Social media is powering the rapid ascent of celebrity- and influencer- driven brands, shifting the power from companies to individuals.

As competition for consumer attention increases, brands need ways to stay above the noise. Social media has become a mainstream marketing channel, displacing advertising dollars that once fed into traditional media channels. As a result, traditional licensing and spokesmanship—a brand marketing tactic heavily used in the past—is decreasing in prominence. The advent and ubiquity of social media has also triggered more celebrities to pushing their own brands forward, serving as the primary conduit and beneficiaries of the brand.

The Playbooks

How to build a celebrity brandHow to work with celebrities and their brands

1.

Companies that are successfully using celebrity marketing are aligning themselves with celebrities in an organic partnership, which can jumpstart or rejuvenate a brand.

Sean “Diddy” Combs resuscitates and amplifies Cîroc

Cîroc, a vodka brand founded in 2003 by Diageo PLC, remained largely unknown in the market until it teamed up with Sean “Diddy” Combs in 2007. Between 2009 and 2014, the vodka brand went from selling 40,000 cases annually to 2 million, building a reputation as an ultra-premium liquor brand. Since then, Cîroc has remained a top-performing vodka brand, tapping into Combs’ power and fame: 2017 revenue was $14.7 billion.

Overall, the symbiotic partnership between Cîroc and Combs continues to invigorate the vodka company: Diageo found the right celebrity to represent the right product in the right market. Forces emanating from both Diageo, in terms of the operations, and Combs, in terms of the marketing, helped establish Cîroc as the vodka of choice for consumers who want to celebrate in luxury. Diageo established partnerships between Cîroc and high-end nightclubs and venues. In Great Britain, for example, these partnerships propelled Cîroc to the number-one ultra-premium vodka brand in 2016.

The vodka brand embedded well in the rapper’s lifestyle, persona and work, appearing in music videos and referenced prolifically by Combs in interviews. Promotional music videos starring Combs seamlessly highlighted Cîroc as the drink of those who work hard, play hard and want to celebrate extravagantly and glamorously—every image, from the tailored suits to Vegas casinos to private jets solidified the Cîroc brand’s elite reputation.

Beats by Dre revolutionizes headphones and speakers with celebrity personalities at the forefront  

Record producer Jimmy Iovine and music producer and rapper Dr. Dre founded Beats by Dre (now Beats Electronics), an audio electronics brand known for its premium headphones, in 2006. The idea grew out of dissatisfaction with the state of the music industry in the 2000s: illegal downloads were soaring, the reign of CDs was ending and the earbuds that Apple was selling with the then-dominating iPod weren’t doing the music justice. The co-founders set out to drastically improve sound quality that could capture what artists and producers created for their listeners.

The revolutionary audio experience of Beats, coupled with their sleek look and Dr. Dre’s name, skyrocketed premium headphone sales from less than a third of the industry’s revenue at the time of Beats by Dre’s 2008 launch to new heights—by 2012, Beats by Dre held 64% of the market share of $100-plus headphones, ranking in about $1.4 billion. Like Cîroc, Beats easily embedded in the hip-hop lifestyle, but Iovine also put in the work to capture images of every big name in the music industry wearing Beats; the headphones soon became ubiquitous in music videos and lapped up endorsements from other musicians and celebrities. Focusing on the audio quality, the company slowly unveiled new products—earbuds and Envy (Beats audio) for HP laptops in 2009, Envy for the Chrysler 300S in 2011, and Beats Pill, a portable speaker, in 2012. In January 2014, Beats Music, a sister company that ran a subscription music service, went live, further solidifying Beats by Dre as a lifestyle choice—not as a one-time purchase.

At its outset, Beats by Dre partnered with Monster Cable, an AV equipment company, for engineering and manufacturing purposes. But in 2010, after a Taiwanese electronics company called HTC expressed interest in Beats, Iovine and Dre sold 50.1% of their company’s shares for $300 million. This allowed Beats to split with Monster, while keeping all of the patents the AV company had developed for Beats, as well as the name.

In 2012—four years after its launch—Beats by Dre unveiled its first independently-created products: the Beats Executive headphones and Beats Pill. Both products continued to embody Iovine and Dre’s shared desire to create for the audio experience as aficionados of the music recording industry, instead of simply slapping a celebrity’s name on a product, as Iovine accused his engineering competitors. Beats’ ensuing success allowed the company to buy back all of its shares from HTC and regain total independence in 2013. The brand was so successful that Apple bought it in July 2014 for $3.2 billion—at the time, Apple also acquired Beats Music, which was discontinued, but fed into Apple Music, launching in June 2015. Regardless of the stage of the company, Iovine and Dr. Dre remained inseparable from Beats by Dre, embodying the DNA of the brand and vise versa—a perfect match.

Estée Lauder x Kendall Jenner fails to lean into the partnership

Not all partnerships are as successful. Model and reality TV star Kendall Jenner has served as the face of Estée Lauder since November 2014, and created her own lipstick for the company in June 2015, which sold out extremely quickly. But even on the back of this initial success, Lauder made a defining move when it decided not to feed consumers’ calls for more Kendall-designed products. Instead, it launched a collection of 82 millennial-targeted products called The Estée Edit in January 2016, with Jenner as its face.

Jenner’s involvement on the production side of The Estée Edit was minimal—she served as its spokesmodel in the traditional sense, but the products were clearly Lauder’s. By June 2016, Lauder announced it would discontinue The Edit after sales failed to meet targets.

Though the failure was likely in part a result of too many SKUs—not to mention The Estée Edit’s unhelpfully ambiguous name—failing to involve Jenner at a deeper level on the production and distribution sides was a missed opportunity for Lauder. Additionally, Jenner’s celebrity status is more decentralized than her younger sister Kylie’s—Kendall isn’t as active on social media—and she doesn’t wear much makeup, which only highlighted the dissonance between The Estée Edit and her personal brand. If The Estée Edit had collaborated with Kendall to develop products that reflected the celebrity and her makeup choices, the collection could have gained much better traction.

2.

As celebrities transition from traditional spokesmodels to lifestyle brand ambassadors, the most successful partnerships deeply involve the celebrity in the brand and product design process, in addition to the overall business.

As the traditional spokesmodel role for celebrities fades, so does the formulaic brand ambassador role. In the past, inking a deal with a brand meant that the celebrity showed up to a photoshoot or event to represent the brand, or was required to post about a brand on Instagram a certain number of times. Today, there is more interest, both from the side of celebrities and from the side of brands, to enter a true partnership, where the celebrity plays a much bigger role than what, contractually, they did in the past.

Tribe Dynamics, which tracks the reach and value of influencers on social media, created a metric called EMV, which stands for Earned Media Value and quantifies the value of influencer content as if it were purchased through traditional media sources. For example, in June 2017, Jo Malone London launched a perfume collection called Poptastic, which drove $655,000 EMV thanks to model Poppy Delevingne, the brand’s long-time ambassador, who designed confetti patterns on the bottles.

But by far, Selena Gomez and Gigi Hadid were the best performing influencers of all brands in 2017 for their work with Coach and Tommy Hilfiger, respectively—Gomez generated $1.9 million EMV and Hadid garnered $1.7 million EMV during the first half of 2017. As these two partnership indicate, their success was largely predicated on the agency that Gomez and Hadid were given in the design process. Naturally, the partnerships were more organic, as the products in each collection more closely represented each ambassador’s personal brand.

Gigi Hadid and Tommy Hilfiger collaborate as co-designers, contributing their strengths to capsule collections

With Gigi Hadid as its “global ambassador” since December 2015, Tommy Hilfiger saw double-digit sales growth in its women’s business across all regions. Though the exact revenue impacts are unknown—the company does not break out the numbers and has not mentioned the collaboration in earnings—the partners have collaborated on Tommy x Gigi capsule collections for the past four seasons (Fall 2016, Spring 2017, Fall 2017 and Spring 2018), suggesting that Hadid’s ambassadorship and integration in the design process is working well for both parties.

All of the capsule collections were showcased in Tommy Hilfiger’s runway shows and held up Hadid as a true collaborator—the two designers even walked out together at the end of each show. Hilfiger also ensures that Hadid is doing more work than simply acting as the face of the brand—it’s designed by her too, and the collections showcase a mix of her “California” vibe with Hilfiger’s New York City feel.

The partnership has enabled Hilfiger to capitalize on Hadid’s impressive social media following—more than 38.5 million Instagram followers. In the 48 hours following a September show that featured one of the capsule collection, traffic to Tommy.com increased 900%, and more than 70% of visitors were newcomers to the site. Bringing in new—and most likely younger—audiences to Tommy Hilfiger is a sign that Hadid is much more than a traditional spokesmodel. Instead, the partnership combined Hadid’s skill set with the heritage brand’s prestige, in a way that elevated both parties.

Selena Gomez x Coach makes the singer-actress a creative designer and legitimizes the heritage brand for younger audiences

Selena Gomez’s first global handbag advertising campaign for Coach—Selena Gomez for Coach—launched in July 2017 to run through the Fall 2017-Spring 2018 season, following by a second campaign in Spring-Summer 2018. In a departure from the traditional spokesmodel framework, Gomez is given the title of “creative director,” and parts of the campaign show the singer-actress in Coach’s corporate office—a promotional video captures her working alongside the company’s executive creative director to design a purse.

Gomez has reinvigorated Coach’s cultural context, not least thanks to her Instagram following of 134 million (she was the most popular celebrity on the platform in 2017). With this online presence, Gomez’s work on Coach’s advertising campaigns, and public appearances for the brand, the partnership garnered Coach 3.5 billion impressions in July alone, an uptick in recruitment across social channels and a significant increase in North American web traffic. Gomez brings an element of Americana, as well as her global prestige to the brand, and at 24, helps reposition Coach as modern and youthful.

This is not Coach’s first move to reel in more millennials—since 2015, actress Chloë Grace Moretz, now 21, has been a Coach brand ambassador and more recently became the face of the company’s fragrance line. Gross profit for Tapestry Inc., the parent company of Coach, increased 1.9% in Q2 2018 while net sales increased 2.2%.   

3.

For mainstream success, celebrity brands need to produce high-quality products that fulfill a specific market need. Tapping into existing distribution channels also can be a big help.

In the past, many brands were founded by designers who ascended into the celebrity class: Michael Kors or Gianni Versace, for example, created successful, big-name brands in the pre-social media era that continue to live on today—the brands created celebrities out of the designers behind them. But as celebrities consolidate more power than ever, they are taking more control and ownership over their own productification, merging the role of brand ambassador, designer, and often times owner.

When starting their own brand, celebrities can bring up to four different skill sets to the table: brand ideation (defining the vibe and aesthetic for a brand), product ideation (defining what the product is, as opposed to manufacturing said product), direct access to their audience (typically via social media), and access to a decentralized audience (stemming from their fame). Many celebrities are realizing that by finding partners who fill in gaps in their expertise, they can go from being paid to represent a brand, to earning from their own brands, which keeps the economic and creative control in their hands.

The Jessica Simpson Collection took advantage of licensing and the department store boom

The Jessica Simpson Collection by Jessica Simpson is the most successful celebrity apparel brand ever created. Many shoppers of The Jessica Simpson Collection today don’t know Simpson from the “Newlyweds,” which first aired in 2003. Instead, the brand managed to persevere because it maintained smart business practices, knew the interests and needs of its mid-range audience, and solidified its Americana brand that customers continue to seek out. Owned by The Camuto Group, the brand, which is a traditional license that is distributed through third-party channels and department stores, racked up $50 million in first-year sales, $300 by its third year, $750 million by its fifth year and is now worth over $1 billion. Since it’s a license, Simpson does not see all of this revenue herself, but even so, her earnings are significant.

Simpson smartly used licensing and the wholesale channel, which allowed her to focus on the general brand and product direction while The Camuto Group took care of everything else. Tapping into third-party retailers gave the brand massive global reach, as Simpson’s southern charm resonated far and wide. While the brand expanded quickly during the mid 2000s as the wholesale channel was growing overall, it will be important to watch what happens in the coming years as this channel continues to contract. The brand is still growing, but as its revenue gets bigger, this growth might slow, and the macro changes in the consumer landscape might not help. At the same time, the brand’s rather affordable price point might keep it alive longer.  

Kat Von D Beauty unites a unique, celebrity-inspired beauty line with Kendo’s production knowhow and Sephora’s business prowess

Gone are the days when a celebrity designer or the rare celebrity brand like Simpson’s became a market mainstay—today, more celebrities are creating and co-creating brands themselves, and often meeting great success. One of the earliest celebrity brand success stories in the new era is Kat Von D Beauty. In 2008, Kat Von D—a tattoo artist who made her name on the reality show “LA Ink,” which launched just a year before—received a call from a Sephora executive; customers wanted Von D’s signature matte red lipstick that they saw on the show and Sephora wanted to collaborate to create it. They teamed up, launching with four red lipsticks, which promptly sold out. With that triumph, the partnership expanded into a full-fledged beauty line of products inspired by Von D’s gothic and bold style and the inks and pigments she uses as a tattoo artist.

The rise of Kat Von D Beauty, and the longevity of its success, is linked to a number of reasons, but was largely a result of a smart partnership with Sephora and Kendo. Kendo, the former private-label development arm started by Sephora in 2010 that became an independent “brand incubator” in 2014, was integral to the process. Because both companies share the parent company LVMH, Sephora naturally promotes and nurtures Kat Von D Beauty, as well as holds the exclusive rights to sell the line in its stores, giving the brand access to millions of pre-existing customers. At the same time, Kendo presumably has access to Sephora’s customers sales data. This partnership allows Von D to focus on her best qualities, namely branding, product ideation and aesthetics, while Kendo takes care of all production and logistics and Sephora handles distribution. This trifecta is key to the success of the brand, and without all three pieces it would be nothing like what it is today.

At the time, no other line was creating such premium-quality products with Von D’s unique and highly-pigmented aesthetic. As a tattoo artist, Von D was already a celebrity, a tastemaker and an artist, facilitating her turn to makeup, where she could apply a similar skill set to design lipsticks and other products. For Von D fans, the makeup was an extension of the celebrity—not only because it is something she would wear, but also because Von D draws all the artwork on the packaging herself. But ironically, the beauty line remains one of Sephora’s top performers because customers don’t need to like or even know who Kat Von D is to fall in love with her makeup.

Interestingly, the Kat Von D craze also occurred before most other brands sold on social media—it wasn’t until 2015 that Kat Von D launched the brand’s Instagram account herself, which gained over 1 million followers the first month. The brand has also been aided by Von D’s enduring fame; she remains engaged with her audience at events and doesn’t shy away from shining her bold personality online—or, for that matter, when she names her products with occasionally scandalous titles. However, it doesn’t seem that Kendo or Sephora have tried to restrict Kat Von D’s behaviorthey know her personality works for brand promotion and Kendo credits Kat Von D as being the seed brand that launched it. Today, Kat Von D Beauty continues to thrive; a decade since its launch, the line now boasts more than 350 products and, in addition to other projects she is working on—including designing a vegan shoe line and releasing an album—the celebrity is working on a collection for the beauty brand’s 10th anniversary.

Fenty Beauty merges Rihanna’s social distribution power with Sephora and Kendo’s expertise

Even before the release of Fenty Beauty’s flagship foundations, influencers in the online beauty community heavily hyped Rihanna’s line, organically endorsing the brand’s product quality. Launching in September 2017 with 40 different shades of foundation, and using 40 different models to market each color, Fenty Beauty embraced a long-ignored market—one that was craving high-quality, moderately priced products that prioritized inclusivity. Even the release embodied these values; not only was it not a limited release, but inventories were also high enough that when some of the darkest foundation shades initially sold out, they were quickly restocked.

Fenty Beauty was a massive hit on social media: The brand pulled in a whopping $72 million EMV in its first month—$45 million from Instagram and almost $11 million from YouTube. The brand’s first-month sales were five times higher than those of Kylie Cosmetics in that same month, and Fenty Beauty is on track to outpace both Kylie Cosmetics and KKW Beauty in 2018. LVMH also singled out Fenty Beauty as a big reason behind its 2017 revenue numbers, which improved 11%, its profit from recurring operations, which rose 17%—it also helped Sephora continue to gain market share, particularly in North America and Asia. The flagship foundations even landed on Time’s Best Inventions of 2017.

Like Kat Von D Beauty, Fenty Beauty makes products Rihanna would actually use—she helped design them and has called the partnership a long-term collaboration—and it is also the product of a partnership with Kendo and Sephora. It’s possible that Sephora and Kendo decided to forgo the limited product release route because of Rihanna’s resume of successful collaborations (RiRi Hearts collection for MAC, Fenty x Puma, and Rihanna x Manolo Blahnik, to name a few)—the image Rihanna espouses and the products she is associated have a great track record. But it may have also been a move made possible thanks to Kendo, as a brand incubator, and Sephora, as one of the biggest beauty chains in the world. Working with Kendo and Sephora comes with huge advantages—their retail expertise put Fenty in Sephora and Harvey Nichols stores and on FentyBeauty.com at the outset, and their experience with product assortment and pace started the collaboration with a flagship foundation, and slowly rolled out new products to form an entire collection. Even with Rihanna’s massive following, Sephora’s distribution and Kendo’s knowhow made the brand’s launch a massive success.

Casamigos was a successful celebrity brand on its own, but continued to grow after its acquisition by Diageo

George Clooney’s premium tequila brand, Casamigos, began as a passion project between the actor and his friend Rande Gerber, an entertainment industry businessman, to create “the best tasting, smoothest tequila” for themselves and their friends and families. But when the two partnered with real estate mogul Mike Meldman in 2013 to begin selling Casamigos in the U.S., the liquor brand grew extremely quickly. In time, Casamigos caught the eye of Diageo, which acquired the brand in 2017, valuing the company upward of $1 billion. Typically, liquor brands get a valuation of $1,000 for every case sold but because of Clooney’s celebrity, Casamigos was able to get an even higher valuation of almost $6,000 per case.

The launch of the brand to the market happened to coincide with a 7.4% rise in tequila sales, particularly for upscale brands like Clooney’s—between 2002 and 2016, sales of high-end brands rose 292%, and those of “super-premium” brands rose 706%, according to the Distilled Spirits Council. Casamigos sold 120,000 cases in 2017, and expects to sell more than 170,000 in 2018.

But independent of the rising global interest in tequila, Casamigos has continued to position itself as a premium liquor, made possible by both Clooney’s reputation and the work of its parent company, Diageo. Diageo came in at a time in the brand’s lifecycle when it was already growing fast with Clooney at its helm, and as a world leader in alcohol, it had the framework in place to enter Casamigos to the liquor industry’s extensive distribution network, and especially to international markets. (Laws differ in the U.S. on a state level about selling alcohol direct-to-consumer.) Likely, Diageo—which noted in 2017 that it wanted to focus on developing premium brands—learned from its ongoing Cîroc partnership with Diddy, which propelled the vodka brand into the premium category. In its half year 2018 earnings call, Diageo mentioned that its number-one priority is “to invest in the business where we see good returns,” Casamigos being one of these businesses. The company continues to increase its distributions of the tequila brand and expects its growth to be accretive and perform even better moving forward.

The timing of the partnership is also interesting. Diageo, for example, bought Casamigos in 2017, four years after its 2013 launch, and brought Diddy on as a brand ambassador for Cîroc in 2007, four years after the vodka brand’s 2003 launch. Additionally, Diageo launched an investment arm called Distill Ventures in 2013 to support startups and independent companies “to be the global drinks brands of the future.” It will be interesting to see if, in the future, Diageo develops a Kendo-like branch to streamline partnerships, particularly with celebrity-created brands.

4.

As top-tier celebrities amass more direct access to their audiences, they are testing the waters by selling flagship products direct-to-consumer. As these experiments turn into lasting companies, they are becoming majority owners in the productification of their brands.

Today, the products of celebrity brands are often announced and released on social media where their audiences are. Beauty products, in particular, are predisposed for Instagram and YouTube, whereas less visual CPG products like fragrance and candles are struggling more, regardless of their celebrity or influencer ties. In fact, in 2017, the EMV share for cosmetics was 85%, in contrast to 7% for haircare, 6% for skincare, and 2% for fragrance (though the cosmetics rate is slowing down, according to Tribe Dynamics).

YouTube and Instagram are leading the way for brands brands to frequently test “flagship” products, rather than releasing more complete collections less frequently—at the same time, brands now have to take into account how to promote products for smaller screens and shorter attention spans. This convergence has entirely altered the flagship release process; because Instagram is the end point, products have to be built and their release timelines have to be created with Instagram in mind.

The rise of direct-to-consumer has simultaneously made it easier and cheaper to launch a brand. Coupled with celebrities’ increased media power, many celebrities now have access to a perfect CPG storm: the ability to begin a brand from scratch themselves whose destiny they can also control, as long as the business they create is sustainable.

Kylie Cosmetics, fully-owned by Kylie Jenner, is building a beauty empire powered by flagship products.

Kylie Jenner’s Kylie Cosmetics launched in 2016 after running a small product test, and quickly skyrocketed to success. Jenner was able to contribute brand ideation, production ideation, direct access to an Instagram audience of more than 104 million, plus her decentralized audience (via traditional media channels) as the child of a reality television show. Further, because Kylie Cosmetics was built as a direct-to-consumer brand, product distribution is extremely streamlined, meaning that Jenner only has to focus on production (she partnered with Seed Beauty to fill in this gap, but continues to hold all equity in the company).

Wielding so much control over Kylie Cosmetics is a watershed moment for celebrity brands. Particularly in contrast to Kat Von D and Rihanna, whose respective beauty lines would not have been possible without Sephora and Kendo from the get go, Jenner (as well as her sister, Kim Kardashian) reached out to Seed Beauty herself, and continues to reign over her entire operation, giving her more flexibility on how she wants to run her business.   

Jenner’s brand has seen great success for a number of reasons. First, the founder is confident in her taste and creativity. She tested a flagship product—the Kylie Lip Kit—on Instagram beginning in November 2015, which sold out in only 30 seconds. That success gave her reason to expand her product assortment to blushes, highlighters (“Kylighters”) and eyeshadow palettes, which formed an official brand, Kylie Cosmetics, in 2016. With her lip kits in particular, Jenner successfully identified a hole in the market, similar to how her older sister, Kim Kardashian, has focused on contouring with KKW Beauty, and Rihanna has focused on foundation with Fenty Beauty.

Jenner also knew her audience. Every product Jenner has created and sold is built for Instagram, amplified by her ubiquity and deft use of the platform, which she employs to develop, gauge interest in, and promote her products.

Third, she has mastered the product release. Building excitement on social media and intentionally producing for scarcity, Jenner continues to sell out of each product she releases, garnering massive sales—in just 18 months, Kylie Cosmetics has made $420 million in sales, and with the launch of her birthday collection on August 1, 2017, she made $10 million in one day. Her business is on track for a $1 billion valuation by 2022, only five years since its launch—a feat that took Bobbi Brown Beauty 25 years, and L’Oréal’s Lancôme 80 years to accomplish.

However, it remains to be seen how long the flagship model can operate effectively as Jenner’s product line continues to expand. Jenner has launched a few dozen products since the Kylie Lip Kits in 2015. As we’ve seen with Apple, much of the company’s success under Steve Jobs was related to its highly restricted SKU count—in 1997, after losing $1.04 billion in the latest fiscal year and on the brink of bankruptcy, Jobs narrowed Apple’s line down to only four products, making a $309 million profit in the next year and allowing the company to focus on quality and innovation. But since Tim Cook took over as CEO in 2011, Apple’s product line has grown from 14 to 27 products, available in 200 different versions. While revenue has doubled and the number of employees has grown almost twofold, new product releases have met long delays, and the only truly successful item has been the Apple Watch—an ominous sign for the future. With this in mind, and as with all brands, it will be important to watch the mix between breadth versus depth and how Jenner approaches this ratio as she scales her brand.

While Jenner has said she wants to see Kylie Cosmetics in stores, she has yet to sell wholesale, likely an intelligent move—not only to maintain a low inventory and cut costs as a direct-to-consumer brand, but also to keep control over the brand, its margins and its prices. But the more products she offers, the more difficult it will be to gauge demand and keep selling out products. Over time, it will be interesting to see if Kylie Cosmetics buckles as quickly as it ascended—many celebrity brands are so young that it’s unclear what their lifecycles will be.

Kim Kardashian’s KKW Beauty releases flagship products in disciplined and creative ways

Kimoji Heart Fragrances by KKW Beauty, Kim Kardashian’s beauty brand, is one product launch that illustrates the extent to which Instagram plays a role in celebrity brands. Kardashian launched KKW Beauty in June 2017 with one product—Contour and Highlight Kits, initially available in four color variations—garnering more than $14 million in revenue in the first day of sales and selling out in less than three hours. Notably, sales for KKW Beauty in the first day were $13 million higher than those of Kylie’s first release, suggesting that Kardashian learned from her sister, Kylie Jenner, whose initial release sold out in 30 seconds, partially due to high demand, but largely due to limited inventory at only 15,000 units. (Like Jenner, Kardashian also owns KKW Beauty, giving her complete control over the brand, and has slowly released more products about every two months since KKW Beauty’s launch.)

With the launch of the Kimoji Heart Fragrances, released in February 2018, Kardashian also creatively circumvented the obstacle of perfume, making sure the promotion of the fragrance appealed to other senses. She collaborated with pastry chef Chris Ford to create oversized chocolate sweethearts for each press box. In one Instagram video, Jen Atkin, a celebrity hairstylist and founder of Ouai Haircare, receives a box with a giant chocolate heart, and uses the accompanying wooden hammer to break through the shell, finding the perfume inside, lying on a bed for tiny sweetheart candies. Kardashian then reposted these videos on her KKW Fragrance’s Instagram account.

Pop and Suki epitomizes the shift from spokesmodel to celebrity-owned brand

Another brand that has utilized the flagship release is Pop & Suki, which grew out of actress and model Suki Waterhouse and entrepreneur Poppy Jamie’s quest for the perfect bag: “timeless pieces that could be applicable to anyone without looking cookie cutter.” A direct-to-consumer company, Pop & Suki launched in November 2016 with only three pieces—a camera bag, a tote and a paperclip chain, each available in a few different colors. Each piece was both an extension of Waterhouse’s celebrity, but also offered monograms, different straps, tassels, keychains, luggage tags, and charms, made customizable to the shopper herself. Since then, the co-founders have maintained an extremely small SKU count.

A little over a year since the launch, Pop & Suki has already collaborated with luggage brand Away and Ouai haircare, started a partnership with Nordstrom, opened a pop-up in the high-end London mall Selfridges, and has more collaborations with Juicy Couture and a global cosmetics brand on the docket.

Like many entrepreneurs, they stumbled on the need for something in the market and started a brand to create it—and, given their complementary backgrounds, they largely had the resources themselves to create it. They’ve grown a cult following on Instagram, and tapped into a specific market that reflects their own story as best friends: to enjoy fashion with friends, instead of shopping purely for personal consumption. Especially given the co-founders’ respective work leading up to Pop & Suki—Waterhouse was the brand ambassador for Burberry’s Brit Rhythm fragrance in 2014 and became the face for H&M’s new denim collection in January 2018 and Jamie is a graduate of the London School of Economics and a long-time entertainment correspondent—they realized that together, they had the necessary skill sets to create and promote something from the back end, at the same time as they pursue front-end work. Waterhouse and Jamie also launched their brand along with co-founder and CEO Leo Seigal, an entrepreneur who has worked with a variety of celebrities and influencers to realize their brands, particularly on the platform he co-founded in 2014, Represent.

5.

Direct-to-consumer celebrity brands are fast to ascend, but may sink just as quickly without a sustainable business strategy.

Honest Company grew too fast and become too overvalued with a celebrity at its helm, crippling the company’s optionality

Founded in 2011 by Jessica Alba and her business partners, Honest Company was one of the first celebrity brands to launch lower-margin CPG products—alternatives to household and baby products “honestly made without” toxic chemicals. After starting with 17 products in 2012, the company saw $10 million in sales in its first year. However, the brand has had numerous setbacks. For one, it has confronted multiple lawsuits and voluntarily recalled products, revealed to contain synthetic substances entirely inconsistent with the company’s all-natural, eco-friendly image.

But perhaps more importantly, Alba’s celebrity has proven crippling to her own company. Since its founding, Honest Company has raised a total of $303 million, but after its most recent Series E funding in October 2017, its valuation dipped from $1.7 billion to less than $1 billion. In September 2016, early talks between Unilever and Honest Company about an acquisition fell through—the price was set below Honest Company’s $1.7 billion valuation to begin with, and because Honest Company was so overvalued, Unilever ultimately bought competitor Seventh Generation for $600 million. Whereas Honest Company’s SKUs rose to 100 in less than five years, Seventh Generation was a safer acquisition bet for Unilever with only 200 SKUs over its 25-year existence, and without a celebrity at its helm. Around the same time, Honest Company also put its plans to go public on hold.

Though the company originally sought to focus on selling direct-to-consumer, its newly appointed CEO decided to focus on its faster-growing wholesale channels in 2016; Honest Company products are now sold to thousands of stores, including Whole Foods, Costco, Amazon and Target, likely crushing its already-thin margins.

Honest Company serves as a cautionary tale that even a good intention and a well-known celebrity tied to the brand from its origin is not necessarily enough to create a successful brand—sometimes, this might make it even harder to build a lasting brand. For one, the company started with too many products and too much money. The failed deal with Unilever can only mean that selling Honest Company will be even more difficult in the future.

Lastly, there is a generational dimension at play. At 36, Alba is significantly older than the Millennial and Gen Z audiences people like 20-year-old Kylie Jenner connect directly with, especially with Jenner’s deft hand at social media. It’s possible that Alba’s sway with mothers and those in charge of the household is not nearly as vigorous as the power that younger celebrities have—something that might have also pigeonholed Honest Company’s sales to the wholesale channel.

Going Forward

Many of these celebrity-driven direct-to-consumer brands are extremely disruptive forces, but they also pose a number of questions about longevity and sustainability. Kylie Cosmetics has rocketed to the top as one of the biggest success stories among celebrity brands and in the beauty industry, but it will be important to watch how Jenner carries it moving forward.

Right now, the flagship model is working, but as brands age, creating pent up demand and releasing new products in small batches might not be sustainable in the long-term. When it comes to Kylie Cosmetics, Jenner’s initial pace has only accelerated—most recently, she released an eyeshadow palette, Blue Honey, in January 2018 and just over a month later, released The Weather Collection. It will be interesting to see when or if Jenner loses interest, and if she wants to continue what seems to be an extremely high-level involvement in the ideation and distribution side of Kylie Cosmetics.

Other brands such as Beats by Dre, Casamigos, and Cîroc seem to be in the good hands of their acquirers, keeping the brands true to their origins while expanding their reach wider than ever. The same could be said for Kat Von D Beauty and Fenty Beauty thanks to Kendo and Sephora. While Kylie Cosmetics and KKW Beauty started strong, Jenner has hinted that she might want to sell, which would pose an interesting set of challenges for her eponymous brand. Few buyers would be interested in paying the brand’s high valuation without Jenner attached for the foreseeable future—the same goes for Kim Kardashian’s brand. And for brands like The Jessica Simpson Collection and The Honest Company, the wholesale channel is a risk that will likely need to be mitigated in the future as the channel contracts overall. Amazon’s launch of Dear Drew, a celebrity-driven collection with Drew Barrymore at its helm, is a sign that even Amazon is trying to find its place in this ecosystem.

It’s too early to tell how sustainable these brands and their unique celebrity-, social media-, direct-to-consumer-driven models are, but it’s a safe bet that the same fundamentals of brand building apply to celebrities just as much—if not more—than for non-celebrity brands. Building a long-lasting business still takes time, resources and expertise. Even social media hasn’t changed that.