Celebrities are usually good for advertising, but what happens if their image goes bad? Robin Walsh reports

' With the recent publicity surrounding the cancellation of a number of advertising campaigns featuring model Kate Moss, the advertising industry is reminded of the potential risks associated with using a high profile personality to promote a particular brand or product.

Celebrities today are often brands in themselves and are prone to being damaged in much the same way. As such, advertisers should be prepared for the potential fall-out and costs if the worst should happen.

The appeal to an advertiser of a celebrity endorsement for its product may be huge, particularly when the success of some of the alliances that have been struck up over the years are borne in mind. Examples are: Maureen Lipman's Beattie character for British Telecom (as it was then known); Jennifer Aniston and l'Oreal; Gary Lineker and Walkers Crisps; Jamie Oliver and Sainsbury's; and Thierry Henry's Va Va Voom for Renault.

It is apparent that a well-orchestrated campaign with the right celebrity providing the endorsement can surpass the impact of a thousand pack-shot adverts.

Each year sees a raft of new and successful personalities in the public consciousness, some of which may portray just the sort of image that an advertiser would like associated with its product.

However, along with the anticipated upside of such celebrity endorsements, there is the flip-side of what happens when things go wrong. No matter what the advertiser's contract with the celebrity might say, or what warranties it may contain, it will invariably be the advertiser who is left on the hook if a campaign has to be terminated.

An unsuccessful campaign as a result of the creative content not really 'hitting the spot' is perhaps an occupational hazard. But with a celebrity endorsement as the focal point of an advertising initiative, a downturn in the celebrity's reputation or perception in the eyes of the public may well mean that the image an advertiser had spent so much money getting right and promoting, is suddenly more of a liability than an asset.

Similarly, in the unfortunate event that the featured celebrity were to die, or their health to deteriorate to a significant extent, it may well be felt that to continue with the campaign would be in poor taste at the very least, if not wholly inappropriate.

This risk can, however, be addressed. Most insurers who offer annual advertising agents indemnity insurance to ad agencies, will also provide celebrity death and disgrace cover as an ancillary to the annual policy but specific to individual advertisements or campaigns.

These policies will typically run for a

12-month period, which adequately covers the shelf-life of the average campaign. They will indemnify the advertising agency for those costs which are rendered abortive and valueless in the event that a campaign has to be withdrawn as a result of the death, disability or 'disgrace' of the insured celebrity.

The limit of indemnity under such policies will generally reflect the production budget attributable to the advertisement but, in some instances, may include the air-time or print space costs contracted into. The policy will indemnify the insured for the costs of the campaign for which no value has been derived, taking into consideration the original intended scheduling.

'Bad boy' image

Even with such a policy in place, the advertising agency or advertiser does of course have a responsibility to run their business in a diligent fashion.

If a company makes a conscious decision to have an individual with a 'bad boy' image fronting up their campaign, then, as part of this decision process, they should have considered that the type of actions which give this individual his public image are part and parcel of his personality. And similar publicity of this nature will not constitute grounds for terminating a campaign and making a claim on any policy.

In this vein, underwriters, when approached with a risk prior to the commencement of a campaign, will seek to obtain as much background information as possible on the insured celebrity. From a 'disgrace' perspective, this will mean scouring news sources to highlight any facts which are already in the public domain or which may be of interest to the insured.

On the basis that such information is already out in the open and a matter of public record, the advertiser or its agency would then need to decide whether it is willing to continue with the campign.

Normally, there would be no cover under the death and disgrace policy for any claim which may subsequently be made on the basis of this information. In reality, it is extremely rare for any situation to come to light in this process which is either not already known to the parties involved, or is of a nature such that the only sensible option would be not to proceed. Needless to say, the internet has proved to be an invaluable tool for underwriters in this underwriting process.

The policy cover is, of course, not restricted to instances where a celebrity is 'disgraced'. Because cover for death or disablement is also provided, a decision will typically be taken by the underwriter based on the age and perceived health of the celebrity to be insured, as well as on the production budget, to determine what medical information is needed.

This process also gives the insured and insurer the option to discuss the scope of cover to be provided. The default position would be that any pre-existing health condition or matter of public record would not be covered by the policy.

However, in many instances the extent of cover can be widened. For example, an insured celebrity may have a history of alcohol abuse, but have been 'dry' for the past five years, in which case the underwriter may feel sufficiently comfortable with this position to agree to provide cover.

The same process may be undertaken in respect of more regular medical conditions, sometimes after advice has been sought from either the attendant physician, or an independent medical expert.

The extent of cover granted can therefore vary widely and the premium will of course reflect this. Celebrity brands can be very strong but also potentially volatile. Insurers and their advertising agency clients must therefore identify carefully the possible exposures that specific endorsements may leave them open to and work these contingencies into their strategies. IT

Robin Walsh is UK media manager within the AT&T division at Hiscox