(FORTUNE Magazine) – THE NEXT TIME the creative types at your advertising agency suggest hiring a celebrity for your campaign, think hard before saying yes. Many admen agree that celebrities are being enlisted to pitch products as never before. Star power looks like a sure way to grab attention. Besides, there's glamour in having a famous face coo your product's name. And yes, sometimes it works. But the cold reality is that there's little to celebrate in celebrity advertising. It isn't cheap. For a few weeks' work as advertising spokesman for Coca-Cola and General Foods' Jell-O pudding line, actor Bill Cosby will pull down more this year -- an estimated $1.5 million -- than the salary of either company's chief executive. Back in 1983, actor Alan Alda, late of the TV series | M*A*S*H, signed an estimated $2-million-a-year deal with Warner Communications' Atari unit to pitch home computers. Months after the first commercial went on the air, Warner sold Atari, which dropped the campaign. But under the contract, Alda is still getting paid. Sums of $100,000 or less will buy perhaps three days' work by lower-voltage celebrities, such as actress Rita Moreno. But that's just for television commercials. Print ads cost extra, and companies must fight hard to persuade celebrities to appear on billboards or at corporate functions: stars consider both unglamorous. The usual contract between celebrity and sponsor prevents the star from endorsing competing products. To stop the star from pitching all other products, competing or not, costs up to three times the ordinary fee, a premium few advertisers will pay. And some contracts call for more than money. Magician Doug Henning's agreement with Chrysler gives him the right, while shooting ads, to spend one hour of every four in meditation. For all that money and effort, an advertiser can't count on getting a stirring testimonial. Pepsi-Cola USA signed deals estimated at $5 million each to get singers Michael Jackson and Lionel Richie to appear in commercials. Yet on film neither praises or even drinks Pepsi. Instead they dance, look hip, and sing paeans to the ''new generation'' of Pepsi drinkers. In 1978 Pat Boone, the 1950s teen idol, got nailed by the Federal Trade Commission for delivering a commercial script containing unsubstantiated claims on behalf of an acne remedy, Acne-Statin. He later signed a consent decree in which he agreed to refund some of the money he made doing the ad. Since then, more celebrities have become reluctant to recite product claims. Most stars won't make even a cameo commercial appearance without indemnification from the advertiser or its ad agency against legal liability. Evidence suggests that viewers don't believe what a star says. According to a 1984 survey of 1,000 adult TV viewers by the New York advertising-research company Video Storyboard Tests, half of all viewers assume that celebrities who appear in ads are ''just doing it for the money.'' Certainly Bill Cosby's claim that he likes new-formula Coke better than the original version he had been touting for four years has come to seem strained. The credibility problem could balloon if Coke decides it wants Cosby to resume hawking the old formula, reintroduced as Coca-Cola Classic. The company won't say what it plans for Cosby. CHOOSING THE RIGHT celebrity is an art. Few ad agencies do it well, according to Steven Levitt, president of Marketing Evaluations Inc., a Port Washington, New York, research company that polls thousands of households to measure the popularity and familiarity of stars. Levitt also studies the effectiveness of specific commercials. He says Catherine Deneuve, the glamorous French film star, flopped for Whitehall Labs' Youth Garde moisturizing lotion because women find her intimidating. John Wayne was a dud for Datril because few people believed the Duke was an expert on headache remedies. Levitt sees so much miscasting of this sort that he concludes, ''Most celebrity ads are preposterous, with no reason for being. Most of the guys who make them don't know what a consumer looks like.'' Yet the people who will spend an estimated $96 billion on U.S. advertising this year are not boneheads. Many think celebrities will help solve their greatest recent problem -- the reduced selling effectiveness of television, where 23% of ad dollars are spent. The pleasant pastime of ignoring commercials, usually by flicking a remote control switch to change the channel or cut the sound -- known as zapping in the ad world -- is on the rise. Dave Vadehra, president of Video Storyboard Tests, finds zapping on the rise: 20% of all viewers were confessed zappers in 1984, vs. 13% a year earlier. When viewers do watch commercials, they are often confused by what admen call clutter, the bunching of so many ads during a commercial break that it's hard to remember which was which. The shift from 60- to 30-second spots in the early 1970s forced twice as many ads to vie for attention in a given time period. Experts say 15-second spots may soon become standard, redoubling commercial clutter and viewer confusion. In this environment, star spokesmen are thought to provide zap insurance. Roughly 10% of the ad dollars spent on TV now go for celebrity ads. And as zapping increases, so will the use of such ads. ''What you get from a celebrity at a bare minimum,'' says Burton J. Manning, chief executive of the J. Walter Thompson USA ad agency, ''is audience attention.'' This view of the star's role may help explain otherwise incomprehensible pairings of personality and product, such as low-brow comedian Dom DeLuise for high-tech NCR personal computers, and the sequined actress Suzanne Somers for Ace Hardware stores. But celebrities don't guarantee that a commercial will be + noticed. The Great Neck, New York, research firm of McCollum Spielman found that only about 40% of TV ads using celebrities had better than average success at fostering brand awareness in clutter. And only half of those also increased viewers' positive feelings toward the advertised products. The fear that an expensive ad campaign might not get noticed can lead a company to regard zap insurance as cheap. What, after all, is a star's fee of $100,000 -- even $1 million -- next to the average $200 million or so that the top 100 U.S. advertisers spend annually on advertising? Since even an unknown actor working for the minimum scale allowed by the Screen Actors Guild can pocket $25,000 or more for a frequently aired commercial, why not loosen the purse strings a little and gamble that the popularity of Jack Klugman (Quincy, The Odd Couple) or Linda Evans (Dynasty) will somehow goad consumers into a buying frenzy? Skillfully used, celebrities can do more for an advertiser than command attention: Celebrities unabashedly used as entertainers can make watching an ad enjoyable. Lionel Richie for Pepsi is an illustration. An exceptionally credible spokesman can lend trustworthiness to the ad, the product, and the company. Every adman's ideal is Walter Cronkite, among the most credible people in America since his days anchoring the CBS Evening News. But Cronkite remains what admen call a commercial virgin: he has never appeared in an ad (see box). A good matching of product and celebrity can make an ad convincing. Example: Miller Lite's campaign with stereotypically beer-loving retired professional athletes. A celebrity can give human dimension to an abstract or commodity product. Admen praise Cliff Robertson's appearance in AT&T's campaign for long-distance service. Some celebrities, such as former vice presidential candidate Geraldine Ferraro, who appeared in a commercial for Diet Pepsi, generate free publicity for the advertiser merely by their controversial association with the product. MOST ADVERTISING executives understand these principles. A few have mastered them. Pepsi commercials, created by the New York advertising agency BBDO International, combine many elements that make for winning celebrity ads: entertainment, a good match between star and product, and news value -- signing Michael Jackson made headlines. One measure of the ads' efficiency is Pepsi's cost per 1,000 ''retained impressions'' as calculated by Video ^ Storyboard's Vadehra. ''Retained impressions'' refers to the number of TV viewers who can spontaneously remember an ad, though the measure doesn't necessarily forecast sales. Dividing Pepsi's average weekly TV budget of $612,000 in 1984 into his estimate of 70 million retained impressions per week, Vadehra calculates Pepsi's cost per 1,000 retained impressions at $8.78. That's low compared with the $13.24 he figures Coke pays. ''I think Michael Jackson was worth $5 million,'' he concludes. But he's really guessing: he can't say whether Pepsi's ads with stars are more effective than its ads without them, which contend that cola drinkers prefer Pepsi over Coke. Another campaign much praised on Madison Avenue is the N.W. Ayer agency's effort for AT&T long-distance telephone service. As part of the phone company breakup, AT&T lost the right to use the familiar Bell name in its advertising and faced difficulty in getting consumers to think of long distance as a service separate from local calling. In this case spokesman Robertson's fame was less important than his ability, as an actor, to project an aura of genial credibility. ''Cliff didn't have high visibility at the time,'' explains Kim Armstrong, advertising director for AT&T Communications. But since AT&T spent $276 million on long-distance ads last year -- much of it on ads with Robertson -- his face has become one of the most familiar on TV. His low-key spots are running against higher-pitched MCI ads (agency: Ally & Gargano) with comedienne Joan Rivers, as well as noncelebrity spots for GTE's Sprint service (from J. Walter Thompson USA). Combining a celebrity with a relevant sales message probably helped General Foods make a winner of Crystal Light. With sales at wholesale of $150 million, this powdered diet soft drink mix was among the most successful new products of 1984. In its introductory campaign General Foods employed Linda Evans, familiar to viewers for her Dynasty role as Krystle Carrington. Evans commands attention in the ads while positively demonstrating the value of slenderness by sheathing her considerable charms in skintight spandex. Though it's too soon to judge the success of Burger King's new ads for an improved Whopper hamburger, the commercials are entertaining, in a loony way, and show a convincing match of personality and product. In each of a series of ads for the Pillsbury unit, an actor playing a wimpy Burger King executive explains why the new Whoppers are better than the old. Cut to Mr. T, the gold- chained, Mohawk-haired member of TV's A-Team -- or one of several other personalities with abrasive images -- who is provoked to ferocious rage by the notion that anyone would change the beloved Whopper. The executive, clearly flustered, nervously explains the improvements, sparking even more wildly exaggerated belligerence on the part of Mr. T. In the end Mr. T is somewhat mollified by a bite of burger. ''I'll let you live,'' he growls at the wimp. Jay Schulberg, the top creative executive at the Ogilvy & Mather ad agency, guesses that only about one celebrity advertisement in five is effective. As an example of what not to do, consider a magazine ad for Clingers, a product that resembles 3M's well-known Post-It notes and that uses a mnemonic trick similar to Crystal Light's in its advertising. Ampad Corp., maker of Clingers, hired Jamie Farr, who played Corporal Klinger on M*A*S*H. But Farr's qualifications to recommend sticky-backed note paper are not apparent from the ad, which shows him sticking the notes to his eyebrows. Among other pitfalls is overreliance on a single star. General Foods made this mistake by almost indelibly associating its Sanka decaffeinated coffee with Robert Young, best known for his TV portrayal of Marcus Welby, M.D. Though likable and convincing -- apparently many viewers thought he really was a doctor -- Young had little appeal to younger adults who have lately become the fastest-growing group of decaf drinkers. ''Our product had a medicinal image, and sales were up only marginally,'' says Stephen Morris, general manager of the General Foods coffee division. Sanka learned its lesson. It dropped Young in 1981 and hasn't used a celebrity since. Another danger is that a star's image can shift like quicksand. When nude photos of Miss America Vanessa Williams appeared in Penthouse, American Greetings and Gillette Co. pulled or altered ads using her once-thought-to-be- wholesome likeness. (A company that stuck by Williams after her abdication -- with no ill effect -- was Royal Silk Ltd., a New Jersey mail order house that cared more about how she looked in its clothing than about customers' knowledge of what lay beneath.) CELEBRITY ADS can backfire if a competitor turns a star's image to its own advantage. Canon USA, whose personal copier line Jack Klugman has represented since 1982, has fallen victim to this counterploy. In his most recent major TV role Klugman played Quincy, a nice-guy medical examiner of unquestioned integrity. Though perhaps irrelevant to Canon copiers, the image was at least positive. Then Minolta, needing to make the most of an ad budget that its ad agency says was a third of Canon's, hired Tony Randall as spokesman for its copiers last year. The two actors were featured in the long-running TV series The Odd Couple, reruns of which are still popular in many cities, with Randall playing a compulsive neatnik and Klugman an inveterate slob. The Minolta ads, which according to his agent riled Klugman, played up the Odd Couple stereotypes and even made a thinly veiled reference to Klugman when Randall ad-libbed, ''Of course, I'm not a slob like, uh . . .'' and gave his you-know-who-I-mean look. Minolta's marketing coup was to associate Canon machines in consumers' minds with Klugman's mess: jammed paper, perhaps, or ink-blackened hands. A performer's success in one campaign may reduce his chances of success in another. A case in point: the magisterial John Houseman, whom consumers regarded as exceptionally credible because of his TV role as Professor Kingsfield in The Paper Chase. For six years the brokerage firm Smith Barney, through Ogilvy & Mather, has successfully employed him to explain to viewers in an elegant, patrician style: ''We make money the old-fashioned way -- we earn it.'' Procter & Gamble also appears happy with Houseman as spokesman for Puritan cooking oil. But his work for Chrysler and McDonald's flopped. Robert Connor, advertising vice president at Smith Barney, admits he felt ''some queasiness'' when Houseman began doing other ads, but says research showed that ''when people saw him doing something else, they thought of us first.'' A spokesman for Leo Burnett, McDonald's agency, points out that it was the client's idea to use Houseman, not the agency's. The only people sure to gain from the rise of celebrity advertising are celebrities. To some, advertising work is a welcome reward for enduring the rigors of their profession. Says John Houseman: ''I worked my ass off in the theater for 45 years. God knows this isn't as complex as playing King Lear. It is less work for the money than any other theatrical work.'' To less known or fading actors, commercials can provide welcome exposure. Celebrity advertising will never be as sweet a proposition for advertisers. The rare combination of the right star, a relevant message, and brilliant execution may yield an effective ad. But a celebrity campaign is more likely | to be remembered -- if it's remembered at all -- for its dazzle, not its substance. As a bit of Madison Avenue wisdom has it: if you have nothing to say, have a celebrity say it.