Celebrity Endorsements Produce Limited Luxury Payoff; Wealthy Americans Tell the Luxury Institute That a Celebrity Pitch is Unlikely to Influence Their Purchasing Decisions

NEW YORK--(BUSINESS WIRE)--Sept. 19, 2006--The New York-based Luxury Institute announced today results from its survey of a panel of over 1,000 wealthy Americans with a median income of $250,000 and a median net worth of $1.5 million for their views on celebrity endorsements. The bottom line: Luxury marketers should not expect much of a boost in sales from hiring a celebrity to endorse their brands. In fact, luxury firms are generally better off not using celebrity endorsements in their promotional campaigns, since such moves are more than twice as likely to backfire as they are to produce immediate sales results, and more than ten times as likely to produce no result at all.

"Only one percent of wealthy consumers say that a celebrity endorsement will spur them to purchase a luxury product or service and a scant five percent say that endorsements will increase their consideration of such purchases," says Luxury Institute CEO Milton F. Pedraza. "At the negative extreme, 13 percent of wealthy consumers tell the Luxury Institute that they would definitely not consider a celebrity-endorsed luxury product or service." For two-thirds of wealthy Americans, their decision to buy luxury products and services is unaffected - either positively or negatively - by a celebrity endorsement.

“Only one percent of wealthy consumers say that a celebrity endorsement will spur them to purchase a luxury product or service and a scant five percent say that endorsements will increase their consideration of such purchases”

So why do companies shell out big money for top-notch celebrity endorsements? In a word: awareness. "Raising awareness of luxury products and services is one area in which celebrities can produce positive results for a brand," says Pedraza. "Eighteen percent of the wealthy say that celebrity endorsements help them become aware of luxury offerings.

Some industries stand out for having a greater chance of success. Nearly one-third of the wealthy admit that celebrities can affect their choice of fashion designers and luxury hotels and resorts. About 25 percent say that emotional purchases of fragrances, spirits, watches, jewelry, and automobiles can be swayed by a big-name endorsement. Also, celebrity pitches for wealth management firms, cruise lines, private jet service, destination clubs, and major universities have some degree of influence on wealthy consumers. The biggest impact of endorsements: 45 percent say that celebrities help influence their choices of philanthropies - a crucial ingredient in the success of these organizations.

"This is crucial information about what works and what does not, and it comes directly from wealthy consumers," says Pedraza. "By listening to their most valuable demographic segment, luxury firms can make smarter allocations of their advertising and marketing dollars."

About the Luxury Institute

The Luxury Institute is the uniquely independent and objective research institution that is the trusted voice of the high net worth consumer. The Institute provides a portfolio of proprietary quantitative research that guides and educates high net-worth individuals, and the companies that cater to them, on leading edge trends, wealthy consumer ratings and rankings of luxury brands, and best practices. To reach the Luxury Institute, please call 646-792-2669 or go to www.luxuryinstitute.com

Contacts

The Luxury Institute
Martin Swanson, 914-909-6350
Cell: 914-715-3357
mswanson@luxuryinstitute.com
www.luxuryinstitute.com

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