Modeling The Effects of Celeb-Entrepreneur Endorsement On ...

2012 Cambridge Business & Economics Conference ISBN : 9780974211428

Modeling the Effects of Celeb-Entrepreneur Endorsement on Advertising Effectiveness:

The Case of Malaysia’s Pop Princess

Mazzini MudaFaculty of Business Management, Universiti Teknologi MARA Malaysia

(60-0129151964; [email protected]),

Rosidah MusaFaculty of Business Management, Universiti Teknologi MARA Malaysia

(60-0192980780; [email protected])

June 27-28, 2012Cambridge, UK

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mailto:[email protected]

mailto:[email protected]


Modeling the Effects of Celeb-Entrepreneur Endorsement on Advertising Effectiveness:

The Case of Malaysia’s Pop Princess

ABSTRACT

Celebrities have been hired to endorse products in advertisements for a long time. They are

found to be more effective than non-celebrity endorsers because of their credibility in the eyes of

the audience. Recently, some celebrities are taking it a step further by endorsing their own

brands or labels. Despite being extensively reported in popular media, scholars have been slow to

recognize the importance of this new phenomenon. To address the gap, the purpose of study is to

develop, test and validate a model that can explain the effects of celebrity entrepreneur-endorser

on advertising effectiveness. This research hypothesizes that celebrity credibility (attractiveness,

trustworthiness, expertise and decorum) and advertisement credibility will positively affect three

traditional measures of advertising effectiveness –attitude toward the advertisement, attitude

toward the brand and purchase intention. A real print advertisement featuring Malaysia’s number

one songstress who is also an entrepreneur accompanied a self-administered questionnaire, was

filled up by 542 female respondents. Data were analyzed using structural equation modeling

(SEM). The findings indicate that all aspects of celebrity credibility are significant predictors of

attitude toward the advertisement with celebrity decorum as the main contributor. Celebrity

credibility and advertisement credibility significantly influence advertising effectiveness. These

findings have important implications for future research directions and advertisers.

Keywords: celebrity entrepreneur, celebrity endorser, credibility, attitude toward the

advertisement, attitude toward the brand, purchase intentionJune 27-28, 2012Cambridge, UK

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INTRODUCTION

Advertising is a popular, yet challenging form of marketing communications. With increasing

rivalry for consumer attention and new product introduction, advertisers are forced to use

attention-grabbing media stars. These celebrities can help advertisements stand out from the

surrounding media clutter, thus improving communicative ability by cutting through excess noise

in the communication process. Celebrity endorsements have also been found to produce better

recall or recognition of a brand name (Friedman & Friedman, 1979; Petty, Cacioppo &

Schumann, 1983). Many studies have also shown that celebrity endorsers favorably influenced

important advertising effectiveness measures such as attitudes toward the ad (AAD), attitude

toward the brand (ABR) and purchase intention (PI) (Atkin & Block, 1983; Frieden, 1984;

Kamins, 1989; la Ferle & Choi, 2005; Petty et al., 1983). Furthermore, celebrity endorsement

strategy has the ability to create an image for a product through meaning transfer (Debevec &

Iyer, 1986; Langmeyer & Walker, 1991; McCracken, 1989). For these advantages, companies

are willing to pay handsomely to have celebrities endorse their brands in the advertisement.

From the perspective of the celebrities, endorsement presents a lucrative supplemental income,

which for some celebrities means income far above what they actually made in their original

field of work. The allure of multiple endorsement contracts, for instance, brings unwelcomed

consequences to the celebrities as well as the companies who hire them. Celebrities who

endorsed too many products will lose credibility with consumers who will question the real

motive of the endorsement (Tripp et al., 1994), which is more for the money than real testimony

for the product. As a result, multiple endorsements will limit the effectiveness and appeal of

celebrity endorsement (Silvera & Austad, 2004). With limited opportunity to endorse, some


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celebrities started to open up their own company and promote their own products by appearing

as the endorser or spokesperson. The phenomenon of ‘celebrity entrepreneur-cum-endorser’ is

relatively new thus little literature is available. However, celebrity entrepreneurship does share

many similarities with celebrity endorsement (Hunter, 2010; ).

Our knowledge on the effects of celebrity endorsement has been largely informed by researches

and models developed in Western countries in which the people has an unhealthy obsession with

celebrity culture especially among the younger generations (Douglas, 2003; McCutcheon, Lange

& Houran, 2002; Swami, Taylor & Carvalho, 2009). This has led the authors to be concern about

the application of those models in Eastern cultures especially cultures dominated by Islamic

values that prohibit excessive worshipping of celebrities. Given the recent escalation of celebrity

endorsement advertisements in Malaysia, this study may provide some evidence of Eastern values

in interpreting the meanings of credibility of celebrity endorsers in developing countries that have

similar characteristics with Malaysia.

In order to fill the gap, this study aims to develop a theoretical framework to understand the

importance of celebrity credibility in influencing the effectiveness of the advertisement when the

celebrity is both, the endorser and the owner of the brand advertised. This study also seeks to

explore the importance of advertisement credibility in the celeb-entrepreneur endorsement model

and its roles in advertising effectiveness; conceptualized as consisting of three traditional

measures – attitude toward the advertisement, attitude toward the brand and purchase intention.

By proposing and subsequently testing the structural relationships among the five constructs, this

study intends to achieve the following objectives: (1) to explore the underlying dimensions of


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celebrity credibility, (2) to investigate the effect of celebrity credibility on advertising

effectiveness, and (3) to investigate the impact of company credibility on advertising

effectiveness.

THEORETICAL BACKGROUND AND HYPOTHESES

Celebrity Endorser and Celebrity Entrepreneur

Celebrities are individuals who are well-known to the public due to their accomplishments in

areas such as sports, entertainment, politics, broadcasting, corporate and etc. (Speck, Schumann

& Thompson, 1988). In many societies, celebrities are perceived as model of success. Many

consumers aspire to share their values and lifestyles (Alsmadi, 2006). Consumers frequently

imitate the ways celebrities dress, communicate, and most importantly, the brands of products

celebrities choose and use. Capitalizing on their image, celebrities are used as endorsers of

brands in advertisement. The most frequently used definition of celebrity endorser is given by

McGuire (1985): an individual who enjoys public recognition and who uses this recognition on

behalf of a consumer good by appearing with it in an advertisement. Celebrity endorsement is a

heavily employed strategy in advertising because it is more effective than celebrity-less

endorsement in terms of producing desirable outcomes for the sponsor. Celebrities are seen as

more attractive (likeable) by consumers (McGuire, 1985) and therefore more readily identifiable

(Kelman, 1961). Celebrities are also looked upon as more expert and trustworthy than non-

celebrities (Ohanian, 1990). As a result, consumers identify with celebrities and internalize the

‘things’ they say about the endorsed products (Kelman, 1961).


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Increasingly, celebrities engage in business not just as endorsers but also with a financial stake

and decision-making role in the business. Hunter (2010) defines celebrity entrepreneurs as

individuals who are known for their well known-ness and take part both in owning or running a

venture (or are portrayed as doing so) (p. 2). The launching of their new products is usually

reported by the media; hence, creating publicity to the celebrity and the venture. The association

with the company makes the celebrity an endorser of the company and product (Kamen, Azhari

& Kragh, 1975). It is understood that by default all celebrity entrepreneurs are celebrity

endorsers but not all celebrity endorsers are celebrity entrepreneurs. Since celebrity

entrepreneurs are also endorsers, a reasonable way of researching celebrity entrepreneurship is

through a celebrity endorsement framework.

Celebrity Endorser Credibility

Source credibility construct has been studied by many social scientists in the past several decades

in order to understand its effect on message persuasiveness (Hovland & Weiss, 1951; Sternthal,

Dholakia & Leavitt, 1978; Goblieb & Sarel, 1992; Pornpitakpan, 2003; Ohanian, 1990). In a

review of the source credibility literature over the past five decades, Pornpitakpan (2004)

discovers that the majority of studies undertaken indicate that perceived source credibility has

some degree of influence on communication effectiveness. In advertising context, such

credibility is often associated with a model or an endorser (Friedman & Friedman, 1979; Patzer,

1985; Ohanian, 1990, 1991), the advertiser (MacKenzie & Lutz, 1989), the advertisement

(MacKenzie & Lutz, 1989), corporate credibility (Lafferty & Goldsmith, 1999; Goldsmith,

Lafferty & Newell, 2000a; Newell & Goldsmith, 2001), or web credibility (Choi & Rifon, 2002).


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The Source Credibility Model derived from seminal work of Hovland, Janis & Kelley (1953),

contend that expertise and trustworthiness are the essential factors leading to the perceived

credibility of a message. Expertise is defined as the extent to which a communicator is perceived

to be a source of valid assertions about the object or issue, and trustworthiness was referred to as

the degree of consumer’s confidence in the communicator’s intent to communicate the assertions

she or he considers most valid (Hovland et al., 1953).

On the other hand, the Source Attractiveness Model originates from McGuire’s Source Valence

Model (McGuire, 1985). It has attractiveness as the third component of source credibility.

Attractiveness refers to the perceived attractiveness of the source (Josepth, 1982; Kahle &

Homer, 1985; Kamins, 1990; Ohanian, 1991; Patzer, 1985). Source attractiveness in the context

of message effectiveness (and communication) is said to depend on source’s familiarity,

likability, similarity and overall attractiveness to the receivers (McGuire, 1985; Ohanian, 1991).

Familiarity is considered knowledge of the source through exposure, whereas likeability is

affection for the source as a result of the source’s physical appearance and behavior; and

similarity is the supposed resemblance between the source and the receiver of the message

(McGuire, 1985).

Findings from the source credibility studies have been questionable as they regard the celebrity

endorsement process as uni-dimensional, thus unable to provide a well-grounded explanation of

important factors (Erdogan, 1999). Given the pervasiveness of the usage of celebrities in

advertising, a valid instrument for measuring celebrity endorser’s credibility was deemed

important for assessing the possible impact of using such individuals. Ohanian (1990)


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synthesizes previous literature on source effects and proposes three components of celebrity

endorser credibility: trustworthiness, expertise and attractiveness. Endorsers who are perceived

to be knowledgeable, honest and physically attractive are considered credible and in turn, induce

positive attitudinal and behavioral responses from consumers (Ohanian, 1991). Table 1 displays

the three dimensions of celebrity endorser credibility scale with their corresponding items as

proposed by Ohanian (1990).

Table 1: Celebrity Endorser Credibility Scale

Attractiveness Trustworthiness Expertise

Attractive-Unattractive Trustworthy-Untrustworthy Expert-Not expert

Classy-Not classy Dependable-Undependable Experienced-Inexperienced

Beautiful-Ugly Honest-Dishonest Knowledgeable-Unknowledgeable

Elegant-Plain Reliable-Unreliable Qualified-Unqualified

Sexy-Not Sexy Sincere-Insincere Skilled-Unskilled

Source: Ohanian (1990)

Negative Publicity and Celebrity Decorum

The literature on celebrity endorsement focuses more on its positive effects and potential benefits

for advertisers, while research on negative effects is scant and mostly from a western

perspective. Scholars and practitioners report that the greatest fear in hiring celebrity is when the

celebrity’s image becomes “tarnish by allegations of illicit, unethical, unusual, or even slightly

unconventional behavior” (Miciak & Shanklin, 1994, p. 53), thus instantly create problems for

the endorsement contract (Erdogan, Baker & Tagg, 2001; Charbonneau & Garland, 2005; Louie,

Kulik & Johnson, 2001; Money et al., 2006; Till & Shimp, 1998). The problem arises as to how

negative publicity about the celebrity endorser is associated with the brand being endorsed.

There is the possibility that celebrity endorsers who are entwined in destructive scandal transfer June 27-28, 2012Cambridge, UK

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the negative repercussion to the endorsed product and company, just like positive information

about their performance and achievements create their value or equity as endorser. The negative

publicity might affect their credibility as endorsers in the eyes of the consumers to certain

degree.

Celebrities, though popular, are mere mortals with tendencies toward good and bad. The few

studies on negative celebrity effects (e.g. Hunter & Davidsson, 2008; Louie & Obermiller, 2002;

Money, Shimp & Sakano, 2006; Till & Shimp, 1998) use the term negative information to

describe celebrity’s involvement in undesirable events such as incurring injuries, dealing with

substance abuse or getting caught engaging in unlawful behaviors (Louie, Kulik & Jacobson,

2001). As even the most mundane information about the celebrity is newsworthy (Boorstin,

1961; Pringle, 2004) and researchers have long known that negative is more attention grabbling

than positive information (Fiske, 1980; Klebba & Unger, 1982), the effects of negative celebrity

information on the endorsement contract is of interest to both, theory and practice.

The effect of negative publicity on a company is dependent on how personally responsible its

spokesperson was. Louie et al. (2001) report that a company’s stock performance is affected

based on whether the celebrity is blameworthy or blameless. The more culpable a celebrity was

the more likely the company will experience losses in stock market value. Furthermore, Klebba

& Unger (1982) find that indirectly, negative information may affect attitudes towards the

advertisement and brand by lowering the credibility of the endorser. Till and Shimp’s (1998)

study reveal that negative information resulted in unfavorable attitudes toward the brand, only in

the case where a fictitious celebrity was used to promote a fictitious brand. Interestingly, when a


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real celebrity is used to promote a fictitious brand and negative information given, there was no

significant negative effect to the brand. In a recent study comparing the influence of two types of

negative information – self- oriented and other-oriented, between the U.S. and Japan, Money et

al. (2006) reveal that negative celebrity information did not necessarily produce less favorable

evaluation of a brand.

Based on the literature on the effects of negative publicity on celebrity credibility, we propose

that it is important that the reputation of a celebrity in terms of his/her decorum be included as

part of his/her credibility assessment. A celebrity’s past behavior should indicate that he/she

would be an ongoing asset to the product campaign he or she endorses. Proper decorum or

deportment in potential product endorsers should be part of the ‘base criteria’ to find an effective

spokesperson and limit the risk of advertising backfires (Miciak & Shanklin, 1994; Swerdlow &

Swerdlow, 2003).

Advertisement Credibility

Many previous advertising studies focused on the effectiveness of the source of credibility,

particularly on the role of endorser (i.e. celebrity) per se (e.g. Atkin & Block, 1983; Biswas,

Biswas & Das, 2006; la Ferle & Choi; Ohanian, 1991; Pornpitakpan, 2003). The present study

extends the concept of credibility in celebrity-endorsed advertisement by examining the

believability and trustworthiness of the advertising message/claims presented by the endorsers or

as illustrated in the advertisement. Advertisement credibility refers to the perception of whether

the advertised message or claims made by a company’s advertisement are truthful, believable,


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and reliable and product performance is according to the stated information in the advertisement

(Herbig & Milewicz, 1995; Shavitt, Lowrey & Haefner, 1998).

The concept of advertisement credibility is based on the argument that consumers are motivated

to evaluate the truthfulness of the claims in the advertisement (Kavanoor, Grewal & Blodgett,

1997). In advertising and consumer behavior literature, advertisement credibility has been

defined as the “extent to which the consumer perceives claims made about the brand in the ad to

be truthful and believable” (MacKenzie & Lutz, 1989, p. 51). It refers to the same idea as

advertisement believability as conceptualized by Beltramini (1982): “the extent to which an

advertisement is capable of evoking sufficient confident in its truthfulness to render it acceptable

to consumers” (p. 4). Thus, advertisement credibility focuses on the advertisement and the

consumer’s evaluation of the truth and believability of the contents of the advertisement (i.e. the

visual and verbal components of the advertisement). Similarly, Goldberg and Hartwick (1990)

state that advertisement credibility is the perception consumers have regarding the integrity of a

commercial that encompasses two dimensions: trustfulness and believability. Trustfulness refers

to the perceived authenticity and integrity of the information presented in the advertisement

while believability refers to the perception of an accurate portrayal of reality. Consumers will

interpret the advertisement itself (rather than only the source) to determine if the claims it makes

are true (Cotte, Coulter & Moore, 2005).

Advertisement credibility is a key advertising attribute as consumers are not likely to respond to

advertising in the desired manner if they do not believe what the advertisement is trying to

convey (Beltramini & Stafford, 1993). The advertisement that is perceived as credible tends to


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have a greater degree of message acceptance. Many studies have demonstrated the positive

impact of advertisement credibility on advertisement outcome measures such as brand attitude

and purchase intention (Deshpande & Stayman, 1994; Ohanian, 1990). Moreover, advertisement

credibility can generate positive impression on the celebrity endorser’s, company’s and brand’s

images particularly in beauty-related products. For example, skincare consumers may expect and

hope the advertised brand of products would perform as presented by the celebrity endorser and

advertiser. However, if the information in the advertisement is misleading or deceptive, the

image of the product, endorser and advertiser may deteriorate as a consequence.

Nevertheless, previous studies have shown that the public tend to have negative view towards

advertising claims made by advertisers (O’Donohoe, 1995). For example, Mittal (1994) found

less than a quarter of his respondents perceived that television commercials are honest and

believable. Andrews (1989) found that majority of his respondents agreed that advertising does

not present a true picture of what is being advertised. Similarly, Alwitt and Prabhaker (1992)

found that most of their respondents agree that advertised products did not perform according to

claims made by television advertisements. In addition, Shavitt et al. (1998) examined the general

consumer’s perceptions and attitudes toward advertising among different demographic segments.

They concluded that American generally do not trust advertising, however, when it comes to

their actual purchase decisions they tend to base their choices on advertising claims.

Advertising Effectiveness

In advertising studies, three traditional measures of effectiveness are commonly used: attitude

toward the ad (AAD), attitude toward the brand (ABR), and purchase intention (PIN). As such,


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this study will adopt the above measures as representing consumers’ responses to advertisement

endorsed by the celebrity entrepreneur-cum-endorser. In general, findings from previous studies

strongly indicate that these constructs are related and impact consumer purchase behavior. Thus,

they serve as useful measures of advertising efficacy. Illustrations of sequential path of influence

from AAD to ABR, which subsequently impact PIN can be found in many studies (e.g. Lafferty,

Goldsmith & Newell, 2002; MacKenzie, Lutz & Belch, 1986; MacKenzie & Lutz, 1989).

Shimp (2008) was among the first to suggest that AAD is a mediator of consumer brand choice

and empirically examine the AAD-ABR linkage and found that advertising content significantly

impacts ABR, PIN and the act of buying. As more companies hire celebrities to represent their

brand, it is imperative that they understand the factors that influence consumers’ attitude toward

celebrity endorsed advertisements. Below is the conceptual model postulating relationships

amongst constructs in this study.

Figure 1: Hypothesized Model

H1 H6

H2 H5

H3

H4 H7


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CelebrityCredibilit

y

Advertisement Credibility

Attitude toward the

Brand

Attitude toward the

Advertisement

Purchase Intention


Based on the above discussion, we suggest and test the following hypotheses:

H1: Celebrity credibility has a positive influence on attitude toward the ad.

H2: Celebrity credibility has a positive influence on attitude toward the brand.

H3: Advertisement credibility has a positive influence on attitude toward the ad.

H4: Advertisement credibility has a positive influence on attitude toward the brand.

H5: Attitude toward the ad has a positive influence on attitude toward the brand.

H6: Attitude toward the ad has a positive influence on purchase intention.

H7: Attitude toward the brand has a positive influence on purchase intention.

METHOD

This study adopts a quantitative methodology via a cross-sectional survey. A self-administered

questionnaire based on extant literature and focus group discussions was conducted to test the

proposed hypotheses. An actual magazine advertisement featuring a real celebrity entrepreneur

endorsing her own brand of skincare product was attached as stimulus. The celebrity selected

was Malaysia’s number one songstress, Dato’ Siti Nurhaliza (Siti) who created history in

Malaysia’s entertainment scene with unprecedented number of music awards since her debut at

the age of 16. From the beginning of her career, she was portrayed as a modest and conservative

singer, refusing to wear revealing attires and taking picture with man for magazine covers. Her

reserved image was the subject of appraisals and positive feedback from Islamic scholars from

Malaysia and Indonesia. Frequently, she was cited as an idol and as an inspiration by many

Malaysians and non-Malaysian artists alike.


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Siti also took part in philanthropic activities by giving generous donations to tsunami victims,

National Anti-Drug Campaign, Nurjiwa Foundation (a foundation founded together with

husband, Dato’ Khalid Mohd Jiwa, as a platform to help needy people through charity concerts

and dinner events) and build a number of mosques in Kuala Muda, Kuala Lumpur and Pattani,

Thailand. Owing to her success as an artist and sparkling image, she was nominated as the

cultural ambassador for the Malay community and her image likeness was used as part of the

promotion by Malaysian Ministry of Tourism. Furthermore, Siti has been an ambassador and

spokesperson for various international products such as Jusco, Maxis, Maybelline, Minolta,

Mitsubishi, Olay, Pantene, Pepsi, Samsung and TM Net.

With success in her singing career, Siti also got herself involved in business by setting up her

own company with activities generally in the entertainment industry. Then again, she recently

ventured into the beauty industry by launching her own skincare and cosmetics products under

the label ‘SimplySiti’. The products are manufactured in South Korea under strict supervision by

SimplySiti Sdn. Bhd. so as to guarantee high quality and ‘halal’ (permissible to use under

Islamic law). Being known as a formidable, successful and well-known businesswoman in

Malaysia, Siti currently tops the list of the ‘Richest Artistes’ in Malaysia and was also named as

one of the millionaires in entertainment in South East Asia as well. With these amazing

achievements and shining image, Siti makes an appropriate case for us to explore our conceptual

model for the study.


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Sample and Procedure

Population of the study consists of females 18 to 55 years old, residing or working in the Klang

Valley, Malaysia. Females are targeted because they are the main users of skincare products.

Respondents were screened on two criteria: (1) familiarity with the celebrity endorser portrayed

in the advertisement and (2) never used the brand endorsed in the advertisement. As no sampling

frame was readily available, quota sampling approach was used based on ethnic and age factors.

900 questionnaires were distributed via drop-and-collect approach at various organizations in

several stages for three months.

Out of the 625 survey forms that were returned, 83 were discarded due to invalid responses

(monotonous and many incomplete answers), thus excluded from analyses. This yielded 542

usable questionnaires which resulted in approximately 60.2% response rate. Of the 542

respondents, 72% were Malays, 17% Chinese and 11% Indians. Chinese respondents were less

than the intended number because they could not recognize the celebrity. Each respondent was

instructed to view the stimulus advertisement as if they were reading it from a beauty magazine

and then completed a standard questionnaire which contained a series of questions regarding the

variables of interest in the study. Drop-and-collect procedure was chosen as method of

collection. Moreover, liaisons from companies, organizations and institutions were contacted and

trained on the collection procedures. Questionnaires were dropped and collected two weeks later.

Questionnaire and Stimulus Design

The survey instrument included measures of celebrity endorser credibility (CEC), advertisement

credibility (ADC), attitude toward the advertisement (AAD), attitude toward the brand (ABR) as


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well as purchase intention (PI). The measurements for CEC were adapted from Ohanian (1990).

However, two items, ‘sexy’ and ‘dependable’ were excluded from the question set because

results from pilot test found those two items to be very poor items (difficult to evaluate). A new

dimension was added to CEC to capture the notion of decorum or mannerism that contributes to

the credibility of the celebrity in the context of Eastern value and culture. The items for celebrity

decorum include ‘friendly’, ‘likeable’, ‘kind’, ‘polite’, ‘etiquette’, ‘ethical’, and ‘modest’. Six

ADC items were adapted from Beltramini and Evans (1985). For the attitude and intention

measures, items were adapted from Bruner and Hensel (1992) for AAD; MacKenzie and Lutz

(1989) for ABR; and Yi (1990) for PI. All items were measured using a 7-point Likert scale

from 1=strongly disagree to 7=strongly agree (except for respondents’ demographic

information). Likert scale was used instead of the original semantic differential scale because

respondents from the pilot test had difficulty understanding the later structure.

Once the stimulus advertisement was chosen, permission was solicited from and granted by the

company to use its magazine advertisement in the study (the advertisement is not shown here due

to potential copyright restrictions). To ensure the stimulus advertisement was exactly of the same

quality as the one in the magazine, printing was handled by the university printing centre using

high quality reproduction materials. Print medium was chosen for consistency with earlier

studies on celebrity endorsements.


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DATA ANALYSIS AND RESULTS

Exploratory Factor Analysis (EFA)

In reducing number of item measurements, three exploratory factor analyses (EFA) were

separately conducted on Celebrity Endorser Credibility, Advertisement Credibility and

Advertising Effectiveness constructs comprising of Attitude toward the Advertisement, Attitude

toward the Brand and Purchase Intention. A principal component extraction with oblique rotation

was utilized in reducing these large items to a more manageable set as it has been recognized to

be a valuable preliminary analysis when sufficient theory is unavailable to establish the

underlying dimensions in a specific construct (Anderson & Gerbing, 1988). In order to achieve a

more meaningful and interpretable solution in this purification process, items with low factor

loadings (< 0.5) or high cross-loadings (> 0.3) were dropped (Hair et al., 2010). Then another

round of EFA was performed. The results for all emerging factor structures within the respective

constructs showed high factor loadings and the alpha coefficients of these factors ranged from

0.93 to 0.97, well above acceptable value of 0.70 (Sekaran, 2009). This clearly indicates that the

scales used in this study were highly reliable (Nunnally, 1978).

Confirmatory Factor Analysis (CFA)

Confirmatory factor analysis, a more rigorous statistical procedure was applied to refine and

confirm the factor structures obtained from initial EFA. CFA has been proposed as an analytical

tool to ascertain unidimensionality of measures (Alexandris, Kouthris & Meligdis, 2006).

Therefore, all measures obtained from EFA were then submitted and validated using CFA

analytic procedure by employing AMOS 18. In order to achieve an acceptable ratio of


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observations to estimate parameters, two separate measurement models were conducted using

CFA.

Measurement Model 1

The first measurement model consists of four-factor solution of celebrity credibility construct

and two-factor solution of advertisement credibility. The overall fit indices (χ2 = 634.34, df =

223, p< 0.001, GFI = .90, NFI = .96, CFI = .97, RAMSEA = .06) indicate good model fit.

Convergent validity and reliability was assessed by examining the magnitude and significance of

the factor loadings (standardized regression weight) and their associated t-value. It was also

assessed with the evaluation of average variance extracted (AVE) and composite reliability (CR)

of each construct. Structural equation modeling requires a more stringent test of reliability by

examining the AVE and the Composite Reliability, in addition to Cronbach’s alpha. Items were

loaded on their posited variables with standardized coefficients greater than 0.5 cut-off point and

t-value ranged from 16.55 to 46.70. From the result, it can be claimed that convergent validity

has been achieved. Table 2 summarizes the result of the measurement model 1. The reliability of

the variables were also achieved with AVE value greater than the threshold value of 0.5

(Anderson & Gerbing, 1988), composite reliability value greater than the threshold of 0.6

(Bagozzi & Yi, 1988) and Cronbach’s alpha greater than the cut-off value of 0.7 (Anderson &

Gerbing, 1988). Composite reliability reflects the internal consistency of the construct indicators

while AVE indicates the amount of variance captured by the construct indicators (Gerbing &

Anderson, 1988).


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Discriminant validity was established through low correlations between the constructs and is

evident when the correlation between factors was lower than 0.8 (Yanamandram & White,

2006). The correlations between each latent variable were lower than 0.8 except for the

correlation between advertisement believability and advertisement honesty (r=0.85). Although

this high correlation is consistent with the hypothesis it may suggest that these constructs

essentially represent the same construct. To address this concern, Fornell and Larcker’s (1981)

more rigorous method of assessing discriminant validity was applied. It was found that AVE for

each construct was greater than the squared correlation between the variable and any other

variables in the construct, which in this measurement model indicates that discriminate validity is

achieved (see Table 2).

Table 2: Summary of Results of Measurement Model 1

Variable X1 X2 X3 X4 X5 X6 CR AVE Α

Celebrity Attractiveness (X1)

1 0.91 0.72 0.95

Celebrity Trustworthiness (X2)

0.71(0.50)

1 0.92 0.75 0.96

Celebrity Expertise (X3)

0.58(0.34)

0.65(0.42)

1 0.91 0.71 0.93

Celebrity Decorum (X4)

0.74(0.55)

0.76(0.58)

0.61(0.37)

1 0.88 0.59 0.93

Advertisement Believability (X5)

0.59(0.35)

0.63(0.40)

0.59(0.35)

0.64(0.41)

1 0.92 0.80 0.96

Advertisement Honesty (X6)

0.57(0.32)

0.65(0.42)

0.62(0.38)

0.64(0.41)

0.85(0.72)

1 0.88 0.77 0.93

Note: The numbers in the brackets represent the squared correlation values between constructs of the respective column and row. AVE = average variance explained; CR = composite reliability

Measurement Model 2

The second measurement model consists of three constructs namely attitude toward the

advertisement, attitude toward the brand and purchase intention. Goodness-of-fit indices

supported the acceptable fit of this model (χ2 = 128.66, df = 41, p<0.001, GFI = .96, NFI = .98, June 27-28, 2012Cambridge, UK

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CFI = .99 and RMSEA = .063). The results of individual factor loadings revealed that all paths

had standardized factor loadings substantially above 0.70. The model was further assessed by

obtaining CR and AVE for each construct. As shown in Table 3, all constructs met the

recommended level of 0.70 for CR and 0.50 for AVE, demonstrating the reliability and

convergent validity of each construct. Discriminant validity is established in this measurement

model as the correlation coefficients range from 0.73 to 0.68, below the cutoff point of 0.8

(Yanamandram & White, 2006). For a rigorous test of discriminant validity, the AVE of each

construct was manually computed and found to be greater than the squared correlation between

that construct and any other constructs in the model (see Table 3). In conclusion, it is reasonable

to claim that all the measures used in this study possess adequate psychometric properties.

Table 3: Summary of Results of Measurement Model 3

Variable X1 X2 X3 CR AVE Α

Ad Attitude –X1 1 0.91 0.76 0.96

Brand Attitude – X2 0.78(0.61)

1 0.93 0.73 0.97

Purchase Intention – X3 0.73(0.53)

0.78(0.61)

1 0.92 0.80 0.97

Note: The numbers in the brackets represent the squared correlation values between constructs of the respective column and row. AVE = average variance explained; CR = composite reliability

Structural Equation Modeling (SEM)

SEM was subsequently performed in order to test the seven hypothesized structural relationships

of celebrity credibility and advertisement credibility with advertising effectiveness in the context

of celebrity entrepreneur-endorser advertisement. The structural model has a significant χ2 value

(χ2 = 83.01, df = 23, p < 0.001), indicating inadequate fit of the data with the hypothesized


21


model. Even though the chi-square value was significant (p < 0.001), reliance on the chi-square

test as the sole measure of fit in a structural equation model is not recommended due to its

sensitivity to sample size (Gerbing & Anderson, 1988; McCallum, Browne & Sugawara, 1996).

Hence, the overall fit of the model was assessed using alternative fit indices. The goodness-of-fit

indices employed (GFI = .97; CFI = .99; NFI = .98; RMSEA = .069) suggest that the model fits

the data satisfactorily. Consequently, this model was retained without any further modification.

Hence, the study’s attempt to establish a plausible model that has statistical and explanatory

power, which could permit confident interpretation of results, was thus fulfilled. Table 4 presents

the results of the tested hypotheses. It was found that all the hypothesized paths were supported.

Table 4: Results of the Hypotheses Tested

Hypothesized Paths Standardized Coefficient

Critical ratio (t-value)

Results

H1 Celebrity Credibility → Attitude toward the Ad 0.28 4.65**** Supported

H2 Celebrity Credibility →Attitude toward the Brand 0.13 2.76*** Supported

H3 Ad Credibility → Attitude toward the Ad 0.34 4.24**** Supported

H4 Ad Credibility → Attitude toward the Brand 0.21 3.34**** Supported

H5 Attitude toward the Ad → Attitude toward the Brand

0.54 14.30**** Supported

H6 Attitude toward the Ad → Purchase Intention 0.24 3.97**** Supported

H7 Attitude toward the Brand →Purchase Intention 0.60 10.10**** Supported

Note: **** Significant at p< 0.001 (t> ± 3.29) ** Significant at p< 0.0.05 (t> ±1.96)*** Significant at p< 0.01 (t> ± 2.57) * Significant at p< 0.10 (t> ± 1.65)

DISCUSSIONJune 27-28, 2012Cambridge, UK

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This study sought to understand the effects that celebrity credibility and advertisement credibility

have on advertising effectiveness when the celebrity who endorses the product in the

advertisement is also a celebrity entrepreneur who owns the product as well as the company. The

scanty literature on celebrity entrepreneurship argues that from the perspective of the consumers,

there are more similarities than differences between a celebrity entrepreneur and a celebrity

endorser (Hunter, 2010).

However, with increasing reports of notorious celebrities and the pending damage on their

endorsement contracts, celebrity decorum is proposed to be among the main characteristics to

determine celebrity credibility. Findings from this study revealed that indeed celebrity decorum

is the main attribute influencing celebrity endorser credibility, followed by celebrity

trustworthiness, celebrity expertise and attractiveness; at least from the perspective of Malaysian

respondents. Most empirical evidence of consumers’ attitudinal and behavioral responses to

advertisements endorsed by celebrities found that attractiveness (Chaiken, 1979; Dion,

Bersscheid & Walsters, 1972; Horai, Naccari & Fatoullah, 1974; Shavitt, Swan, Lowrey &

Waenke, 1994) and trustworthiness (Despande & Stayman, 1994; McGinnies & Ward, 1980;

Pornpitakpan, 1998, 2002, 2003) positively influences persuasion. However, in this study,

attractiveness, though significant, was found to be the least predictor to celebrity credibility. This

is surprising considering that the product endorsed in the advertisement was attractiveness

related.

With regards to advertisement credibility, it is found that both advertisement believability and

honesty equally play a role in determining positive evaluation for advertisement credibility. The


23


claims on the efficacy of the skincare product in the stimulus advertisement were simple and

straightforward, and in the language that was understood by the audience. Meanwhile, the visual

aspect of the advertisement portrayed the celebrity endorser in her normal appearance not edited.

The results also showed that celebrity credibility and advertisement credibility had a positive

association with both attitudes toward the advertisement and the brand. These results imply that

in the case of celebrity entrepreneur, consumers may look up to the credibility of the celebrity as

well as the advertisement in terms of forming positive attitudes toward the advertisement and the

brand. However, advertisement credibility proves to be the main contributor to both, AAD and

ABR. It means that even in advertisement endorsed by celebrity, consumers still look up to

truthful and honest advertisement messages in forming positive attitudes toward the

advertisement and brand.

AAD and ABR serve as mediators to the relationship between celebrity credibility and

advertisement credibility with purchase intention. Whereas some very early research indicated

the link between attitudes and behavior was not highly correlated, more recent research has

indicated that attitudes substantially mediate behavioral intentions (Fishbein & Ajzen, 1975;

Mitchell & Olson, 1981).

LIMITATIONS AND FUTURE RESEARCH

This research has several limitations. Caution must be taken to generalize the findings of this

study beyond the celebrity entrepreneur and the brand featured in the stimulus advertisement.

The study should be replicated across different celebrities, brands and product categories.


24


Rosenthal and Rosnow (1984) suggest that a study needs to be replicated as many as fifteen

times before results can be generalized, indicating that further work on this model is necessary to

generalize the findings.

It may be fruitful for future research to replicate and validate all or parts of the present model in

order to determine the robustness of the findings in other cultures, eastern or western.

Comparative cross-national studies are essential in order to examine the generalizability of the

model. This research direction appears to be potentially fertile because celebrity entrepreneurship

and celebrity endorsement are global phenomenon. It is also deemed important that future study

be undertaken to extend the present model by integrating company credibility, media credibility,

or other advertising effectiveness constructs such as brand recall. It is also suggested that for

future research some moderating variables such as attitude toward advertising in general, mood,

fan status or celebrity worship may be considered, which may be able to explain any additional

differences that may crop up.

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