Major consumer brands typically treat prices and marketing budgets as interchangeable levers: raise ad spend or cut price to move product. Brands like Church & Dwight target marketing around 11% of net sales, though ad budgets can fluctuate seasonally. Tariffs, volatile weather and commodity shocks are disrupting these norms, driving higher costs and forcing price increases. Many CPG companies plan to flatten or reduce marketing spend relative to sales, asking marketing to deliver more with less. Some brands are reallocating ad dollars to create or accelerate consumer trends, exemplified by heavy investment behind gummy candy successes.
For major consumer brands, it has long been true that product prices and marketing budgets are flip sides of the same coin. How do you move something off the shelf? Most likely, spend another dollar on ads or knock a buck off the price. Household name brands like Church & Dwight also often peg their marketing budgets to sales. The company's ad budgets ping around over the course of the year, CFO Lee McChesney said on the company's earnings report earlier this month.
But the phase-in effects of tariffs, combined with vicissitudes of global weather and commodity production, have thrown those standards for a loop. Based on recent earnings reports from major brands and retailers, and conversations with CPG and grocery marketing execs, marketing spend is going to be flattened even as prices go up considerably. One major CPG marketer who requested anonymity to discuss internal plans said the company will decrease its long-held percent-of-sales metric for advertising.
For example, one of the fastest-growing categories in the entire grocery store, per Circana's food and beverage industry ratings, is Non-Chocolate Candy. It's now in the top 10, trailing Dairy Milk, Fresh Eggs and Fresh Bread & Rolls. That growth is powered by the newfound popularity of gummy candies. AdExchanger Daily Get our editors' roundup delivered to your inbox every weekday.
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