FMCG, auto firms hike ad spends in Q2 to revive demand, eye festive boost

As urban demand slows, FMCG and auto leaders increase Q2 ad spends. Companies such as Nestle, Colgate, and Tata Motors focus on tactical marketing to clear inventory and boost sales

In response to slowing demand, several major consumer and automobile companies, including Nestle, Colgate-Palmolive, Godrej Consumer Products, Maruti Suzuki, Volkswagen, Skoda, and Tata Motors, increased their advertising and marketing budgets during the July-September quarter, according to a report by The Economic Times. 

Many have indicated plans to maintain elevated spending into the October-December period, aiming to further stimulate demand.

Colgate, Godrej increase ad spending

Colgate-Palmolive expanded its marketing budget by 17.8 per cent in the July-September quarter, reaching Rs 242 crore. According to Colgate’s management, this rise in spending aligns with new product innovations. Godrej Consumer Products also confirmed its intention to gradually boost advertising expenditures, following a similar pattern to the previous quarter, the report said. 

 

Nestle India also intensified its advertising and marketing focus in the September quarter. “We kept a relentless focus on investing behind our core brands,” said Suresh Narayanan, chairman of Nestlé India, adding that increased ad spending would help counter local competition. 

Nestle India chairman Suresh Narayanan said, “We kept a relentless focus on investing behind our core brands, with advertising and marketing investments increasing this quarter.” 

He further said that increased ad spending would help counter local competition. 

Large consumer companies like Hindustan Unilever, Tata Consumer, Dabur, and Godrej Consumer Products highlighted the pressures on urban demand, affected by rising food and fuel prices, although rural demand shows signs of improvement. Generally, consumer goods companies dedicate 6-12 per cent of revenue to advertising and promotions, the report said.

 

Automakers start targeted campaigns

With the ongoing festive season, automakers like Maruti Suzuki, Volkswagen, Skoda, and Tata Motors have ramped up ‘tactical’ ad campaigns, aiming to clear excess inventory. These efforts include a mix of national and regional promotions to attract consumers to showrooms.  

According to industry sources, while overall marketing expenses saw a spike, spending shifted from brand awareness campaigns to direct marketing efforts, including print and radio ads, as TV ad spending declined, the report mentioned. 

The Ministry of Finance’s October economic bulletin highlighted signs of softening urban demand, with indicators like a decline in FMCG volume growth from 10.1 per cent in Q1FY24 to 2.8 per cent in Q1FY25. The Federation of Automobile Dealers Associations reported a 2.3 per cent decline in auto sales for H1 FY25, with notable decreases in urban areas.  

Additionally, housing sales and new launches also dipped in Q2FY25, which the ministry attributes to a cooling in consumer sentiment, the report said.