Slashing of star fees and non-renewal of contracts is the likely impact of recession in the advertising industry.

At a time when several recession-hit producers are keeping ambitious projects on hold, brand endorsements once the biggest source of income for stars too seems to have taken a hit. Not only is there a major cut in the endorsement fees, but also there is also little demand for renewals of existing contracts. Though the huge slump in the advertising budgets and a drastic cut in celebrity endorsements fees is inevitable, the situation may actually help advertisers convince stars to sign endorsement contracts at lesser fees over the next year, according to Prahlad Kakkar.

Explaining the current advertising scenario, he says, “The dynamic rise in endorsement fees was being fuelled by corporates and MNCs who wanted to flaunt the growth of their business. But now, the scenario is different. Advertising budgets are being slashed and this will be passed on to endorsement fees as well.” Kakkar said that the brand endorsement business functions on the economics of supply and demand. According to him, as of now, there are few takers for brand ambassadors. However, in the next few months, advertisers may realize that it is a major opportunity to sign new brand endorsement contracts at lesser prices and that too, for longer durations! A likely offset of the trend is also reduction in number of public appearances made by the stars. Translated literally, it means busy actors will have the option of signing more brands for lesser time commitment.

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