In the midst of the current crypto crash, a lot of people are a little mad at the celebrities who have shilled for this stuff. Gwyneth Paltrow, Tom Brady, Reese Witherspoon and even Larry David were all happy to help mainstream cryptocurrencies in recent months, just to go quiet now it’s gotten a little difficult. For Matt Damon, “fortune favors the brave…who apparently aren’t brave enough to say that it might have been a little oops to try to let ordinary people gamble their hard-earned money on hyper-speculative assets.
If crypto was so sure to make you money to some degree, why would it need so many high-profile celebrities? After all, money is the most famous celebrity out there.
Here’s the thing: Famous people endorse and support financial products and services all the time — products and services that fall within the spectrum of sketchiness. If you get mad at LeBron James for being in a… Crypto.com Adyou should probably be annoyed by that too Tom Selleck Reverse Mortgage Advertisingor the places where William Devane talks about buying goldor the litany of A-listers get into SPACs. In the 1990s, Whoopi Goldberg was a spokeswoman for Floozthe cyber currency of that era that was eventually brought down for crime and fraud†
This might seem a bit obvious to point out – celebrities always make recommendations – but I think they do, especially in regards to money, is worth pondering. Personal finance and investing should be a bit unsexy; how you map your 401(k) isn’t particularly cool. Now marketers and advertisers and the big culture have managed to make it a hobby and a lifestyle. Trust in traditional financial institutions has declined so much. People might think that Bear Stearns didn’t do a great job in the 2000s, so why not take a chance now on what Floyd Mayweather says is a good idea now? Companies are able to maneuver this institutional mistrust by replacing cold, dodgy and faceless banks with sympathetic celebrities, to whom consumers may be more receptive.
Banks left customers “dry” after the global financial crisis of 2008, explains Ana Andjelic, a brand executive and expert in the sociology of business† “What replaces this trust?” she said. “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 build their wealth – and those advisors don’t tell them to get into dogecoin.
Celebrities = $$$
Companies hire famous people to sell their stuff because they know it can work. According to a 2012 study of Harvard Business School, athletes’ supporters led to a 4 percent increase in sales. Multiple studies have found that celebrity announcements increase stock prices.
When it comes to finance specifically, the rich and famous aren’t the most influential in consumers’ lives, but they do make a small difference. A morning consultation in 2021 questionnaire found that 20 percent of investors and 45 percent of crypto owners would invest in cryptocurrency if famous people endorsed it (although still behind financial advisors, relatives or friends and business reporters). Younger Consumers May Also Be More Affected by Fame – CreditCards.com found it that 28 percent of Generation Zers and 24 percent of Millennials said they sought financial advice from social media and influencers.
As people no longer plop in front of network TV on Friday nights, a captive audience for commercials, brands increasingly rely on celebrities and influencers to connect with consumers, explains Shiv Gupta, a digital marketer and director at the consultancy Quantum Sight. “The channels are shrinking,” he said. A celebrity can catapult your product to consumers through their existing audiences and spheres of influence. You can see how it happened with crypto. “You’ve had the nerdsphere or the geeksphere push 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 talking about crypto. It was more like saying, ‘Look, it’s mainstream.’”
Making a financial product mainstream makes it more comfortable for consumers, making them feel like it’s okay to give this a try. It can also cause them to overlook the stakes, even in rooms where the stakes are high.
“A-list celebrities endorsing brands is nothing new, we’ve seen this for decades. Selling cryptos and NFTs is obviously a lot more complicated and I’d say it takes more professional responsibility than selling typical consumer goods,” says Anindya Ghose, a business professor at NYU. “If you approve of chips and energy drinks, that’s something else.”
If you bought a bag of chips because an actor said so and it turned out to be gross, whatever. But if you did a reverse mortgage, what? regulators have warned against advertisements for, and accidentally lost your house because Tom Selleck said, that’s not so good. The focus is now on young people and crypto, but no generation is immune.
“There are people who say, ‘Well, I like Tom Selleck, I grew up with Tom Selleck, he seems like a respected man. After all, he fought crime Magnum PI‘ said Gupta. “It’s a generation issue, he gets a little older with you.”
Probably don’t listen to celebrities about money
If you had asked me in 2004 if I wanted to see the husband of… the OC or the husband of Good Will Hunting about what to do with my money, hopefully I wouldn’t have said either, but I probably would have said: Good Will Hunting boy. Turns out in 2004 I would have been wrong. You really shouldn’t listen to either one Good Will Hunting guys because Ben Affleck sports betting shillswhich is also often not ideal for the wallet of the end user.
Turns out maybe I should have said the OC Husband, Ben McKenzie. He has a few points about listening to famous people about money and crypto in particular… and that is that you shouldn’t. McKenzie Called Celebs Pumping Crypto A ‘Moral Disaster’ In A 2021 Article Slate alongside journalist Jacob Silverman. “These rich and famous entertainers might as well provide payday loans or seat their audiences at a rigged blackjack table,” they wrote. (To be fair, there’s something to gain for McKenzie here too – he and Silverman are currently writing a book on crypto scams that they’re probably getting paid for, and he’s got himself a anti crypto celeb†
Celebrities may not have their fans’ best financial interests in mind. Please Reese Witherspoon, but her crypto tweet, at least for now, feels pretty irresponsible. “In the end, it’s all about the money,” Andjelic said.
It’s not just that celebrities encourage unnecessary risk. 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 costs from the SEC for failing to disclose that they were paid to promote initial coin offerings or ICOs, a trend so dubious you rarely hear about it anymore. Actor Steven Seagal got into trouble also for something similar.
It’s easy and tempting to dismiss a lot of this – of course, celebrities shouldn’t be a reliable source of financial information. And regulators have something to say about protecting consumers here – being endorsers supposed to be honest about being paid. But famous people are often sneak into how we think about money in a way that’s a little awkward. If you really think about it, celebrities teaming up with even traditional names in finance is a bit, well. Jennifer Garner seems fine, but isn’t rich just because she’s super handy with her Capital One card.
Celebrities and financial brands join forces to sell people a lifestyle, a pursuit of wealth that may not be realistic. The celebrities lend their reputation to products that can be questionable. They often do this without acknowledging their own financial interests – Tom Brady is not just a spokesperson for crypto exchange FTX, he is an investor in the business – or while thinking about taking risks that the average person might not have to. And the downside risk to their reputation lending, if a project is bottom-up, may not be much.
“It’s not like oh Tom Brady stopped doing something and now he’s just a crypto guy, you know?” said Andjelic. “People care for one minute.”
Except of course the people who lost.
We live in a world that constantly tries to cheat and fool us, where we are always surrounded by scams big and small. It can seem impossible to navigate. Every two weeks, look with Emily Stewart at all the little ways our economic systems control and manipulate the average person. Welcome to The Great Pinch†
Do you have ideas for a future column? What is something in economics that is bothering you that you can’t quite put your finger on? E-mail firstname.lastname@example.org†