What are the odds? Underdog brands are consumer favorites

Abstract

We examine the association between product endorser quality, performance expectations, and abnormal stock returns of corporate sponsors and identify a pronounced underdog effect – marginal excess returns to sponsors of the biggest underdogs are roughly double those of the biggest favorites. Results indicate that consumers are more excited about and more motivated to support brands having an underdog narrative. • Consumers identify with an underdog narrative. • Betting market odds are used to quantify performance expectations. • We find a significant underdog effect in returns to brand marketing. • Returns to sponsors of winning underdogs are twice those of winning favorites.