Brands Briefing: Tariffs are putting pressure on marketing budgets

But ultimately, brands are at the mercy of their P&L. For businesses that already run lean operations, pulling back on marketing is something they have to do out of sheer necessity to continue operating during these headwinds. 

Organization and keepsake brand Savor, whose products are produced in China, is one such brand. “Certainly, we’re tightening our belts,” said Savor’s founder and CEO, Jennifer Nevins. The company, which sells document organizers and keepsake baby boxes, among other products, had been in the process of scaling its marketing budget after seeing major growth during the pandemic. “And now we are cutting it to ensure profitability,” Nevins said.

It’s a conundrum. “The less you spend on marketing, the less sales you get,” Nevins said. “But we are trying to get our spending to be more efficient.” 

Ideally, Nevins said a marketing budget should have a balanced mixture to support brand awareness and conversion. But, “we now have less and less money to do awareness,” she said.

It’s not the only challenge Savor is facing right now. TikTok has been a big driver of sales for the brand; the company has roughly 250,000 followers on the app.

“But frankly, the TikTok disruptions have also really challenged that growth,” Nevins said. “We saw a dramatic shift in our advertising effectiveness after January.” Savor had wanted to invest more in original content this year, such as video tutorials on how to best use Savor products. Another channel Savor wanted to build out this year was YouTube, which is ripe for this engaging, long-form content. But, “that kind of content requires a different budget, which is now on hold,” Nevins said.

These budget cuts also have a ripple effect of stifling R&D and new product launches, Nevins said. “I was building one product that I’d invested a lot of money in that I cannot afford to make now.” With a small business, Nevins said product launches are already expensive and have an upfront marketing cost to make sure people know about the new products. “It takes time for that return to come in,” Nevins said.

Brands with larger advertising budgets are also calibrating their channels as they plan campaigns for the rest of the year.

Kristen Guerry is the senior director of growth at cookware brand Caraway, which manufactures its products in China. She told Modern Retail that, as tariff negotiations continue to play out, brands will likely move ad dollars to mid- and lower-funnel channels where they already see strong returns. “But that will ultimately be a short-term gain for long-term pain,” she said.

For example, Caraway’s biggest sales season is the fourth quarter, followed by smaller peaks like the upcoming Mother’s Day and Father’s Day holidays. “So we don’t want to cut off investments,” Guerry said. “But anything that’s experimental we’re going to put on the back burner for now and heavily scrutinize any new investments.”

For instance, she pointed to some influencer partnerships the brand was exploring and has put on pause for now. “Those are big swings and big bets we’re making,” Guerry said, noting that the company is prioritizing day-to-day investments in high-ROI channels like Meta, TikTok and Google. “We launched on connected TV at the beginning of the year, and we have a linear TV presence,” Guerry said. But those investments may change based on incremental value in the coming months, she said.

At the same time, Guerry said the company wants to continue to be visible to customers across social platforms.

Pinterest, where Caraway has a paid ad program, is one example of those channels. “It’s very minimal,” Guerry said. But it’s not necessarily worth reallocating the monthly $25,000 Pinterest spend — a small portion of Carway’s overall ad budget — into more incremental channels that convert customers faster, such as Google or Meta. “It’s worth it to keep the lights on at Pinterest and continue showing up there,” she said. Still, Guerry said there is room to tweak ad spending without hurting returns. Earlier this year, when tariff talks were heating up, she said Caraway started to pull back on its Amazon Seller Central program.

“We were taking a bet that we actually don’t need to invest that heavily in order to have a strong presence on Amazon, and we’ve proved that theory out,” she said. With more efficiency, the brand’s sales are up about 60% year-over-year on Amazon.

John Busbice, chief decision science officer at marketing mix platform Keen Decision Systems, said that while it’s tempting to cut marketing to offset new tariff costs, “This is a moment for strategy, not panic.”

“While some brands might react emotionally, it’s better to act strategically by predicting outcomes,” Busbice said. Each brand has to quantify the risks before making the decisions to pull back their presence among shoppers. “This protects both short-term performance and long-term brand equity.”

Busbice also noted that tariffs won’t hit all categories equally. For instance, demand for essentials may not fall too far, but pricing wars and brand differentiation will intensify on categories like discretionary goods. “It’s important that brands not sacrifice their future to survive the quarter,” Busbice said.

Indeed, a number of digitally-native brands don’t want to reduce their presence on platforms they’ve invested years in growing. 

This was the sentiment expressed by Beachwaver co-founder Erin Potempa-Wall, who spoke at the Modern Retail Marketing Summit last week. “I hate to scale back on marketing,” Potempa-Wall said. When things are getting tight, she said, that’s the time to advertise more and remind customers of the brand’s presence. “It’s good to remind the community that it is a tough time, but that we’re here to stay and the product is here to stay,” Potempa-Wall added. 

Even for brands navigating cash flow challenges brought on by the new China tariffs, it’s still too soon to make long-term changes to their marketing strategy. “To make any major decisions right now seems foolhardy,” said Savor’s Nevins. — Gabriela Barkho

Executive moves

Kyle Widrick, formerly the CEO of Win Brands Group, has transitioned to become chairman of the board, he posted on LinkedIn. Widrick wrote that Jacob Brewer, who has a background as the managing director of operations at Orangewood Partners, one of Win Brands Group’s backers, would “lead the way” as president of Win Brands Group.

Modern Retail previously wrote about the rightsizing that Win Brands Group — which owns candle brand Homesick and silicon ring seller Qalo, among other brands — went through last year, with multiple rounds of layoffs and cost-cutting. In a text message, Brewer said, “As Win hits its next phase of growth, I’ve spent a lot of time understanding our individual brands’ legacies. This will serve as a cornerstone that stabilizes our identity, while forward-thinking innovation drives our evolution.”

For example, Brewer said Qalo’s legacy is that it is “the original ring for athletes.” So, utilizing Brewer’s technolog background and vendor partners, Qalo launched a $190 smart ring in January. With this, Brewer said, “We were able to launch not just a smart ring, but [also a] multi-product technology platform with Qalo heritage at its core.”

That’s just one example of how Win Brands Group will be looking to position itself, and its brands, going forward. “By tapping into contemporary trends that have long tailwinds that complement our core principles, we are moving to create a dynamic future that harmonizes tradition with technology,” Brewer wrote. –Anna Hensel

Job openings to watch

Last week, Harry’s executives said in an interview with the New York Times’ DealBook that the company would be rebranding to Mammoth Brands, as it seeks to be known for more than just its core men’s shaving brand. Mammoth said its four brands — Harry’s, Flamingo, Lume and Mando — each generated more than $100 million in sales last year. Flamingo is Mammoth’s women’s-focused shaving brand. Lume, meanwhile, is a personal care brand known for its whole-body deodorant that Harry’s acquired in 2021; Mando is its male counterpart.

Lume appears to be the runaway hit for the Mammoth portfolio — Mammoth as a whole did around $835 million in revenue last year, and just the Lume brand did around $300 million. As such, it’s not surprising that most of Mammoth Brands’ job openings right now are centered around growing the Lume brand. Lume is on the hunt for a demand planning manager, an influencer marketing manager, sales managers for both grocery and Walmart, and more. –Anna Hensel

What we’re reading

• Tariffs provide an opening for Solo Stove’s Amish-made rival, Breo.
• A Wirecutter writer wrote about her experience testing as many Quince products as possible for a month.
• Brands like E.l.f Cosmetics and Nike continue to top Piper Sandler’s annual “Taking Stock with Teens” survey.

What we’ve covered

• ButcherBox launched in Target’s marketplace last week, giving people the option to buy its boxes of meat and seafood without committing to a subscription.
• A look at how True Classic is refining its marketing playbook as it becomes more of an omnichannel brand.
• Inside Ninja’s creator-led video strategy; the household appliance brand frequently invites influencers to test out products beforehand to ensure they shine on camera.