Digital Acceleration 2 - Kroll

Celebrity Brand Valuation Report 2021Overview of Celebrity EndorsementsThe first step in building a methodology toassess celebrity brand value is to understandhow celebrity endorsements are structured.Based on our analysis, we understand that acelebrity may be engaged by a corporation oran advertiser in two key engagement models—a fixed fee and term engagement model ora one-time engagement model.Fixed Fee and Term Engagement ModelIn the first and the more popular model, acelebrity will be contracted for a specified term(usually one or two years) for a fixed-feepayment that may be made through an initialsigning amount with the balance to be paidupon completion of specified activities.These agreements may also involve a royaltycomponent. These celebrities are called“brand ambassadors” owing to their long-termassociation with the endorsed product. Recently,there have been certain deals where theintellectual property (IP) is partly or fully ownedby the celebrity and the partner operates undera profit-sharing model. Usually, an annualendorsement contract includes the celebrity’savailable two to four days (eight hours a day),during which time the advertiser may schedulean event, a photo ad shoot or a video ad shootdepending on the campaign.Brands, with the requisite budget, targeting theutilization of a celebrity for multiple campaignsusually block the celebrity for a higher number ofdays in the contract to get a better cost-per-day deal.There is also an “annual floor cost of association,”which factors in a minimum number of days,irrespective of the actual utilization of the celebrityfor the brand. Exclusivity provisions ensure thatthe celebrity does not promote a rival productbrand for a certain period after termination ofthe contract. However, it is common for rivaladvertisers to buy out these exclusivity provisions.10One-Time Engagement ModelThe second and less popular form of engagementis a one-time appearance by a celebrity for aspecified event. This may be in the form of asingle photo/ video advertisement shoot or asingle post on social media platform or even anevent attendance. A celebrity may also be castas “acting talent” for a specified advertisement.Such engagements are charged by the day orby the post (in case of a purely digital campaign),with the rates being significantly different forannual contracts versus one-time endorsements.Other Elements of EngagementApart from the regular fee payments, celebrityendorsement contracts may also include an“in-kind” payment. The product being endorsed issupplied to the celebrity for free for a specific term.This is particularly prominent in case of high-endluxury brands. Often celebrities who endorsefashion brands are spotted wearing them toenhance the appeal of the product.The contract may also have additional benefits,which may cover all expenses incurred by thecelebrity during the advertisement’s production.For example, expenses related to first class airfare,hotel accommodations and luxury meals. Theendorsement deals may also provide for insuranceof the celebrity, such as commercial generalliability insurance, which is issued to cover themagainst any injuries arising during the shoot.Alternatively, the terms may include an umbrellaliability insurance, which protects the celebrityfrom certain personal liability situations that mayarise because of the endorsement contract.Variation in Endorsement FeesInterestingly, we note that the rates charged bycelebrities for an annual endorsement engagementsignificantly differ across product brands signed, even

Celebrity Brand Valuation Report 2021in the same year. This is mainly because certainproducts are more attractive to a celebrity, and theirfees for endorsements will vary by their inclinationto be associated with a certain product. Somecelebrities may reduce their endorsement fees fora product brand, which helps a social cause. Endorsingfor a social cause through campaigns initiated by thegovernment or public/private entities increases theircredibility and the likelihood of receiving futureproduct brand endorsement offers. Hence, they arewilling to work for little to no endorsement fees.The prestige of the product brand primarily dictatesthe deal value. There is an inverse relationship betweenthe size/ appeal of the product brand and endorsementfees charged. Endorsing products dealing with personalcare, consumer durables and apparel is often attachedto the celebrity’s status symbol. Celebrities with a highstature often prefer to endorse a company that matchestheir own status in a market leading position. Endorsinga product that can be hazardous to health, such ascarbonated and alcoholic beverages, cigarettes, etc.,creates a negative impact on the celebrity’s image.Celebrities tend to charge much higher endorsementfees for such products.“Established artistes are moresought after in the areas of digitalinnovation both in terms of newproducts and formats like NFTs,bitcoins, D2C, etc. This is mainlyto establish trust and credibilityand build significant awarenessfor otherwise very cutting-edgeofferings. “Traditional products”across categories like beauty,food, nutraceuticals, etc. arealso witnessing very interestingcommunication formats whichare purpose-led, instead ofjust being pure monetarytransactions.”— An Industry SpokespersonCOVID-19 and the CelebrityEndorsement SpaceIn the post-pandemic era, digital marketing hasemerged as a key promotional strategy for productbrands, wherein influencers and social mediahave become integral to almost every marketingcampaign. Further, the film industry is also largelydependent on social media and digital advertisementsto promote their upcoming movies and events.As a result, advertising spend on digital media isexpected to increase from 28% in 2020 to 34%in 2022. Further, ad spends on digital media aremainly led by social media with the largest shareof 29% (USD 628.6 mn) and online video with ashare of 28% (USD 597.2 mn). 33Source: Dentsu Aegis Network India: ‘Digital Advertising in India 202111

Celebrity Brand Valuation Report 2021Ad Spends on Digital Media by Formats (2020)Social mediaOthers, includingclassifiedsDisplay bannersOnline videoPaid SearchSource: Dentsu Aegis Network India: ‘Digital Advertising in India 2021During the COVID-19 pandemic, new-age brands andemerging startups have been shifting their marketingstrategies from traditional methods to influencermarketing, which in turn has proven to be an effectiveway to increase brand awareness among consumerswithin a brand’s limited budgets. According to GroupMINCA’s India Influencer Marketing Report, the Indianinfluencer marketing industry is estimated to reach toUSD 123.1 mn by the end of 2021. It is further expectedto reach USD 300.9 mn in 2025, increasing at aCAGR of 25.0% throughout 2021-2025.4Companies like Mamaearth, Nykaa and Zomato havebeen promoting their brands on social media platforms.Online food delivery platform Zomato has reportedan increase in its advertisement expense from45USD 10.9 Mn in FY18 to USD 70.6 mn in FY21,increasing at a CAGR of 86.6%. Cosmetics andfashion platform ‘Nykaa’ reported a 285.4%increase in marketing and advertising expenses inSeptember 2021 as compared to September 2020.D2C personal care brand Mamaearth spent about90% of its total marketing spend on digital platforms,including influencer marketing, and 10% ontraditional media.5 Further, new-age companieslike Licious, Pepperfry and Rapido have come upwith specific digital media campaigns like “For theLove of Meat,” “WowWomaniya” and “Smart ho,toh Rapido,” respectively, to ensure targetedengagement with the potential consumer.India Influencer Marketing Report: The New Era of Intelligent Influence, GroupM, 2021Mamaearth increases its marketing spends by threefold; to invest in TV and digital, Financial express, December 202012

Celebrity Brand Valuation Report 2021In an interview with the Celebrity Brand Valuation team,Vinit Karnik, Business Head, GroupM ESP, shared hisinsights on the evolving endorsement trends postCOVID-19:1How do you think the advertising space hasevolved in the last few years, especiallyduring the pandemic era?During the pandemic, technology became anintegral part of our lives. With an array of contentavailable online and social media platforms to stayconnected, the digital segment has become quiterelevant in the last two years. And with the riseof social media, influencers have also seenincreasing popularity in the advertising space.In a country with more than 400 million activesocial media users, most of whom follow atleast one influencer, digital marketing is amassive brand opportunity.2Please share your thoughts on why thedigital endorsement space is expectedto have an edge over traditionaladvertisements.Due to lower data costs and affordable devices(like smartphones, connected TV), increaseddigital consumption has led to an explosion ofdigital supply in the Indian market. The uniqueadvantage of digital is its duality; in other words,it acts as an independent medium as well as ameasurement tool for other traditional mediums.This dual nature has provided an astounding yetsustained 30% growth YoY in India. Thus, digitalplatforms are gaining share in the marketing pieby transforming its presence on the back ofadvertising technology platforms such as search,commerce, social and programmatic.3According to you, what are the trends thatwill drive the advertising space in 2022?We believe the following four trends will drivethe Indian endorsement industry in 2022: Rise of D2C brands in the Indian diaspora:The D2C sector has witnessed a significantuptick during the pandemic. With increasedinternet penetration and niche products, wewill see more D2C companies in India emerge.Influencer marketing will be at the core of mostD2C brand marketing strategies, which willgive rise to some exciting collaborationsbetween influencers and these brands. Influencer commerce will become integral toa brand’s sales channel mix: We have beenwitnessing the e-birth and growth of influencerdriven commerce. This space will continue toevolve with new business models emerging. Measurement of influencers’ marketing impact:Currently, there is no standard metric to measurethe ROI on influencers’ marketing. With a generalshift towards digital marketing, metrics like costper engagement, cost per sales and return on adspend (ROAS), etc. will be the focus going ahead.This shift is essential for influencer marketing togrow sustainably. The emergence of social media platforms:With the rise of local social media platformslike Josh, Moj, etc. and vernacular socialplatforms like Sharechat and Daily Hunt,the industry is observing an explosive mixof talent and reach.13

Celebrity Brand Valuation Report 2021Current Celebrity EndorsementsTelevision AdvertisementsAs part of our analysis, we examined the presenceof top celebrity brands in India on television. Thesecelebrities endorsed over 300 product brandsacross 20 different industry segments during the12 months ending November 2021. One of theemerging segments was new age companieswhich covers startups built on digital platformsand technological innovations. These includedsegments like FinTech, EdTech, online gamingand OTT platforms etc., sectors which havespearheaded digital acceleration and grownexponentially via online platforms.Some of the key highlights of the research on television advertisements are presented below:Top Segments Using Celebrity EndorsersPersonal Careand ToiletriesFood andBeveragesNew AgeCompaniesClothingE-CommerceTop Advertising Product BrandsHarpicHorlicksWhiteHat siPhonePeDollar ClubNetmedsColgateVimalSpotify AppLyraGoDaddyLux SoapMountain DewMyGlammParagonMagicBricksTop EndorsersAkshay KumarHrithik RoshanShah Rukh KhanVarun DhawanRanbir KapoorSara Ali KhanTaapsee PannuHrithik RoshanAkshay KumarKareena KapoorAnushka SharmaAkshay KumarVirat KohliKareena KapoorAlia BhattAlia BhattShah Rukh KhanAamir KhanSalman KhanMS DhoniKareena KapoorVirat KohliDeepika PadukoneRanveer SinghHrithik RoshanSource: TAM Media Data for the Period December 2020 to November 2021, Kroll analysisRankings are Based on Secondages—The Number of Seconds the Celebrity Appears on TV for a Product Brand—on TV Channels14

Celebrity Brand Valuation Report 2021Digital AdvertisementsWe also analyzed the digital presence of the India’stop celebrities on more than 100 websites, suchas YouTube, Zee, Rediff, Yahoo, MSN, BBC, etc.As compared to advertisements on television, thedigital advertisements space is expected to witnessan explosive growth from USD 2.2 bn in 2020to USD 3.2 bn in 2022, at a CAGR of 22.5%,while the growth of television advertisementsdeclined by 13.7% from 2020 to 2021.6Some of the key highlights of the research on digital advertisements are presented below:Top Segments Using Celebrity EndorsersPersonal Careand ToiletriesFood andBeveragesNew AgeCompaniesReal Estate andConstructionHealth CareTop Advertising Product BrandsNiveaCadburysSpotify AppLodha GroupVoliniGarnierHorlicksBrawl StarsAplRelisprayTresemmeVimalGo DigitPolycabCureFitLakmeKwality Wall’sPaytmRado Captain CookMankindColgateLiptonDisney HotstarAstralCoviselfTop EndorsersAnushka SharmaShah Rukh KhanDeepika PadukoneAkshay KumarVirat KohliSara Ali KhanAkshay KumarVirat KohliTiger ShroffHrithik RoshanAlia BhattAlia BhattSachin TendulkarAyushmann KhurranaRohit SharmaTiger ShroffMS DhoniShah Rukh KhanRanveer SinghAkshay KumarTaapsee PannuRanveer SinghAkshay KumarHrithik RoshanAyushmann KhurranaSource: TAM Media Data for the Period December 2020 to November 2021, Kroll analysisRankings are Based on Secondages—The Number of Seconds the Celebrity Appears on various websites for a Product Brand6Digital Advertising in India, Dentsu Aegis Network, 202115

Celebrity Brand Valuation Report 2021Product Brand Endorsements by the Top 20 CelebritiesThe cumulative number of product brandendorsements by the top 20 celebrities increasedto 376 in 2021, reflecting a reasonable recoveryand growth from 357 product brands in 2020.This growth was driven by endorsements innew age companies that grew to about 12% ofthe total endorsements. Further, this representsa CAGR of 8.4% over the last five years growingfrom 272 product brands in 2017.CAGR – 8Source: Kroll analysis based on endorsements of the top 20 celebrities16201920202021

Celebrity Brand Valuation Report 2021Digital Acceleration 2.0While in 2020, we were all “Embracing the New Normal”that the pandemic had brought upon us, 2021 set theground for us to enter “Digital Acceleration 2.0.” In thesecond year of lockdown restrictions, companies devisednot only new marketing and promotional strategies,but also looked at building stronger digitally-drivenbusiness models to target the fastest growing internetpopulation in India, which stands at about (‘ ’) 825million internet subscribers at the end of March 2021.7According to a McKinsey global survey of executivesin 2020, companies have accelerated the digitizationof their customer and supply-chain interactions andof their internal operations by three to four years.Also, the share of digital or digitally- enabled productsin their portfolios has accelerated by seven years.8As traditional as well as upcoming industries adoptedthe digital route to continue engaging with theirconsumers, we observed greater traction in thefollowing three segments, specifically from acelebrity endorsement standpoint: FinTech (including Cryptos)– The FinTech sector is expected to reach a totalmarket size of USD 114.2 bn in 2026 fromUSD 38.2 bn in 2021, implying a robust CAGRof about 25.0%. It also witnessed hecticfunding activity with more than USD 7.1 bnraised across 141 deals in 2021.– E-payment total transactions value is expectedto grow from USD 22.2 trillion (34.1 bntransactions) in FY20 to USD 27.1 trillion (43.7 bntransactions) in FY21 and is expected to reachUSD 99.9 trillion (649.7 bn transactions) by2027, CAGR of 24.3% from FY2021-2027.9 Social Media and OTT Platforms– Social media platforms have seen a tremendousgrowth of 21.0 % in the user base, increasingfrom 370 mn in 2020 to 448 mn in 2021.10We also witnessed the emergence ofmultiple short video and other social mediaapps to capture the open space createdpost the ban on Chinese apps.– The number of paid OTT subscribers grewfrom 53 mn in 2020 to 75 mn in 2021,an annual growth of 41.5%. This resultedin video, content and influencer modelsbecoming central to monetization plansgiven the exploding active users. D2C Platforms– With currently more than 800 D2C brandsin India, the total addressable market underD2C is expected to grow from about USD33.0 bn in 2020 to more than USD 100.0 bnby 2025, implying a CAGR of about 25%during 2020-2025.11– The D2C space has also seen increasingfunding activity, with more than 97 dealsand raising more than USD 1.3 bn in 2021.As the battle to address the next 100 mnsubscribers continues in 2022, the focus isexpected to shift to the tier 2 / 3 cities and tothe digitization of the unorganized. We seesignificant funding taking place in super apps,neo banks, digital currencies, social commerce,and also the rise of “phygital” models with thephysical becoming digital and the digitalentering physical.Internet users up nearly 4% to over 825 million in Q4 of FY21: TRAI data, Business Standard, August 2021“How COVID-19 has Pushed Companies Over the Technology Tipping Point—and Transformed Business Forever,” McKinsey & Company, October 20209E-payment Solutions Market in India 2021, Netscribes, October 202110“Social Media Day 2021: History, Significance and How it Emerged as a Ray of Hope Amid Covid,” India Today, June 202111“Decoding India’s 100 bn D2C Opportunity,” Inc4, June 20217817

Celebrity Brand Valuation Report 2021In an interview with the Celebrity Brand Valuation report team,Jayesh Kishanchandani, Associate Vice President, TalentManagement & Brand Partnerships, Yash Raj Films Pvt. Ltd.shared his insights on the evolving endorsement trends:1How would you summarize the changesin the pre- vs. post- COVID-19 era forestablished celebrities vis-à-vis otherupcoming celebrities, particularly froman endorsement perspective in thecurrent era of digital acceleration?One change that I have observed is that establishedcelebrities have a lot more opportunities for brandpromotion

Celebrity Brand Valuation Report 2021 5 C elebrity Brand Ranking We present the list of our top 20 celebrity brands for 2021 below: Celebrity 2021 Brand Rank Brand Value (USD mn) 2020 Brand Rank 1 Virat Kohli 1 185.7 1 Ranveer Singh 2 158.3 3 Akshay Kumar 3 139.6 2 Alia Bhatt 4 68.1 6 MS Dhoni 5 61.2 11 Amitabh Bachchan 6 54.2 9 Deepika Padukone 7 51.6 5 Salman Khan 7 51.6 8 .