Why Tiger Woods Stands to Gain From Scandal

Dec. 10, 2009 — -- In the wake of recent revelations about Tiger Woods and his apparent chronic infidelity, there has been a public outcry concerning his lucrative endorsements. Many believe that endorsers will drop Tiger Woods or scale back on their financial commitments to him. Unfortunately, that is not how the business of celebrity endorsements works. Tiger Woods is an extremely talented athlete surrounded by the preeminent sports management organization (IMG) and is likely to continue earning very large paychecks for many, many years. To understand why, you have to understand the business of marketing endorsements.

Sponsorships and endorsements are a vital part of the marketing plans of many large companies. For some companies like Nike, Reebok and some fragrances, it is the most important part. Manufactured brands are inanimate objects; advertising and marketing breathe life into brands. Celebrity endorsers personify brands, helping consumers relate to the personality and attributes that the brands want to identify with. They help marketers reach a wide group of consumers and gain credibility. This translates into sales. Nike alone spends more that $475 million a year paying athletes to endorse its products.

Here is where it gets tricky. The attributes the companies are paying for are clear-cut. In the case of Tiger, he dominates the golf world. When he is on the course, he performs in a way no other golfer before him ever has. He wins almost 30 percent of the times he tees the ball up. In contrast, Jack Nicklaus, widely considered the best golfer of all time, won only 12 percent.

This has made Woods wealthy on the golf course. His golf winnings along with tournament appearance fees put his career golf earnings over $100 million. Companies use him because he personifies winning and as the most widely known athlete that also wins the most, he is the go-to guy to represent this attribute. Tiger has been one of the most recognized athletes in the world; this scandal will make him one of the most recognized people in the world. This only helps him.

What About His Sins? What About His Character?

I'm not happy about what Tiger allegedly did. In fact, I'm angry. However, let's take a quick ride through celebrity endorsement mathematics:

Madonna: Signed by Pepsi in 1989, she was dropped the same year for her video "Like a Virgin" which showed her getting busy with a saint and developing Stigmata while wearing a cross and a Bustier. Sexually promiscuous, she had children out of wedlock, French-kissed Brittany on national TV and admitted on the Letterman show she smokes pot. After all of this she went on to write six children's books, the first of which The English Roses, was the best-selling children's book ever by a first-time author. Oh yeah, at last look she was the best-selling female rock artist of the Twentieth Century.

Martha Stewart: Sentenced to five months in prison for lying to federal prosecutors, her brand, unmistakable as it carried her name, took a big hit. It has since regained much of its luster and you can see her on her TV show every day.

Paris Hilton: In 2003 was the star of an amateur sex tape. Later arrested for DUI and sentenced to jail time. Paris has created a brand that spans fashion, music, movies, TV shows, books, apparel, fragrances and even charity work.

Apparently, a spotless record is not a requirement for a celebrity endorser. In fact, celebrity is and in most cases, it is not important how you get it.

This is not intended to sanction bad behavior or condone sexual misconduct. It says more about us than it does the celebrity endorser. We scream bloody murder when a celebrity misbehaves. But, even if we shy away for a short period, we always come back. Maybe it is because we forgive. Maybe it is because we realize we are flawed. Maybe it's because we can't turn away from a car accident. Maybe it's the zoo effect, when we stare at animals in the zoo waiting for them to do something interesting so we can watch it.

Companies will react to the initial public outcry. So in the case of Tiger, they back off and step away for a moment. Especially during the period the mainstream media is shining a klieg light on the bad behavior. But on the other side of the storm, when the clouds move away and Tiger Woods again lofts a huge trophy after decimating the field and millions of fans win vicariously; Tiger will still have as many endorsement deals as he has today. Perhaps even more.

The work is the opinion of the columnist and in no way reflects the opinion of ABC News.

Larry D. Woodard is president and CEO of Vigilante, a New York-based advertising agency that develops consumer-centric advertising campaigns. He is also chairman of the American Association of Advertising Agencies New York Council and the recipient of many prestigious industry awards, including two O'Toole Awards for Agency of the Year, the London International Award, Gold Effie, Telly, Mobius, Addy's and the Cannes Gold Lion. A blogger and a frequent public speaker, Woodard enjoys discussing the intersection of media, politics, entertainment and technology.