How to Structure Celebrity Partnerships for Brand Growth

By Melissa Dolan, Director, Emil Capital Partners

Celebrities are entering the venture capital scene, partnering with brands on everything from product collaborations to investing capital alongside more traditional investors. As a founder in today’s landscape, you’ve probably already considered the idea of celeb partnerships or even taken a few steps forward on a deal.

Are you looking to recreate success stories such as Kim Kardashian’s Skims, which raised $270 million in a deal valuing the company at $4 billion earlier this year? Perhaps you have identified talent that speaks to your target consumer. Or maybe you are looking to make a big splash with your marketing plans and take your brand to the next level.

Celebrities can undoubtedly serve as a catalyst for stratospheric growth, with examples such as Ryan Reynolds’ investment in Mint Mobile providing a template for effective partnerships that benefit both the brand and the celebrity. As investors in a number of consumer brands, we at Emil Capital have facilitated partnerships such as Venus Williams joining the board of Zeel and Deebo Samuels and Lindsay Horan investing in Cheribundi.

Over the years, we have picked up some tips and tricks for how to best engage with talent at the start-up level. Before you slide into an A-Lister’s DMs, read on for best practices and tips on how to structure celebrity partnerships and maximize value for your brand.

Seek Out Celebs that Fit Your Brand

When deciding who to work with, the A-List isn’t everything. For every example such as George Clooney’s tequila brand Casamigos, which sold to Diageo in 2017 for $1 billion, there are dozens more that have failed after massive investments (see Hello Bello’s recent announcement that it is filing for bankruptcy). Brands should prioritize the authenticity of the relationship.

A celebrity who is an avid consumer of your brand will generate more authentic engagement with your consumers than an A-lister who is solely in it for a multi-million dollar cash deal. The gold standard here is to find a celebrity who was a consumer of your brand before you engaged with that individual.

Absent this type of match-made-in-heaven, seek out celebrities whose audience has a high overlap with your consumer. When identifying potential partnerships, look past vanity metrics such as social media followers or number of box office hits and instead identify celebrities with engaged followings that mirror your consumer target.

Get Smart On Your Partnership Structure

Once you narrow in on who to partner with on your brand, it is critical to structure the relationship in a way that maximizes value for both sides. Startups have a wide variety of structures to choose from depending on business objectives.

Here are 3 common structures:

  • All cash deals (the traditional spokesperson model) attract top tier talent, but celebrity engagement is often limited to the production of marketing collateral. These deals are typically short-term in nature with both sides focused on one specific deliverable such as a television commercial or a fixed number of social media posts.
  • Hybrid cash and equity grants limit large cash outflows for funding-constrained startups while offering celebrities participation in the upside when the company is sold. Moving a portion of the compensation to equity shifts focus to longer-term targets, such as sales growth, which in turn incentivizes celebs to engage on a deeper level to drive higher enterprise value through their engagement with the brand.
  • Revenue sharing models give celebrities and brands the opportunity to partner to bring something new into the world, such as a co-branded product or limited drop. This is a powerful model given consumers continue to demonstrate seemingly limitless demand for the CPG-ification of everything from restaurants to celebrities.

The types of structures are endless, from celebrity co-founders such as Jennifer Garner’s relationship with Once Upon a Farm to cash investment from celebrity funds like Kim Kardashian’s Skky Partners.

No matter which of the options you choose, your structure should optimize duration of the partnership, cash outflows, and associated deliverables (yes, you can structure a deal with specific deliverables such as media appearances or social posts). Your partnership structure should always adhere to your established business objectives. After all, that’s the whole reason for bringing on a celebrity in the first place.

Mistakes to Avoid

Don’t try to do everything yourself. Many founders pursuing a celebrity partnership for the first time will attempt to do it all: establish the relationship and structure the deal on their own.

Keep in mind that many A-Listers and celebs are represented by an agent who is highly skilled at maximizing value for their client in negotiations. Too often brands enter into this deal point negotiation stage without equally skilled representation on their side. A founder or executive should never lead negotiations with a celebrity (there are exceptions, particularly with emerging talent or micro influencers). It is well worth the investment in an agency or even a consultant with prior experience negotiating talent deals. The agency will be well-versed in different structures and will help you reach a deal that is mutually beneficial for all parties.

Don’t get enamored by celeb status and lose sight of your objectives. Align internally on your business objectives and your brand identity. A good celebrity partnership starts with a good brief.  Refer back to this document as you move through the process to hold yourself accountable to your brand-building objectives. This will help you avoid any emotional decisions should you become enamored with a celebrity. Remember, fame does not always correlate with business success.

How to Start

It is okay to start reaching out to potential talent, especially if you witness them consuming your brand in the wild (again, the gold standard). Talent agencies such as WME, CAA, Night, UTA and others are all open to inbound inquiries from brands looking to partner with their talent. Many of these agencies have active dialogues with their talent regarding the types of brands or partnerships they would like to explore. Before you start negotiating on specific deal points, remember to enlist an agency in this process to represent your best interests.

It is an exciting time for startups and celebrities alike as deal structures are rapidly evolving and the worlds of marketing and venture capital are merging. Working with top-tier talent no longer necessitates marketing budgets only available to large corporations with deep pockets. Celebrities are eager to use their audiences and creative talent to diversify their revenue streams beyond the camera or playing field.

Many celebrities bring unique business acumen and a willingness to roll up their sleeves and partner beyond the terms of their contracts, making them value-add business partners beyond their household names. Remember, celebrities are often gifted creators. Leave some room in your relationship to allow them to contribute their unique gifts – you might unlock a bit of magic, together.

GET IN TOUCH
Got a Question? We’ve Got Answers.