Lochte Out: When to Ditch an Endorsement
You will find a Santander branch on most high streets. Inside, if you’re lucky, there will almost certainly be a cardboard cut-out of Formula One driver Jenson Button. As part of his duties to the McLaren F1 team, Jenson is required to stand and grin in every Santander branch up and down the country, two-dimensionally, his 2009 World Championship victory proof that Santander is the nation’s optimal retail banking provider. A highly corporate sporting outfit, sponsorship duties take up a huge chunk of a Mclaren driver’s time off the track. The team is heavily reliant upon revenues from endorsements, for both car development and driver salaries.
One of Jenson Button’s strengths as an ambassador for Santander is the relative absence of controversy in his life. The same goes for Jessica Ennis-Hill and Rory McIlroy, athletics and golf champions respectively, whose cardboard avatars also adorn our streets and extol the virtues of Santander. Unlike a significant proportion of celebrities, the excitement that they generate is limited to their fields of play. Jessica Ennis-Hill is revered by the country for her gold at the London Olympics and her extraordinary post-natal World Championships victory in 2014. Rory McIlroy is a gentleman, the boy from County Down who now sits in the pantheon of golfing deities, one of only three players to have won four majors by the age of 25. Santander and its media agency, Carat, know this, and accordingly put their faith in these ambassadors.
The same cannot be said of Ryan Lochte. The six-time Olympic champion has been stripped of all his endorsements, after having falsely reported being robbed at gunpoint whilst revelling with teammates. Lochte has returned to the USA a villain, and has achieved a great PR coup for a troubled Olympic Games. Warren Buffett said it takes twenty years to build a reputation and five minutes to squander it, and Lochte’s sponsors have fled in a time that wouldn’t embarrass most athletes at the Games.
This is the first notable blot on Ryan Lochte’s copybook, and here lies the risk in endorsing celebrities. Among Lochte’s former sponsors is Mutual of Omaha, a Fortune 500 mutual insurance and financial services provider. Mutual has sponsored the USA swimming team since 2001, and has quietly dropped Ryan Lochte from their “Gold Medal Team” following the scandal. Lochte has been a dependable ambassador for the company throughout his time as a professional swimmer. His moment of madness has cost the 32 year-old approximately $2.3 million. In acting swiftly and responding alongside the likes of Speedo and Ralph Lauren, who also sponsored Lochte, Mutual has escaped public embarrassment. Yet the risk remains – dare financial and professional services companies endorse high-profile sportspeople?
I think the rewards still outweigh the risks. A host of steady if unspectacular brands achieve household significance through association with the sporting elite. Credit Suisse have invested in tennis superstar Novak Djokovic for years, while Aon achieved global exposure during their time as primary shirt sponsor for Manchester United (they still retain naming rights of the club’s training ground). The importance lies in the sponsors’ ability to disassociate themselves from their endorsees once a crisis occurs. Sponsors are wise to join the mass exodus once their athlete has fallen from grace, or they risk being tainted by the undesirable actions of an individual or team.
For now, some brands may prefer to place cardboard cut-outs of inoffensive athletes in their high street branches. This is entirely reasonable. But it is worth remembering that Ryan Lochte once ranked alongside the Jenson Buttons of the sporting world. As financial services providers know greater than most, the higher the risk, the greater the potential return, and today’s lucrative celebrity endorsement could be filling the pockets of tomorrow’s pariah.