Gianna Tsesmelis

ENC2135

Boudreaux

6 February 2017

Over the Past Five Years, how has the Introduction of Celebrity Endorsements to

Instagram Impacted how Consumers view Digital Advertisements?

Some of the most influential people in America are famous celebrities; whether

they are politicians, actors, or religious leaders, they all have some impact on the lives of

those who idolize them. Since marketing companies are aware of this, it is no surprise

that they turned to celebrities to endorse their products. Since the late 1700s, people have

been using this tactic to attract the public to a product that they are selling. Of course the

field of marketing and advertisement took off when television and, later, the Internet were

introduced. In the present day, however, companies have taken their advertisements to

social media sites, such as Facebook, Twitter, and most recently, Instagram. Instagram is

not necessarily new to the social media world, but over the past five years it has greatly

increased its number of users since its beginning. According to two different blog sites,

the platform has increased its number of users from one million accounts just 2 months

after its launch (Irfan Ahmad) in 2010 to over 500 million active monthly users

(Sydney Parker) as of November 2016. The appeal of using Instagram comes form the

fact that Instagram is strictly photo and video content. As opposed to the typical

advertisement where the words do most of the persuading, Instagram ads solely show a

photo with a caption below explaining all of the product details. While a percentage of
companies have their own accounts and post advertisements from there, other companies

do that as well as paying celebrities to post pictures of their accounts. Not only does this

put the photo directly into the feed of the celebritys followers, but it also appears to

followers that the person advertising the product truly finds the product useful and

recommends it to the public. This is because the photos appear as testimonials rather

than advertisements (Sapna Maheshwari, A1), which entices viewers more than an

obvious advertisement would. Additionally, about 55% of Instagram users are under 30

according to demographics from 2015 by the Pew Research Center. Young people are

often much more vulnerable and susceptible to suggestion, which makes it much easier

for marketers to convince users viewing the ads to buy their product. Using statistics and

data from a variety of academic journals as well as information from newspapers and

blog sites, an analysis can be made on the impact Instagram has made on how consumers

view digital advertisements.

Beginning with a discussion on the history of celebrity endorsements, sources

from The Canadian Journal of Economics, Professors C. Robert Clark and Ignatius J.

Horstmann. Although the use of celebrity endorsements began over 100 years ago, it

really took off when companies began using professional athletes in the 1930s. According

to Horstmann and Clarks article, by 2007, the top 10 pro athletes alone earned $287.5

million in endorsement income (1607). The reason for this is probably linked to the fact

that a majority of endorsement deals involve athletic shoe manufacturers (Clark,

Horstmann 1607), such as Nike and Adidas. A study documented in the same article

indicates that celebrities enhance brand recall (Clark, Horstmann 1606) when they are

used in an advertisement. This must be considered when weighing out the impacts of
celebrity endorsements because there is now a question as to whether the celebrity

increases the appeal of the product or simply the likelihood of consumers remembering

the product. An additional consideration must be made regarding the possible negative

implications involving celebrity endorsements, such as publicity scandals. In Craig

Garthwaites article from the American Economic Journal: Applied Economics, he

acknowledges the negative publicity surrounding Tiger Woods alleged marital infidelity

in 2009 (79). According to Garthwaite, this event decreased the value of products that

Woods endorsed, causing firms to lose large amounts of money. Over the past five years,

however, companies began to use more than just television commercials and billboards to

advertise their products. Instead they started to use social media as its popularity

continued to climb. The reason that companies are choosing social over other mediums is

the fact that a large majority of people use social media platforms such as Facebook,

Twitter, and Instagram every day, multiple times per day. The number of hours of

television that people watch per day has decreased since over the past few years since the

release of Netflix, where users can stream movies and TV shows for a monthly cost. As a

result, marketers have turned to social media to insert their product into the feeds of

account holders.

In an article discussing advertising on Facebook, Doctor Kevin Curran, Sarah

Graham, and Christopher Temple claim that social networking sites in general now

account for one out of every five ads people view online (26). This furthers the point

made earlier about why marketers have turned to social media. The question now

becomes whether or not this method truly works better than traditional advertising or not.

Also, whether or not including a celebrity in these social media campaigns has helped
even more. One thing that Facebook does to enhance its advertising effectiveness, is

allow its marketers to create a page for their business as if it were a profile of a person.

This makes it easy on consumers by allowing them to click on a business profile and

access photos, links, and other informative details about any products the company sells.

Also, the site allows targeting based on demographic profiles and interests that users

reveal about themselves on their pages (Kevin Curran, Sarah Graham, and Christopher

Temple 29). This directs specific ads only to the people who seem as though they would

be interested in them, based on information from their profiles. Similarly, Instagram

allows businesses to make their own page, but unlike Facebook, they do not have to have

a personal account in order to make their business page. Additionally unlike Facebook,

Instagram its strictly photos and videos. The only text comes from a short biography at

the top of the users profile and the captions written underneath each post. This seems

much more effective because people look for what is visually pleasing and exciting.

Attracting people by photo is much more effective at drawing the consumer eye. In recent

years, Instagram has also enhanced its explore page. This page was originally designed to

see the most popular posts on the website at that current moment; however, the site has

been modified into a page that displays photos based on user likes and similar accounts to

those that they already follow. This brings up the topic of celebrity endorsement because

many of the posts on the explore page are visually pleasing. Even if a user does not

follow any celebrities, it is still likely that they will encounter celebrity endorsements,

simply based on the types of photos that they like.

A study done by Jagdish Agrawal and Wagner A. Kamakura showed that on

average, investors [of companies] seem to value positively the use of celebrities in
advertisements (60). This study analyzed the success from using celebrities to endorse

their products. It was published to the Journal of Marketing in 1995, so the information is

not relevant to digital news, but it is relevant in discussing the effectiveness of celebrity

endorsements. In order to analyze the effectiveness, Agrawal and Kamakura studied the

abnormal stock returns of the companies used. According to the results of this study,

firms announcing contracts with celebrities experienced a gain of .44% in excess

returns (Arawal, Kamakura 59). Horstmann and Clark used the results of this study to

formulate the major points of their assessment and they found that celebrity

endorsements lower the cost of reaching a given set of customers by enhancing consumer

recall and/or increase consumers valuation of an endorsed product (1623). Being able to

reach a vast amount of viewers for the most economic price is an important part of

advertising. This is why social media is such an advantageous method. Not only do

marketers have access to hundreds of millions of potential consumers, but they can also

advertise for a much lower cost than traditional methods. As stated in the article by

Curran, Graham, and Temple, almost 1 in every 13 person in the world is an active

Facebook user (32) and the majority of these users are young adults and so are most

Instagram users. As previously mentioned, these users are much more susceptible to

suggestion and, additionally, are usually more relaxed about spending [money] online

and generally have more of a disposable income to spare (Curran et. al. 33). This creates

a direct pathway for companies to reach consumers that are more likely to purchase items

seen in advertisements.

In conclusion, it is fair to say that celebrity endorsements impact a consumers

decision on whether or not they should purchase a product. An important factor of

celebrity endorsement is to find a celebrity that [matches] the brand[and has] the

value and image required to advertise the brand (Wilson Edzorna Dzisah, Chosniel

Elikem Ocloo 197). As discussed, digital news can negatively impact a product if the

celebrity endorsing it has recently been involved in a displeasing event. It can also,

however, greatly affect a companys credibility if the person endorsing its product is

highly respected and adored by the public. The introduction of social media, specifically

Instagram, allows companies to reach out to popular public figures and pay them to

advertise directly to thousands or even millions of followers. According to a book called

Contemporary Ideas and Research in Marketing, however, although a celebritys

testimony of a product increased the confidence of 85% of people in a conducted survey,

only 15% said that the presence of a celebrity dictated their decision to buy the product.

(Angela Sokolovska). There are few academic journals that discuss Instagram directly.

Academics need to address this specific platform because it has changed the way

consumers see advertisements as well as the way companies advertise their products.

1. Agrawal, Jagdish, Wagner, A. Kamakura. The Economic Worth of Celebrity

Endorsers: An Event Study Analysis. Journal of Marketing. 59. No. 3. 1995. 56-

62.
2. Ahmad, Irfan. Timeline of Instagram from 2010 to Present. Social Media Today.

http://www.socialmediatoday.com/content/timeline-instagram-2010-present-

infographic. 7 January 2014.

3. Clark, C. R., Horstmann, I.J. A model of advertising format competition: on the

use of celebrities in ads. Canadian Journal of Economics. 46. No. 4. 2013. 1606-

1636.
4. Curran, Kevin, Graham, Sarah, Temple, Christopher. Advertising on Facebook.

International Journal of E-Business Development. 1 No. 1. 2011. 26-33.

5. Dzisah, W. E., Ocloo, C. E. Celebrity Endorsement and Consumer Buying

Behaviour. European Journal of Business and Management. 5. 2013. 197-208.

6. Garthwaite, C.L. Demand Spillovers, Combative Advertising, and Celebrity

Endorsements. American Economic Journal: Applied Economics. 6. No. 2. 2013.

76-104.
7. Maheshwari, S. Endorsed on Instagram by a Kardashian, but is it Love or Just an

Ad? New York Times. 30 August 2016. A1.

8. Maheshwari, S. Statement on Trump puts New Balance Shoe Company in Cross

Hairs New York Times. 15 November 2016. B9.

9. Parker, Sydney. A Long List of Instagram Statistic That Marketers Need to

Know. Hootsuite. https://blog.hootsuite.com/instagram-statistics/. 3 November

2016.
10. Pew Research Center. Instagram Demographics. Pew Research Center.

http://www.pewinternet.org/2015/08/19/mobile-messaging-and-social-media-

2015/2015-08-19_social-media-update_09/. 17 August 2015.

11. Sokolovska, A. Impact of Celebrity Endorsement on Consumer Buying

Behavior. Guided Selling. SmartAssistant. http://www.guided-selling.org/impact-

of-celebrity-endorsement-on-consumer-buying-behavior/. 19 January 2017.