Matching with the stars: How brand personality determines celebrity endorsement contract formation

•The article estimates the influence of brand personality on celebrity endorsement contract formation.•Congruent brand personality contracts may not always be ideal for firms and celebrities.•A celebrity’s profession and buzz moderates the effect of brand personality on celebrity endorsement contract formation.•Under certain conditions, firms may be better off hiring a relatively unknown celebrity.

Although firms routinely use celebrity endorsers to influence consumer attitudes and firm value, the determinants of celebrity endorsement contract formation remain unexplored. This paper conceptualizes such contract formation as the outcome of a two-sided matching market, and develops an empirical model that jointly estimates firms' and celebrities' preferences for each other. This approach better captures strategic interaction in the market and alleviates biases arising from studying each party separately. Analysis of 79 endorsement contracts in the beauty industry reveals that brand personality drives endorsement partnerships. Congruent brand personality contracts are found to not always be optimal, and the effects of brand personality interaction to be highly asymmetric. Celebrities' profession (superstar/supermodel) and buzz (popularity on the Internet) moderate the effect of brand personality, such that, under certain conditions, celebrity buzz can be detrimental to the endorsement's value. The results of this article serve as a blueprint for firms to determine their likelihood of landing a contract with different types of celebrities.