Why Every Investor Should Know What the Halo Effect Is

This article was prepared by Maddox, our trusted art expert partner. 

Maddox has quickly established itself as a top-performing art investment provider on Splint Invest, achieving remarkable exits with an impressive track record. With two successful exits on the platform — Duncan Robert McCormick’s Summer Oilseed (2021), delivering a realized net return of 32.10%, and Albert Willem’s A Difficult Moment During the Driving, generating a 26.22% return — Maddox has demonstrated its ability to maximize investor gains while maintaining a unique strategic approach. 

Beyond its success on Splint Invest, Maddox’s broader track record in the art market speaks for itself. Over the past nine years, the firm has facilitated the resale of £100 million worth of artworks on behalf of investors, achieving an average gross profit of 25.8%. This extensive experience underscores Maddox’s ability to navigate market dynamics, identify undervalued opportunities, and deliver consistent results. 

Maddox’s investment strategy leverages market trends to optimize the acquisition and resale timing of undervalued artists and works with strong appreciation potential and applies rigorous analysis to ensure informed decision-making. This meticulous approach has positioned Maddox as a leader in the art investment space, offering investors not just exceptional returns, but also the confidence of partnering with a firm that understands the intricacies of the global art market within a holistic view. Beyond auction comparatives and private sales, art appraisal requires to take into consideration multiple factors that affect how that investment will appreciate. When a set of these desirable attributes come together around an artist, they produce what is known as the Halo Effect. 

Therefore, this article explores the phenomenon of the Halo Effect and reviews why it is a critical factor to take into account when investing in art, particularly emerging talent.

How the Halo Effect Drives Value 

Like currency, the commercial value of art is based on collective intentionality. Such fluctuating values increase or diminish according to the fluctuating tastes of the marketplace, academic exposure, availability, and other appreciation strategies. Quite naturally, as an artist becomes more popular, their work will be considered more desirable. With the artist's work being sought after, availability quickly diminishes, in turn driving the prices even higher. 

When a set of desirable attributes come together around an artist - for example, favourable press coverage, curator citation and influencer endorsement - they produce a halo effect that heightens their prestige. The halo effect in art can dramatically affect an artist’s reputation, the value of their work, and the overall art market, and involve some of the following factors in the art market’s ecosystem: 

Social Media Growth 

In today’s market, an artist’s social media presence can be a game-changer. Platforms like Instagram, TikTok, and Twitter enable artists to reach vast audiences, directly influencing their market appeal. The cultural influence of an artist is increasingly a priority for Millennial and Gen Z collectors, 61% of whom seek to build their collections with social and political change in mind. 

Banksy, one of the most sought-after contemporary artists, exemplifies this effect. With 13.2 million Instagram followers, each new post—especially those highlighting his socially conscious work—drives a surge in demand. This digital presence not only reinforces Banksy’s influence but also strengthens the investment potential of his pieces. 

Gallery Endorsement 

Prestigious galleries and institutions are vital in establishing an artist’s credibility and market value. Museums, biennales, and major art fairs serve as validation platforms, reinforcing demand and driving up prices. 

An example of this is Ksenia Pasyura, an emerging contemporary artist discovered and endorsed by Nahmad Projects. Founded in 2016 by Joseph Nahmad, the gallery specializes in conceptual and contemporary art, leveraging the Nahmad family’s $3 billion collection and extensive expertise. Though still early in her career, Pasyura’s association with the Nahmad name has positioned her as a rising star, with collectors anticipating significant value appreciation. 

Exhibitions and Retrospectives 

Posthumous exhibitions and retrospectives also contribute to an artist’s ongoing market relevance. Keith Haring, a contemporary of Jean-Michel Basquiat, experienced a market resurgence following his 2023 retrospective at The Broad in Los Angeles. Showcasing his work alongside figures like Banksy has further cemented his legacy, demonstrating how the Halo Effect continues to influence value long after an artist’s passing. 

Corporate Patronage 

The backing of corporate collectors and industry moguls can significantly impact an artist’s value. A prime example is the late Microsoft co-founder Paul G. Allen, whose collection included works by Yayoi Kusama, Damien Hirst, and David Hockney. When Allen’s collection was auctioned in 2022, it shattered records with a total sale of $1.5 billion. This event not only showcased the financial power of high-profile collectors but also elevated the perceived value of the artists included in his collection. Understanding corporate patronage is essential for investors looking to navigate contemporary art market trends. 

Brand Partnerships 

Over the past decade, luxury brands and contemporary artists have formed increasingly profitable collaborations. From Basquiat and Haring to KAWS and Hirst, brand partnerships have propelled artists into the mainstream, boosting their investment potential. One emerging example is Cooper, an American contemporary artist known for his nostalgic yet modern interpretations of domestic life. After gaining attention through wildflower murals in Los Angeles, Cooper attracted collaborations with global brands like Coach NY, Adidas, and Vans. These high-profile partnerships have not only expanded his audience but also increased demand for his original works, making him a rising star in the collector’s market. 

Hitting the Headlines and Media Impact on Value 

Major news coverage can instantly elevate an artist’s market standing. Raghav Babbar, a 27-year-old contemporary artist, saw his reputation skyrocket in 2023 when his 2020 painting The Coal Seller sold at Sotheby’s London for £609,600—far exceeding its £30,000 high estimate. Babbar’s inclusion in Forbes Asia’s 30 Under 30 in 2024 and his ranking among Artsy’s most in-demand artists further cemented his status as a rising force in the art world. For investors, keeping an eye on headline-making artists can be a key strategy for identifying high-growth opportunities. 

Celebrity Endorsement 

Celebrity collectors play a pivotal role in shaping the market appeal of an artist. Jean-Michel Basquiat’s meteoric rise to art market superstardom was significantly influenced by endorsements from high-profile figures such as Jay-Z, Beyoncé, and Leonardo DiCaprio. The association of Basquiat’s work with elite cultural and financial circles has fuelled demand, making his pieces a symbol of status and exclusivity. Investors tracking celebrity endorsements can gain valuable insight into which artists may be on the cusp of significant market appreciation. 

Understanding the Halo Effect enables investors to distinguish between sustainable market value and temporary price inflation, as it significantly impacts the pricing and appeal of artwork in the short and long term.  

For those looking to navigate the evolving art investment landscape, recognizing the power of influence—whether through social media, galleries, collectors, or brand partnerships—is crucial. As the art world continues to intersect with culture, commerce, and technology, the Halo Effect will remain a defining force in shaping market trends and investment opportunities.