Celebrity endorsements can build brand equity. An example of this is Nike. Prior to Michael Jordan, Nike mostly sponsored tennis and track athletes and decided to expand their market, which increased sales to become a multibillion-dollar company. Celebrity endorsement is used as an advertising strategy, by using celebrity status and image, to promote a brand's recognition, recall, and differentiation.

A celebrity endorser who likes and utilizes the product, and has some knowledge about it, is presumed to be more passionate about the product and would therefore promote the product in a believable way that consumers would find more persuasive.Someone who is perceived to have knowledge about a product or service is considered by marketers to have a power called compliance. Compliance occurs when the receiver of an ad wants to obtain the benefits shown in an ad due to strong advocation for a product. Having a seemingly trustworthy and reliable celebrity source creates a strong advocation that has the power to compel consumers to purchase from the promoted company.