Why Kellogg Had to Drop Michael Phelps

Michael Phelps has made news worldwide in recent days for the wrong reason. A British tabloid published a photo of Phelps partaking of marijuana at a party. While the picture is certainly embarrassing for Phelps, it created an even more uncomfortable situation for Phelps' numerous corporate partners. Several companies inked Phelps to endorsement deals before and after the 2008 Olympics. Now, his remarkable achievements in the water are overshadowed by behavior unbecoming an athlete and role model.

When a celebrity endorser gets into trouble, companies sponsoring the celeb have to decide whether to ride out the situation or cut ties and move on. In Michael Phelps' case, three companies have come out to take a stand. Speedo and Visa quickly made statements in support of Phelps and intend to continue their relationships. Kellogg, on the other hand, announced it would not renew its contract with Phelps when it expires this month.

It can be argued that all three companies made the correct choice. Speedo sells swimming apparel; Michael Phelps is a world class swimmer. Until his performance declines in the water, he is an effective endorser for Speedo. Visa has a broad target market, and its services have nothing to do with Phelps' source of celebrity. He was hired for the name recognition and familiarity he can bring to the brand. So, while Visa would probably prefer he not embarrass himself, it can withstand a situation like this. We are a celebrity culture; we love our heroes and have always been rather forgiving of most their transgressions (most O.J., not all).

Kellogg had little choice but to sever ties with Phelps. Its products are based on promoting good health, and its target market is moms and children. Associating with someone who is perceived as a party guy (other photos and video help create that image), Kellogg cannot afford to risk its brand reputation further. A common theoretical explanation for how celebrity endorsements impact consumer behavior is that the image of the endorser transfers to the image of the brand being endorsed. In this case, Kellogg cannot take a chance on negative associations with Michael Phelps having a negative impact on its brand.

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