Effectiveness of celebrity endorsement measured by quantification method

Abstract

Celebrity endorsement is the prevalent strategy in advertisements promoting a firm’s product or service. Prior research tries to measure the effectiveness of celebrity endorsement based on the sources of celebrity’s attractiveness, trustworthiness, and expertise. This research utilizes data of Korean telecommunication industry to measure effects of the celebrity’s attractiveness, trustworthiness, and expertise on the firm’s value. In addition, text mining and sentiment analysis method are applied for obtaining both quantitative and qualitative information on the celebrity. The results indicate that increasing the positive sources of a celebrity’s attractiveness and expertise have a positive impact on the firm’s value, whereas a negative source of a celebrity’s trustworthiness affects the firm’s value negatively. In particular, a celebrity’s misbehavior, which can completely erode trustworthiness, not only has a negative impact itself but may also impact other factors to become negatively.