No celebrity is safe from an unexpected nosedive in brand equity. And when a celebrity’s stock falls, so does the brands he or she endorses.
Demand Media is surely monitoring the aftermath of CBS News’ 60 Minutes Sunday report that athlete and cancer survivor Lance Armstrong abused performance-enhancing drugs, but has so far refused to provide any comment to Adweek. Eager to shake its reputation as a “content farm,” Demand has developed several celebrity-endorsed websites. The first such site, launched in June 2008, was Livestrong.com. The Armstrong-branded health and wellness site was one of Demand Media’s first partnerships, and was financed, in part, with Demand Media equity. Armstrong and his foundation profited handsomely in the company’s January IPO; the foundation earned $3.1 million (including some shares Armstrong donated).
The association of a health and wellness site with a reported drug-abusing athlete shows the risk of unknowns in celebrity-content partnerships.
Of course, if they do decide to back him publicly, it wouldn't be Demand Media's first time rallying around the athlete after doping allegations; Armstrong’s career has been peppered with accusations of illegal substance abuse. Based on the precedents, Demand isn’t likely to end its association with Armstrong or the Livestrong brand.
In this instance, former Armstrong teammate Tyler Hamilton claimed to 60 Minutes that Armstrong bribed Union Cycliste Internationale into concealing drug test results. Supporters have already expressed annoyance and disbelief at the accusations. Meanwhile, a UBS analyst report reiterated the firm’s “Buy” recommendation, noting that Livestrong.com is not a fan site and shouldn’t be affected. But if Armstrong faces criminal charges as some reports expect, that could change.
In the last year, Demand Media has also launched content partnerships with Rachel Ray and Tyra Banks. Ray serves as a consulting editor of sorts to eHow.com’s food channel; Banks is the face of and editorial partner to TypeF.com, Demand Media's new beauty website which launched with a sponsorship from L’Oréal. The company has several more celebrity-endorsed verticals in the works, including a personal finance site.