Amid the current crypto crash, a lot of people are a little miffed at celebrities who have bought this stuff out. Gwyneth Paltrow, Tom Brady, Reese Witherspoon, and even Larry David were all happy to help with cryptocurrency mainstreaming in recent months, only to shut up now that things have gotten a little rough. For Matt Damon, “fortune smiles on the brave”… who apparently aren’t brave enough to say it was maybe a bit oops trying to get ordinary people to gamble their hard-earned cash on hyper-speculative assets.
If crypto was so certain to make you money, to some degree, why would it need so many high profile celebrity endorsements? After all, money is the most famous celebrity there is.
Here’s the thing: famous people endorse and support financial products and services all the time – products and services that fall within the sketchy spectrum. If you’re going to get mad at LeBron James for appearing in a Crypto.com ad, you should probably also be annoyed by those Tom Selleck reverse mortgage ads, or the places where William Devane talks about buying gold, or the litany of A-listers entering SPACs. In the 1990s, Whoopi Goldberg was a spokesperson for Flooz, the cybercurrency of that era that was ultimately destroyed due to crime and fraud.
It might seem a bit obvious to point out – celebrities always make mentions – but I think they do, especially when it comes to money, it’s worth dwelling on. Personal finance and investing are supposed to be a little unsexy; the way you allocate your 401(k) isn’t particularly cool. Today, marketers, advertisers, and the wider culture have managed to make it a hobby and a way of life. Trust has declined so much in traditional financial institutions. People might think Bear Stearns wasn’t doing a great job in the 2000s, so why not take a chance on what Floyd Mayweather says was a good idea now? Companies are able to maneuver this institutional mistrust, replacing cold, untrustworthy, faceless banks with likeable celebrities, to whom consumers might be more open.
Banks left customers “dry” after the 2008 global financial crisis, explained Ana Andjelic, brand manager and business sociology expert. “What is that trust replaced by? she says. “With brands, with celebrities.”
Yes, famous people are often rich, but not because they participated in a get-rich-quick scheme or made a smart investment in some obscure product. They often have financial advisors who help them manage and grow their wealth – and those advisors don’t tell them to pile into dogecoin.
Celebrities = $$$
Companies use famous people to try to sell their products because they know it can work. According to a 2012 study by Harvard Business School, athlete endorsers lead to a 4% increase in sales. Several studies have shown that celebrity endorsement ads drive up stock prices.
When it comes to finance in particular, the rich and famous aren’t the most influential in consumers’ lives, but they do make a difference. A 2021 Morning Consult survey found that 20% of investors and 45% of cryptocurrency owners would invest in cryptocurrency if famous people endorsed it (although still behind financial advisors, family members or friends and trade journalists). Younger consumers may also be more influenced by fame – CreditCards.com found that 28% of Gen Zers and 24% of Millennials said they seek financial advice from social media and influencers.
Because people are no longer slumped in front of network TV on Friday nights, the captive audience of advertisements, brands are increasingly relying on celebrities and influencers to connect with consumers, explained Shiv Gupta, expert. of digital marketing and director of the consulting company Quantum Sight. . “The channels are narrowing,” he said. A celebrity can catapult your product to consumers through their existing audience and spheres of influence. You can see how it went with crypto. “You had the nerdsphere or the geeksphere pushing the concept of crypto as something that has potential,” Gupta said. “The next step was Larry David and everyone else who came in and started discussing crypto. It was more like saying, “See, that’s common.”
The generalization of a financial product makes it more comfortable for consumers, giving them the impression that it is normal to try it. It can also make them forget about the stakes, even in high-stakes spaces.
“Celebrities endorsing brands is nothing new, we’ve seen that for decades. Selling crypto and NFTs is, obviously, a lot more complex and I would say requires more professional responsibility than selling crypto. typical consumer goods,” said Anindya Ghose, a business professor at NYU. “If you approve of potato chips and energy drinks, that’s another thing.
If you bought a bag of chips because an actor said so and it turned out gross, it doesn’t matter. But if you did a reverse mortgage, which regulators warned about in ads, and accidentally lost your house because Tom Selleck said so, that’s not so good. The focus is on young people and crypto now, but no generation is immune.
“There are those who say, ‘Well, I like Tom Selleck, I grew up with Tom Selleck, he seems like a famous guy. After all, he fought crime on Magnum IP”” Gupta said. “It’s a generational thing, he gets a little older with you.”
Probably don’t listen to celebrities talking about money
If you had asked me in 2004 if I listened to the guy from CO or the guy from Goodwill hunting what to do with my money, I hope I didn’t say either, but I probably would have said the Goodwill hunting dude. Turns out 2004 me would have been wrong. In fact, you shouldn’t listen to either of the Goodwill hunting guys because Ben Affleck is into sports betting which is often not ideal for the end user wallet either.
In the end, maybe I should have said CO guy, Ben McKenzie. He has a few points about listening to famous people about money and, in particular, crypto… which is you shouldn’t. McKenzie called celebrities pumping crypto a “moral disaster” in a 2021 article for Slate alongside journalist Jacob Silverman. “These rich and famous entertainers might as well be asking for payday loans or sitting their audiences at a rigged blackjack table,” they wrote. (To be fair, McKenzie also has something to gain here – he and Silverman are writing a book on crypto scams right now that they’re probably getting paid for, and he’s carved himself an anti-crypto celebrity. .)
Celebrities may not have their fans’ best financial interests at heart. I love Reese Witherspoon, but his crypto tweet, at least for now, feels pretty irresponsible. “At the end of the day, it’s all about the money,” Andjelic said.
It’s not just that celebrities encourage unnecessary risks. Kim Kardashian and Floyd Mayweather may have recently been part of a crypto pump and dump scheme. The boxer is no stranger to scandal in the crypto space: In 2018, he and music producer DJ Khaled settled charges from the SEC for failing to disclose that they had been paid to promote the initial offerings of coins, or ICO, such a dubious trend you rarely hear. more about it. Actor Steven Seagal also got in trouble for something similar.
It’s easy and tempting to dismiss much of this — of course, celebrities shouldn’t be a reliable source of financial information. And regulators have a say here in consumer protection – endorsers are expected to be honest about their compensation. But famous people often creep into our way of thinking about money in a bit of an uncomfortable way. If you think about it for a moment, celebrities associating themselves with even mainstream names in finance are a bit, well, huh. Jennifer Garner looks good but also isn’t rich just because she’s super savvy with her Capital One card.
Celebrities and financial brands are teaming up to sell people a lifestyle, an aspiration for wealth that may not be realistic. The famous lend their reputation to products that can be questionable. They often do this without acknowledging their own financial stakes – Tom Brady is not just a spokesperson for crypto exchange FTX, he is an investor in the company – or while ignoring that they may take risks, perhaps the average person shouldn’t. And the downside risk of lending their reputation, if a project starts from the grassroots, may not be significant.
“It’s not like oh Tom Brady stopped doing anything and now he’s just a crypto boy, you know?” said Andjelic. “People care for a minute.”
Except, of course, the people who lost.
We live in a world that constantly tries to trick and fool us, where we are always surrounded by scams, big and small. It may seem impossible to navigate. Every two weeks, join Emily Stewart in examining all the little ways our economic systems control and manipulate the average person. welcome to The great pressure.
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