The Financial Driver of Tiger Woods.

Researchers at University California Davis studied the impact of the Tiger scandal on shareholder value and concluded that the Tiger-endorsed brands collectively lost between $5 and $12 billion in the two weeks following the wake of the extramarital affairs. More specifically, share values (and market caps) of public companies endorsed by Tiger including Accenture, AT&T, Electronic Arts, P&G (Gillette), Nike, Pepsi (Gatorade) and TLC Laser Eye Centers fell over 2% of value with the news. I am not going to comment on the authors' methodology or if they normalized the stocks values over the two week period, but I will say that I tracked Nike's BrandMojo.org ratings over the same weeks following the scandal. Nike's overall average score decreased along with its overall ranking and the proportion of "1" ratings increased. Using the logic of Till and Shimp, the brand most closely related to the tarnished endorser will suffer the most- and this is precisely the case with Nike. A 4.5% drop in shareholder value and a changing image of it customers. Ouch. We'll see how long these drops last.

Tiger was the king of the endorsement jungle

I didn't really want to weigh in on this, but I can't resist a few musings.

The idea behind a celebrity endorser is that the celebrity's halo transfers over to the endorsed brand. In brand jargon this is called "secondary association" transfer. In the case of Tiger Woods prior to the scandal, Woods had extraordinary universal marketing appeal. His records on the golf course enabled him to halo "performance" and "champion" on to a brand that he endorsed. As the king of golf, a game about honesty, sportsmanship, sophistication and integrity, Tiger's celebrity could also transfer these desirable associations to a brand that he fronted. With such a winning combination of associations to transfer, it is not surprising that execs from Nike, Gatorade, Gillette, Tag Heuer, Accenture, Electronic Arts, Disney, Asahi Beverages, Buick, Wheaties, and American Express lined up to have their brands have their brands linked to the King of Endorsements. And line up and pay out they did. Over his career, Woods has had a revenue stream of more than $5 Billion - the lion's share coming from endorsements. He is the first billion dollar athlete and has been called the world's most marketable athlete.

So as the Web, TV, and tabloids further saturate with Mr. Woody's sexcapades, "silence monies", and nasty talk about Mrs. Woods, we can make some educated guesses regarding how much of a financial hit Tiger will take- at least from an endorsement perspective. In other words, which brands are most likely to dump Tiger and which brands are most willing to hang on to him. Here, I argue that the brands most likely to dump Tiger are:

1. Brands which used Tiger for "honesty, sportsmanship, sophistication and integrity" endowments
2. Brands that have a family orientation.

Alternatively, the brands most likely to stick with Tiger are:

1. Brands that have the most to lose from him going down (translation: those brands that have invested the most in him (e.g. Nike $30million per year)). Incidently, Nike stuck by Bryant after his alleged rape.
2. Brands that use him for the "championship" endowments, assuming Tiger continues to perform.

What are your thoughts on this? How much of a fall will Tiger take on endorsements? Would you continue to use him to promote a brand?