Page 279 - Business Principles and Management

Case Study

PAYING CELEBRITIES FOR COMMERCIALS ON MULTIPLE MEDIA

Celebrities have been used in commercials for decades to sell products and
services ranging from new automobiles to the latest health care for seniors.
Prior to the use of numerous new forms of technology for advertising, the
celebrities appeared on television commercials and in print advertisements,
receiving a negotiated salary or royalty for their work. Most celebrities are
paid for the number of times their commercial is aired or the number of
times an advertisement that includes their likeness is used in magazines
and newspapers.
The digital world of advertising has opened the issue of how actors
should get compensated for their work. The ad industry and talent repre-
sentatives agree that the old model formed in the 1950s does not work in
today’s diversified media landscape, in which advertisements are spread
across cell phones, MP3 players, and video-on-demand. Representatives
from the advertising industry and Hollywood are working on a new model
for compensation in a digital world. Consultants have been asked by all
negotiating parties to submit proposals that will address how actors in
commercials will be paid when the spots appear on multiple media.
The ultimate goal of negotiations is to create a system of fair compensa-
tion for celebrities who promote products and services through numerous
media channels.

THINK CRITICALLY

1. How has the increased use of technology affected the sales potential
for products and services?
2. Why should celebrities be eligible for higher compensation when
their advertisements are being relayed through many technological
avenues?
3. What is your opinion of basing a celebrity’s pay on the dollar amount
of sales generated through the different avenues of advertisement, in-
cluding the latest technology?
4. Give five examples of products or services that are promoted by
celebrities. Why are these individuals good choices for promoting
those particular products and services?

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