How Kanye And Adidas ‘Yeezy-Hacked’ The Business Model Of Celebrity Endorsements

Adidas is riding a wave of sneaker- and pop-culture buzz directly and indirectly tied back to Kanye and his Yeezy Boost clothing and shoe line. It’s safe to say this deal has flipped the traditional celebrity brand partnership structure on its head.

Celebrity brand endorsers are not a new concept in brand marketing, particularly in the fashion and sneaker world. So when Kanye West left Nike for Adidas in December 2013, while news breaking, it was just another in the long line of celebrity signings by the German footwear and apparel brand.

Fast forward to today, and Adidas is riding a wave of sneaker- and pop-culture buzz directly and indirectly tied back to Kanye and his Yeezy Boost clothing and shoe line. It’s safe to say this deal has flipped the traditional celebrity brand partnership structure on its head.

Kanye’s past relationship with Nike was pretty simple: The Portland-based juggernaut would release a namesake sneaker that featured his creative input in limited quantities, and Kanye received a static endorsement fee. Creative control in the product development or in the market deployment strategy were not part of the deal. And in what ultimately broke the business relationship, neither was a financially featured back-end bonus structure, profit sharing, or joint venture-like structure.

Adidas has taken that traditional endorser deal structure and looked at it through the lens of a (well-funded) fashion tech startup. It has given Kanye and the rest of its celebrity endorsers creative freedom while leveraging data from the secondary sneaker market to manipulate and create marketplace hype with strategic release timing and quantities–all with the goal of increasing relevancy with the sneaker culture 5% sub-market to influence and drive the 95% mainstream footwear sales.

Following are three lessons from Yeezy and Adidas that brands can apply to their celebrity endorsement relationships.

1. Joint-Venture Deal Mindset

The music industry revolutionized the company/artist business relationship with the invention of the 360-degree deal structure. A 360-artist deal is based around a business partnership where the company (record label or artist management company) provides an integrated support system to an artist in exchange for a percentage across the artist’s revenue streams, often including sales of music, live performances, publishing, and more.

Adidas has leveraged this same approach by offering joint-venture-type agreements that, while not necessarily taking a percentage in the artist’s revenue streams, have given its celebrity partners the sense of having “skin in the game.”

The keys to applying this concept are based on a relatively simple, yet fundamental psychological approach to the artist and brand partnership.

• Creative deal structure: Get creative with compensation both financially and creatively, and your artist partner will become emotionally invested beyond just a sponsorship deal.

• Provide more than just a check: Artists need a support system that allows them to bring their creative talent to the marketplace. If you can only sign a check, do a traditional sponsorship deal. If you want an integrated partnership, leverage your corporate infrastructure to provide something that most artists’ lack: a multifaceted support team that will allow their creative talent to shine and a brand team to focus on what it does best.

2. Growth Hack Your Brand’s Social Reach Through The Celebrity (And Their Friends)

Kanye did something unprecedented in February 2015: Within 72 hours he took over New York Fashion Week with an unannounced show that L.A. Times said drew “possibly one of the highest-wattage front rows in New York Fashion Week history,” following by free performances during the 2015 NBA All-Star Weekend, happening simultaneously. The result: an Adidas takeover weekend that featured zero dollars spent on traditional event sponsorship and was completely earned through the nexus of what Fortune called a “music-fashion-celebrity thing.”

While this worked out amazingly for Adidas, not all celebrities have the Q Score, and not all brands have the social footprint like Adidas and its three stripes. The key to leveraging these tactics is looking at your artist’s social sphere and understanding the best way to tap into the potential.

• Fluid two-way dialogue: The lines of communication between talent and brand must be fluid, open, and direct. Artist management, talent agencies, and advertising firms, while necessary, often slow down the communication process. Hack the back and forth by allowing direct contact between the artist and the decision maker(s) and the brand team. This is the only way the brand can hear the artist’s creative vision firsthand and provide direct feedback and builds.

• Take data-driven creative risks: Leading up to that February weekend takeover, Adidas gave Kanye the social authority to release images of his yet-to-be released Yeezy 750 and 350 sneakers on social media through his extended group of friends and family.

While nontraditional, if you analyze the data (the potential social reach of the collective group of influencers Kanye selected to leak the images) and the creative assets leveraged (organic nature and real world connotation of the images shared), you can see it was a growth-hacker approach to a product launch leveraging the ambassador’s most unique asset–Kanye’s inner circle with an unparalleled high social clout.

3. Give The Brand Co-Sign And Authority To Create Content

One of Kanye’s biggest gripes with his former Beaverton business partner was that it didn’t give him the system to showcase his fashion talent. In an interview with New York radio station Hot 97 in December 2013, Kanye shared the story of how Nike told him, “We’re gonna give you a bigger sandbox to play in. We’re gonna give you this amount right here to design, and two collections a year, and 30 SKUs—that’s the amount of items that you have. Would that make you happy, Kanye?”

Kanye, as an artist, wasn’t looking to be limited, much less have his creative freedom patronized. Adidas has, in turn, given Kanye and the rest of its artist stable the room to flex their creative gusto not just in the product development, but in the go-to market strategy and tactics as well.

Kanye has returned the favor by integrating the brand into the fabric of everything he does from a creative standpoint, above and beyond the structure of his letter agreement. From one-of-a-kind product seedings (i.e., President Obama in October) to original creative material (he released the single “Facts” on New Year’s Eve with half the song dedicated to his disdain for Nike and his thoughts on who’s winning the sneaker battle heading into 2016), Kanye created original creative content that gave the brand an unquantifiable multiple on its original investment.

Creating Our Own ‘Yeezy-Halo’ Effect

When Adidas first signed Kanye West, a ton of criticism and chatter followed about whether the deal would do anything to help bring back the brand’s relevancy and allow it to compete with Nike for the top spot in the footwear industry.

While not yet reclaiming the No. 2 spot from Under Armour, Adidas is coming off being the most-liked sneaker brand on Instagram for 2015, having arguably the No. 1 sneaker of year in the Ultra Boost running shoe, and touting unmatched brand buzz across the board, including renewed interest in the Stan Smiths and Superstar heritage shoe lines.

Not all artist relationships are as integrated into the fabric of pop culture or deeply emotional as Kanye and Adidas. But with a real-time holistic approach leveraging artist passion points and a corporate brand marketing infrastructure, we can leverage the same tactics to “Yeezy-hack” the traditional celebrity brand business relationship.