Adidas cut ties with Ye over a number of anti-Semitic tweets and comments.
👉Background: Back in 2013, Adidas struck a deal with Kanye West, now known as Ye, to create Yeezy-branded shoes and clothing collections. This has been called “most significant partnership ever created between an athletic brand and a non-athlete".
👉 What happened: Yeezy products generated nearly $2 billion in sales last year for Adidas. That’s 8% of the company’s total sales, according to Morgan Stanley.
👉 What else: But earlier this week, Adidas cut ties with Ye over a number of anti-Semitic tweets and comments. This move will result in a $246 million hit to Adidas’ fourth quarter sales. And this really highlights the dangers of celebrity endorsers.
💡Celebrity brand-deals come with enormous upside for brand promotion but brands are also aware of the enormous brand risk if something goes wrong (think: racist rants, sexual harassment or cheating scandals).
💡But for many brands, the potential reward is worth it. In fact, a 2012 study found that celebrity endorsements from athletes can increase a brand’s sales by 4%.
💡And Adidas aren't the only ones - major brands like Gap and Balenciaga also bet big on Ye. It highlights the importance of vetting brand ambassadors thoroughly before signing on the dotted line.
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