Part 2 - The New Brand Builders: Paid Mercenary or Energized Investor? Artists, Athletes, and Their New Relationship with Brands

“The power and reach of ‘celebrity’ matched with the right values-driven brand can result in positive impact in the world – at scale,” says Adam Lilling who over the course of a decade has built PLUS Capital to facilitate a new kind of investor-partner relationship between venture-backed companies and iconic artists-athletes.  This is a relationship that is far removed from the confines of the traditional endorsement or “face of a brand” deal. 

This new relationship is based on the direct and active participation by the individual in the growth of a company through personal capital investment, time-sweat equity, and an aligned audience-fan base of substantial size. Under these conditions, for a not-yet public company, there is the unique opportunity to collaborate with talent aligned with their values and purpose - without spending eight figures that they don’t have upfront. (As the trusted advisor and infrastructure provider for the artist or athlete, PLUS Capital delivers sourcing, diligence, structuring, and management of the relationship between the individual and the company. PLUS Capital often also participates through accompanying investment from its own fund.)

Economic, Social, and Psychological Forces Open New Possibilities

The lessons of equity participation in the entertainment industry, the transparent versus performative aspects of social platforms, and the unique phenomena of parasocial relationships have cracked open the door for a new kind of values and outcome-driven relationship between iconic artists-athletes and brands.  If they understand the source and nature of these three forces, both individuals and companies can design new forms of engagement and deal structure.

1 - Equity Versus Endorsement Deal

The proven and growing financial importance of backend deals based on marketplace performance has made them an important point of negotiation for leading actors.  Experiencing financial upside in the production of their own craft, along with observing the returns of tech startups, has increased their interest in riskier, performance-based relationships with brands. Traditional endorsement deals still exist and are lucrative for a small segment of ‘talent ‘, and possibly effective for the limited number of brands that can afford to write massive checks up front.  However, the introduction of equity opens the playing field to more individuals and brands, and the longer-term nature forces greater consideration of the alignment of values and beliefs.  When there are options - who wants to be in an economic marriage, no matter how potentially lucrative, with someone you hate?

2 - The Power of Transparency (and Yes Even Truth) in Social Media

Backend equity deals have made the case for the economic viability of moving beyond purely hired help or “pay for play” deals. But it really is social media that is the major economic driver for new relationships between iconic individuals and brands.

On social networks, artists and athletes may feed highly curated images and video to their millions of followers.  But those same networks can also serve to pull back (intentionally or not) the curtain to reveal the true relationship between an athlete or artist and a brand. We’ve moved to a time where “take the money and run” deals will not pass the savvy audience sniff-test. This means that truly living and breathing the brand that an artist-athlete backs over extended periods becomes part of the deal decision requirement.

Audiences and fan bases today expect veracity in the day-to-day relationship an artist-athlete has with the brand, and they look closely at shared values. Being the face has been replaced with the need to genuinely mirror deeply held beliefs and purpose. Today’s engaged audiences, regardless of generation, are too sophisticated and media savvy for anything less.

“A celebrity as the face of the brand, has evolved into iconic individual equals the brand,” Lilling points out. “It’s more of an ambassadorship, affiliation, or partnership type of relationship - where the individual must live and breathe the brand and its values.”  Lilling elaborates: “What this means is that you can’t just talk about the car, you have to drive it, and nothing else. And that car’s brand values better closely follow your own beliefs and that of your audience.”

3 - The Phenomena of Parasocial Relationships

Why do fans care about the alignment of values between an iconic artist-athlete, and a brand?  They often experience a deep visceral relationship with that individual and anything less honest and consistent would be a betrayal. This is, in part, the result of the unique psychological phenomena of parasocial bonding that is intensified by social networks. Parasocial bonding creates a unique relationship in which one person extends friendship-level emotional energy, interest, and time (in the digital space) even though the other receiving persona is completely unaware of that individual’s existence.

When Economics and Emotions Intersect – At Scale

The equity economics of backend deals and the emotional impact of parasocial relationships, activated in an environment with the massive scale of social media – creates a powerful new opportunity for ‘startup’ companies to work with artists and athletes in ways they never could in the past. 

This new opportunity is for iconic artists-athletes to engage with a brand as a values-aligned investor-advocate, receiving company equity in exchange for both their own personal investment dollars and an active and authentic relationship with their audience. This is a deal advantageous to both companies without seriously deep pockets for endorsements – and –values-curious artists-athletes who aren’t in the consideration set for those limited number of endorsement deals, as well as those who want to add this new deal type to their financial portfolio.

“Authenticity in the form of a deep alignment of interests and values is the real glue of trust between brands and celebrities,” says Lilling. “And that’s much more powerful and enduring than a temporary alignment of economics.”

Before considering one of these new kinds of relationships, both companies-brands and artists-athletes need to understand the motivation of the other side of the equation – and how the bespoke considerations and rules of the road are different from past standardized “face of” deals.

Advantages for Artists and Athletes

Elite artists and athletes often want to pursue engagement with businesses that are deeply aligned with their values and that can affect positive change at scale. Many also seek to prepare for a career outside their own core craft, which may have a limited age-determined lifespan. And frankly – well – we’re all human, so there’s always curiosity and economic FOMO.

Traditional endorsement deals can be extremely lucrative, especially for the estimated billion-dollar lifetime deals between athletes such as Steph Curry with Under Armour, or LeBron James and Cristiano Ronaldo with Nike.  But there are only so many of these to go around. And certain brands are wary of such deals, given heightened concerns about “inauthenticity” as well as a sharp awareness of the ways that poor behavior can be exposed on social media.

And there is another factor: The significant media spend that must accompany these kinds of relationships is also only accessible to certain brands that live in the economic stratosphere.

Adam makes an essential point here about the opportunity to align economics and values. An athlete who might have had deals with high-sugar caffeinated energy drinks or fast-food restaurants - but who actually lives and wants to publicly advocate a healthier lifestyle - can now engage in an investor relationship with an established values-aligned wellness startup. They are no longer limited to make financial decisions to ally themselves with organizations that can write the biggest check. That’s now a choice – with a different kind of economic upside.

“The economic return of a brand relationship that involves investing both time and money from an artist or athlete can far exceed a traditional endorsement deal payout,” notes Lilling. This might be in the 3-10x range and it’s for something the individual believes in.”

Advantages for Brands

For ‘startup’ brands that have achieved product-market fit and can clearly articulate their values and narrative, equity-advocacy deals can creatively connect them to individuals they would not have access to through traditional cash endorsement deals. That connection can accelerate brand awareness and revenue growth, as well as create opportunities for new kinds of integrated campaigns and storytelling.  And when it comes to deal closing and cap tables, there is proven value in having a relevant athlete or artist on board.

“There’s a power to having an artist or an athlete on the cap table in the right way,” says Lilling.  “They can bring a level of trust and company validation – a kind of halo effect – that provides additional traction for both investment and partnership outreach. That’s particularly important in highly competitive marketplaces.”

But just as there is the potential for great upside from this new relationship, results can be disappointing, and things can go sideways, if there is not careful and honest consideration of the mutual relationship requirements and outcome expectations between a brand and an iconic artist or athlete.

A Checklist for Engaging an Icon 

1.     Brand Essence: Understand and articulate precisely who you are in terms of your purpose and values, and not just product features.  No hand-waving allowed! Your own values need to be clear and proven before you can see if they intersect those of a potential partner.  Does the archetype and beliefs of your audience and their fan base overlap as well?  If you can’t answer ‘yes’ with proof points, don’t move ahead – you still have work to do.

2.     Artist-Athlete Values and Passion: Understand – don’t guess – the artists-athletes’ values and passions in relationship to the company’s mission, product, and team. All three of these are important – especially team, as this is a high touch relationship. Not completing thorough due diligence around the beliefs and behaviors of an artist-athlete is the biggest upfront mistake a brand can make. Is what the brand delivers in the potential partner’s top three interest and values areas outside of their main work area? If not, you can still be a fan – but look elsewhere for a lasting business relationship.

3.     Dedication of Time Upfront: This new business relationship includes a very personal dynamic that requires spending extensive time together upfront – and not just in a lawyer’s office – to see if there is chemistry and alignment in economics and purpose.  That’s why value alignment with the team is just as important as mission and product.

4.     Define the Blueprint and Expected Deliverables: A clear articulation of the expectations from both the artist-athlete and the brand is essential for a successful long-term relationship and for the kind of co-creation that can be brought to the table. What are the types and frequency of campaigns with which the individual would be involved?  How do they tie into existing initiatives and integrated campaigns? How is there a variety of deliverables as opposed to only one ‘silver bullet’ channel? What are the media production value expectations?

Some tactical considerations might include: creative elements for multi-channel integrated campaigns, press outreach and earned media, product launches, event keynotes, and direct personal gifting.

5.     Qualitative and Quantitative Measurement: There needs to be a process to check-in and measure for success - and agreement as to the conditions under which course correction becomes necessary.  Full customer lifecycle metrics, from awareness to trust-building to conversion and deep engagement, need to be tracked and evaluated.  In thinking about these metrics, brands must remember that the artist or athlete is but one part of the equation, and what they contribute organically must be paired with appropriate marketing spend.

“An iconic individual may not have the same level of engagement on social networks as a pure play digital influence,” Lilling notes. “But the level of awareness and trust that exists around them for a particular interest area gives them – and a brand – the ability to align with an audience and their values at significant scale.”

Current Deals that Reflect the Values-Driven Brand Equity Approach

The new brand-celebrity relationships articulated in this article are being tested in the marketplace today – although not always broadly announced in public. A few examples include:

- Matthew McConaughey with Homebase, Unite Us, and Salesforce.

- Shaun White with Beyond Meat, Sweetgreen, and Califia.

- Ellen DeGeneres and Portia de Rossi with Shelf Engine and Miyoko’s Creamery

As these partnerships play out over time, we’ll see not only how the brands, artists, and athletes economically benefit – but what this means for the lives of their audiences.  If successful, we’ll see a positive impact on the big issues beyond money (such as workplace equity, mental fitness, and sustainability) that inspired Adam to found PLUS Capital in the first place.

In Part 3 of this series (insert this when link published), we’ll look at the new relationships that are unfolding for brands with digital first influencers and creators. 

“When I started PLUS ten years ago, I thought that while digital-first influencers were interesting, they wouldn’t ever replace what an iconic artist or athlete could bring to a brand,” notes Lilling.  “I’ve now changed my mind. Well-managed influencers now have the infrastructure to bring significant levels of awareness and engagement to a brand. This is especially true in relationship to the part of Gen Z that has disposable income (18-25 years). They have limited awareness of iconic figures. What they have are deep and trusted parasocial relationships with the digital personalities they’ve grown up with.”

In This Series on The New Brand Builders:

Part 1 - The Market Power of Icons, Influencers, and Creators

Part 3 - Digital Influencers and Creators Take Control of Their Economic Destiny.  Brands Should Take Notice.