The impact of the Tiger Woods scandal in branding can be viewed from two different perspectives. The first perspective comes from the point of view of the companies that paid Woods to endorse their products. The second perspective is how the personal brand of Tiger Woods will be impacted as the smoke clears from this series of events.
Two professors in University of California-Davis’ Economics Department attempted to measure the impact from the first perspective. They claimed that shareholders in publicly traded companies that Woods endorsed lost $5-12 billion in the weeks that followed the car accident in Florida that set off the scandal. They undoubtedly have an interesting perspective, but there are limiting factors in their research. However, an undisputable fact of the Tiger Woods scandal is that it put a lot of brand management teams in a very delicate situation. Brand managers at firms where Woods served as an endorser had to consider how their brands would be perceived by their target consumers if they were to continue the relationship. It is not an enviable position.
When a brand chooses to link arms with a celebrity endorser, it must consider which celebrities will be effective endorsers. It is essential to select celebrities that will positively contribute to revenue growth and profitability. I believe that a celebrity endorser is most effective when the target consumer perceives them as attractive or desirable in some fashion and the product is related to the expertise of the celebrity. For example, Michael Jordan was an effective endorser of both Nike and Gatorade because of his status as an elite athlete and the fact that both brands are related to athletic performance. Gisele Bundchen is an effective endorser for Dolce & Gabbana fragrances because scent is an important aspect of appearance and she is the embodiment of phenomenal appearance. She would be far less effective as a celebrity endorser for the Toyota Camry. With regards to Tiger Woods, he is most effective in endorsing Nike Golf products and any other golf related brands. His effect is diminished for brands like Gillette and AT&T.
Each of the brands that employed Woods was placed in an undesirable predicament. This was not a situation where there was one right answer. Each of the brands had to consider how Woods as an endorser fit into their marketing communication strategy. Because each of the brands approached the situation from a different perspective, that is why there were a number of different reactions to the situation. I don’t think any brand has made the wrong decision yet in evaluating Woods’ future viability as an endorser.
Nike has made the decision to stay with Woods for the time being. Nike President Phil Knight is choosing to take the long view, as he believes that this incident will be a “minor blip” in the career of Tiger Woods. I fully support Nike’s wait and see approach with Woods. Nike took that approach when Kobe Bryant endured consequences for his extramarital affair in 2003-04. Kobe Bryant’s situation was more severe, as criminal charges were filed. Eventually, charges were dropped. At that point, Nike and Kobe Bryant resumed their relationship. Nike has shown over time that only athletic performance matters for the most part. From their perspective, off the field issues are relevant when an athlete is convicted of criminal behavior.
Nike has a huge commitment to Woods. Before Woods, Nike’s involvement in golf was extremely limited. Nike Golf has tied itself to Tiger Woods, and Nike is a brand that is defined by excellent athletic performance. Nothing about Woods’ behavior has changed the fact that he is one of the greatest golfers ever.
Gillette and Tag Heuer made decisions to pull Woods from their advertising campaigns. Neither company has officially dropped him, but both (see here and here) chose to indefinitely suspend him. Both were initially attracted to Woods due to his winning performances on the golf course and they felt that their target consumers perceived that he had a charismatic personality that would benefit the brands. Due to the fact that athletic performance was not the sole reason for Woods’ presence, they wanted to wait and see how this situation would play out. However, they didn’t want to associate with him in the near term, for fear that his presence could damage brand equity.
Gatorade dropped Woods, but PepsiCo said the decision was made before the scandal broke. Gatorade has had a lot of branding problems in the last few years (see here and here). They have much bigger problems than Woods’ recent behavior.
Accenture and AT&T both severed relationships with Woods (see here and here). Accenture’s decision to drop Woods is unique in the domain of athlete endorsement. Companies will usually not terminate deals unless criminal charges are filed. Companies are prepared for behavioral contingencies, as most endorsement deals have a "morals clause". The "morals clause" likely helped Accenture escape the contract. Accenture strongly tied itself to Woods, a strategic decision that has to be questioned. Tiger Woods doesn’t have expertise in aspects of management consulting, a primary function of Accenture’s business. They also based their ad campaign around the slogan, “Be A Tiger”. "Be A Tiger" doesn’t bring up as many positive connotations as it once did. As for AT&T, they dropped him, giving no indication that there will be a future celebrity product endorsement relationship. The AT&T logo is highly visible on Woods’ golf bag and they also sponsor the Tiger Woods Golf Tournament. AT&T is not primarily attracted to Woods the athlete, so it was a simple decision to let him go.
The second perspective of Tiger Woods concerns Woods’ ability to earn money in the future as an endorser. The events of November & December 2009 turned Tiger Woods from an ordinary, albeit highly talented golfer into a Mike Tyson-esque side show. Very few celebrities have fallen as far and as fast of Woods. Nevertheless, it is important to note that Woods didn’t do anything illegal. Extramarital affairs are commonplace. As a result, the Tiger Woods brand will survive as long as he remains one of the best golfers on the planet.
A good precedent for the current situation with Tiger Woods is Kobe Bryant. In 2003, Kobe Bryant had an extramarital affair and sexual assault charges were filed. In 2004, those charges were dropped. Kobe Bryant has been able to secure endorsement deals in the ensuing years. However, Bryant has not been seen endorsing McDonald’s and Sprite, brands that are intended for wider audiences. I ultimately believe that Woods will remain a valued pitchman for brands where only athletic performance matters. Brands that take into account personal behavior will shy away from him for the foreseeable future.
Woods’ recent behavior has gotten him one job offer. Movie director Todd Phillips, best known for directing “Road Trip”, “Old School” and “The Hangover”, has offered Woods a role in “The Hangover 2”. This makes the aforementioned comparison with Mike Tyson even more apt, because Mike Tyson had a hilarious cameo in “The Hangover”. Also, an actual tiger played an important role in the plot development of “The Hangover”. However, I don’t believe that Woods will accept Phillips’ gracious offer. He and his PR team probably do not believe that “The Hangover 2” is an appropriate venue for image rehabilitation.
The steps that Tiger Woods takes to rehabilitate his personal image will determine how successful he will be in luring companies to pay him to endorse branded products. I believe that image rehabilitation is certainly a realistic goal. Other celebrities have bounced back from more devastating circumstances. Kobe Bryant went from having sexual assault charges filed against him as a result of an extramarital affair to earning $16 million in endorsements in 2007. Baltimore Ravens linebacker Ray Lewis pled guilty to obstruction of justice in a murder investigation and was able to secure endorsements after his plea agreement. The common thread between Bryant and Lewis is that they continued to be among the best players in their respective sports. If Tiger Woods remains a dominant golfer after his self imposed hiatus and he is able to downplay stories about his life off the golf course, he will receive lucrative endorsement deals in time. The roar of Tiger Woods will continue to be heard in the branding universe.