if he thinks we are going to resolve our dependence on oil through biofuel. But there he is marketing BioWillie with that premise.

All of this started me thinking about the efficacy of celebrity endorsements. Not my field, of course, but an interesting topic nonetheless. As you might expect, marketing professors write a fair amount about celebrity endorsements, and this is interesting stuff. Mucking around in these papers for a few hours, I found studies of which sorts of celebrity endorsements are the most valuable (as you would expect, endorsements that are closely related to a celebrities perceived "expertise" are best), which sorts of products are most likely to garner celebrity endorsements (among other things, products with high margins), and similar issues.

I particularly enjoyed reading a few papers linking celebrity endorsements and stock price. For example, this paper (only the abstract is available without subscription) examines Tiger Woods' performance and the stock prices of his sponsors. When Tiger is playing well, do Titleist, American Express, and Nike do well?

We do not find a relationship between Tiger’ss tournament placement and the excess returns of Fortune Brands (parent of Titleist). This is likely due to Titleist being a very small contributor to the total market value of Fortune Brands. We also fail to find a significant relationship for American Express suggesting the market does not view a golfer endorsing financial services as credible. We do, however, find a positive and significant impact of Tiger’s performance on Nike’s excess returns suggesting that the market values the additional publicity that Nike receives when Tiger is in contention to win.

Not exactly in the realm of celebrity endorsements, I found a recent paper linking official sponsorships and stock performance. Here is the abstract:

This study presents analysis of the impact of “official product” sports sponsorships with the National Football League (NFL), Major League Baseball (MLB), the National Hockey League (NHL), the National Basketball Association (NBA), and the Professional Golfers Association (PGA) on the stock prices of sponsoring firms. The primary finding of the study is that, in the main, announcements were accompanied by increases in shareholder wealth. The 53 sponsors analyzed experienced mean increases in stock valuations of about $257 million. A multiple regression analysis of firm-specific stock price changes and selected corporate and sponsorship attributes indicates that official product sponsorships with the NBA, NHL, and PGA and those with smaller market shares were associated with the largest gains in share prices. Although corporate cash flow (a proxy for agency conflicts) is statistically unrelated to shareholder approval, sponsorships by high-technology companies were associated with stronger stock price reactions than otherwise. Finally, product congruence with the sponsored sport was positively related to changes in stock prices.

By the way, I was surprised to learn that "official sponsorships" can be traced to the 1984 Olympics in Los Angeles.

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