give up these deals and refuse these amounts of money only because they don’t have 6 figures. Athletes may get hundreds of thousands of dollars for a photo posted on Instagram, exactly as influencers do (e.g. 50k for a post â€“ which let’s say it takes 5 minutes = rate of 600k per hour!) and agents don’t even have to negotiate long and exhausting deals. If you are a budding influencer and need some help to increase your following check out Kenji, they have some fantastic support, helping you get more followers. But I digress.
As Mook Williams stated five years ago when he was President of Symmetry Rep: “If an agent is familiar with the various uses of Twitter, and actively searches for new endorsement opportunities, he will better be able to identify when a client could potentially use social media to earn off-the-field income”.
And guess what, last year Mr. Williams decided to partner with the “social media King” Gary Vaynerchuk to create VaynerSports, and one of the major goals of the company is exactly “to get athletes in social media investments”. “One of our strengths at VaynerSports will be our ability to help players grow and leverage their social media platforms,” said AJ Vaynerchuck, Gary’s brother and business partner, who added “We will sit down with each client and determine what their goals are beyond the football field…we will also create nontraditional marketing and branding opportunities for our clients, aiming to expand their brand and revenue sources beyond the typical NFL ecosystem”.
Actually, according to a very interesting article written back in 2011 by Caroline McCarthy, Vice President Communications and Content at true[X] and ex-Googler, the face of celebrity endorsements has already started to change. Famous spokespeople aren’t simply appearing for money. They’re often taking a stake in the business itself. “We’re seeing a trend of celebrities, when becoming the spokesperson or face of a brand, taking on titles like investors, creative directors, and advisors that imply a much deeper level of involvement than simply being in a company’s ads.” Many celebrities such as: Lady Gaga, Justin Timberlake, Alyssa Milano, Adrian Grenier and Mc Hammer decided to move towards this direction. But the most famous case is probably Ashton Kutcher, who started making venture capital investments in new companies, becoming involved also as celebrity spokesman for the same. Most of the time people become aware of these new brands solely because a celebrity endorsed it on social media. Also the beautiful and talented actress Jessica Alba found a new beauty line called “the honest Beauty”, proving to be also an extremely successful entrepreneur.
This is an extremely interesting new face of advertising, a good path to make the most of social networks, but above all a great way to manage the 4th step of an athlete’s career. In fact, retirement is among the hardest periods for many players, who suddenly found themselves with a lot of time available and often no new sources of income. Agents can help their clients to invest money in startups and use their social media to advertise them. When you have time, a good amount of money under the mattress and fame, there is nothing better than invest wisely in all these three things together!
So dear sports agent, all you have to do is get over your doubts, grab a surfboard and ride the wave of social media with your athletes!
But remember to do it legally and don’t take the wave too far from the coast!
What do I mean? I mentioned earlier that many times advertisements on social networks are hidden. They look more like friendly recommendations and consumers can’t understand they are in presence of an endorsement. This improves the trustworthiness, and consequently the effectiveness of the message. But is this legal? The FTC in US and the ASA in UK were clear: IT IS NOT! You can ride the wave, but you have to do it following the rules.
The Federal Trade Commission have recently updated their social media endorsement guidelines in an effort to avoid confusion among users and brands. The guide says: “if an ad[vertisement] features an endorser who’s a relative or employee of the marketer,” or someone who has “been paid or given something of value to the product,” that connection must be made clear. The FTC say this reflects “the basic truth-in-advertising principle that endorsements must be honest and not misleading.”
This is very similar to the UK laws in regards to paid-for endorsements, with the Advertising Standards Authority having the power to remove or amend anything that breaches the Committee of Advertising Practice Code (CAP Code). A 12th version of CAP Code was released on 2011 specifically to cover social media.
But who’s responsible in case of violation – the company or the celebrity endorser?
At the beginning of the investigation (just one year and a half ago) the FTC decided to condemn only the companies. But recently, they changed their attitude and sent warning letters to 90 influencers and marketers. According to the National Law Journal, Allen Iverson was also one of the recipients.
The bottom line is that someone who’s endorsing a product must disclose the nature of that relationship. Following the guidelines of the FTC, individuals who were paid to endorse a product on social media must include in their posts #Ad or words like “Sponsored,” “Promotion” and “Paid ad”. But don’t worry dear sports agents, as you see, this is not something hard to understand and comply with…
Anyway have fun surfing guys, don’t wait for me! Hopefully, one day I will able to join you …
1. “Social Media Endorsements: Where Will Marketers Draw the Line?” Knowledge@Wharton, May 23, 2017, http://knowledge.wharton.upenn.edu/article/social-media-influencers-will-marketers-draw-line/
 2. Smith, C (2014) “Here’s Why Instagram Demographics Are So Attractive to Brands” Business Insider, Available at: http://www.businessinsider.com/instagramdemographics-2013-12/
 I invite you to read the exhaustive dissertation on the topic written by former MBA Candidate at Dublin Business School Mr. Oluwafunmito Jatto, to whom goes my compliment.
 Stever, G. and Lawson, K. (2013) “Twitter as a Way for Celebrities to Communicate with Fans: Implications for the Study of Parasocial Interaction”, North American 80 Journal of Psychology.
Cunningham, N. and Bright, L (2012) “The Tweet Is in Your Court: Measuring Attitude Towards Athlete Endorsements in Social Media”, International Journal Of Integrated Marketing Communications
Hung, K. (2014) “Why Celebrity Sells: A Dual Entertainment Path Model of Brand Endorsement”, Journal of Advertising,
 Cunningham, N. and Bright, L (2012) “The Tweet Is in Your Court: Measuring Attitude Towards Athlete Endorsements in Social Media”, International Journal Of Integrated Marketing Communications
 Harvard Professor Herbert C. Kelman in 1961 identified the three most important dimensions of source characteristics as source credibility, source attractiveness (also known as source likeability) and source power.
 Many athletes such as: David Beckham, Anna Kournikova and very recently Iker Casillas, have been object of these kind of critics with varying degrees of accuracy.
 http://www.villeinitalia.com/villas/historic-properties-e-castles do you know you can rent a Castel in Italy for just 5k $ per week?