Are Celebrity Social Endorsements Worth the Big Bucks or the Gamble?

In the brave new world of social media, marketers are doubling down on celebrity endorsements, banking on stars’ earned media mojo to help their campaigns catch fire.

Take HTC’s splashy, $1 billion campaign starring Robert Downey Jr. or Pepsi’s $50 million endorsement agreement with Beyoncé. “Pretty much anything she does is covered both in traditional and social media,” said William Gelner, chief creative officer of 180LA, which this spring created a popular Pepsi spot starring the singer.

Lately, brands like Audi, Honda and Diet Coke have enlisted A-listers like Claire Danes, Nick Cannon and Taylor Swift, fueling their ads with social star power.

Often such deals give advertisers a direct line to celebrities’ fan followings via their personal Twitter accounts and Facebook pages. The true asset, however, is a star’s relevance, buying a marketer the kind of buzzy exposure that only a Hollywood headliner can bring.

“A lot of what social allows a brand to do is to piggyback off earned media, utilizing the fans to do the work for you,” said Anna Holland, executive group director at WPP’s 171 Worldwide, partner on HTC’s push with Downey. “He just came off Iron Man 3 and that alone brings awareness to [HTC].”

The increased visibility of social also amplifies the potential risk of such deals. For one, it raises the bar for what passes as a convincing celeb-marketer marriage, said Chris Raih, managing director of Los Angeles agency Zambezi, which this summer launched a Popchips ad starring Katy Perry (an investor and creative partner in the company).

Or a brand may find itself entangled in a fiasco on the scale of the Mountain Dew-Tyler, the Creator dustup, the Rick Ross lyrics controversy or the Paula Deen meltdown. Still, “it doesn’t happen that often,” said C. Samuel Craig, professor of marketing at NYU’s Stern school, plus brands can usually distance themselves quickly.

YouTube does have its benefits. Brands can get more bang for their buck with longer ads and richer storylines. Fans can watch spots starring their favorite stars on demand—unlike TV where a diverse cross section of viewers watches a celebrity some might not care for, rendering a celebrity-fronted spot less effective.

“Celebrities by their very nature tend to be quite polarizing,” said Peter Daboll, CEO of Ace Metrix, which measures ad impact. “TV is a very blunt targeting instrument.”

Putting a star in an ad isn’t always a silver bullet. “It really only improves your odds with those people who are fans of the celebrity,” said Bruce Clark, marketing professor at Northeastern University’s D’Amore-McKim school.