An insightful but yet lively look at the elements that make, sustain or break endorsement contracts.

Magnus Carlsen’s triumph at the World Chess Championship last year must also have gladdened the hearts of many advertisers. The young Norwegian had already made inroads into the world of endorsements, securing several deals as well as a modeling contract. Good looks, intelligence, a playful personality and social media prowess – it’s no wonder that Carlsen’s emergence has shaken up a sport that is used to its grave and nerdy heroes.

For his part, Vishwanathan Anand waged a brave battle and is still a revered and respected icon – in India, at least. However, the fact that he failed to grab the crown is likely to take the shine off his image and cause a decline in his endorsement graph.

That sort of decline is normal when it comes to endorser appeal – whether it involves movie or sporting celebrities. After all, stars age, looks fade and athletic abilities wane with time.

Winning clearly matters. Except when it doesn’t.

Roger Federer, for example, figured on a Forbes list of the world’s top-earning tennis players for 2013. Yet this impressive showing was matched by an equally lackluster performance on the court through much of the year. Brands such as Rolex and Credit Suisse, hoping to benefit from the image that Federer has built as one of the most dominant players in the sport, are willing to overlook his recent struggles to regain form. They seek pedigree and solidity in their endorser and they find liberal helpings of these in the Swiss tennis star.

The same is true of Brand Tendulkar, which was able to withstand long dry spells at the batting wicket as well as a drawn out pre-retirement period. Such is the aura of the man that his endorsement pipeline is not likely to dry up at any point soon, even after he has put away his batting gloves.

Once you have made it into a certain elite circle of winners, you are there to stay. For a while, at least. Brands hope that an endorsement will allow them to benefit from the equity that these players have built over time. This makes for a more stable association than one formed on the crest of a player’s victory wave. Waves tend to come crashing down, after all.

All of this presupposes a certain strategic orientation when it comes to endorser selection. That advertisers are examining variables such as fit and relevance when they look for a famous face to promote their brand.

That is certainly true for prominent global brands.National or India-centric brands, however, usually employ a formula that goes like this: Take an attractive and overexposed celebrity – preferably a movie star or cricketer – and make them an offer they can’t refuse. If the marriage fails, as it often does, then move on to the next attractive and overexposed celebrity to peddle your product – a phone, a pressure cooker, a life insurance policy.

But internationally recognized brands do spend time and effort in finding the right person. There is art, science and tested methodologies involved in the selection process. Seasoned advertising professionals lock themselves up in the boardroom to weigh the advantages of selecting one celebrity over the other. That’s not surprising since there is a lot at stake here.

Research has established that the right association can yield very good results for brands, with some studies showing an increase of anywhere from 5 to 20 percent in sales from aligning themselves with a celebrity endorser. Sports celebrities are particularly effective in this respect. Trust and esteem figure highly in the public’s perception of sporting heroes. To a greater degree than actors, they are viewed as role models who have come to their positions in life through hard work and perseverance.

However, while there are demonstrated rewards to adopting this advertising tactic, there are financial and business risks linked to it also.

Cost is a big consideration. A brand may spend a good portion of its advertising budget in booking a big name endorser but find that it still has to expend a significant amount on ads and media purchase. Time is another key constraint. The big check to the endorser gets the brand only a limited amount of her time. Unless the brand has a clear plan on how best to use this time – in terms of advertising vehicles and messages – this will be money that is not so well spent. And then there is, of course, the other risk associated with using a celebrity endorser. The risk that he may commit a crime or act of indiscretion and damage the personal image on which the brand is riding.

This is not an uncommon scenario among sporting heroes and it is easy to see why. These individuals tend to be young, highly determined and willing to go to any lengths to win – attributes that also lend themselves to other forms of risky behavior. From Tiger Woods to Oscar Pistorius, sporting lore is filled with examples of talented people who strayed or lost control for a few brief moments or more. If nothing else, it demonstrates that they are human at the end of the day.

How brands handle this again depends on the nature of the offense and the brand itself. Nike chose to retain Woods in its endorser panel even after his multiple extramarital affairs became very public fodder. In Nike’s view, this was a personal issue and one that did not reflect on his athletic qualities. It also did not want to be perceived as playing moral police in this matter and preferred to stand by the beleaguered golfer. Accenture, on the other hand, dropped Woods very quickly, fearing that the negative publicity would corrode its carefully cultivated image of old-fashioned dependability.

When it comes to celebrity endorsements – and particularly with sporting celebrities – there are guidelines but no clear-cut rules. Yes, an endorsement can help the brand. There are other times when it may not. The whole process is driven by a carefully considered but still subjective analysis of a brand’s attributes and the alignment of these with human characteristics. It is reasonable to expect that Magnus Carlsen will now see advertisers lining up to seek endorsements for everything from cars to clothing. It is also reason-able to expect that Vishwanathan Anand will see his old friends – banks and computer companies, for instance – come back to him for endorsements. He may not have won but he played a good and fair game.

Pratap Bose is the Chief Operating Officer of the DDB...