Why brands like E.l.f., Wendy's and Gap are branching out into original music

Watch out Sony, a new music producer is in town. And this time it's the same brand that makes your favorite lip gloss.

E.l.f. Beauty announced late last month the release of "Mirror Mix," an original album featuring music from seven rising artists. The album comes as the makeup company ramps up its marketing spend, fueled in part by tariff refunds.

E.l.f.'s pursuit of music is part of a growing wave of retailers blending shopping with entertainment.

The album features artists including a WNBA player and a Grammy award-winning singer-songwriter. It's available to stream on Spotify, Apple Music, Amazon and Roblox, according to a press release.

In addition to elevating the voices of independent artists, the new music is intended to help E.l.f. better connect with its customers, Chief Integrated Marketing Officer Patrick O'Keefe told CNBC in an interview.

"When you put community at the center of everything … programs and campaigns and building music, which evokes emotion … when you do that, it changes the conversation. And we want to be top of mind with our community," O'Keefe said.

"Mirror Mix" is E.l.f.'s second album, following the company's 2024 release of "Get Ready With Music, The Album." Its first venture into music, the song "eyes.lips.face.," debuted in 2019.

"We were one of the first movers on TikTok, and we created an original song around eyes, lips, face, and it went viral. It propelled the brand into new dimensions," O'Keefe said. "People didn't know what eyes, lips, face — what E.l.f. — stood for, and we created the song to embrace what it stands for and what it means for us as a brand."

The E.l.f.-released music is part of the company's strategy in "disruptive marketing," or marketing that aims to create moments consumers will pay attention to.

E.l.f. has also launched a TikTok reality show and became one of the first brands to launch a channel on Twitch and offer live shopping on the platform.

"Our marketing works best when you start seeing that virality on innovation, our ability to feed that and be able to sustain that demand and build growing franchises," CEO Tarang Amin said at the Deutsche Bank dbAccess Global Consumer Conference in early June.

"We're an entertainment company that happens to sell beauty products," Amin joked.

Where retail meets entertainment

E.l.f. is not alone in its foray into entertainment.

Days before E.l.f.'s album debut, Gap announced a multiyear partnership with boy band Just Your Type, or JYT. The clothing retailer will be responsible for developing a multi-episode docuseries, national mall tour and a clothing collection with the rising pop stars, according to a press release.

The venture is the company's first collaboration under its newly created "fashiontainment" platform. The initiative comes as the company has undergone a multiyear revival after the retailer closed about 2,000 stores and annual sales fell by $3.5 billion between 2001 and 2021.

Pam Kaufman, Gap's chief entertainment officer, will oversee the project and said in a press release the partnership with JYT will "create something much bigger than a campaign."

"Gap has always lived at the intersection of style, music and culture, and our Fashiontainment platform builds on that legacy by putting our brands at the center of the stories and cultural moments people care about," Kaufman said.

Gap CEO Richard Dickson tapped into a similar sentiment earlier this year, saying traditional advertising campaigns are just not cutting it anymore.

"Fashion is entertainment, and today's customers aren't just buying apparel, they're buying into brands that tell compelling stories and drive cultural conversations," Dickson said in a statement in January announcing the creation of the chief entertainment officer role.

In recent weeks, Wendy's also debuted an emo album titled, "Songs to Listen to in a Wendy's Parking Lot." Unlike the earnest attempts of E.l.f. and Gap to create music that would resonate with fans, the fast-food chain created humorous renditions of songs, including "She Said She Didn't Want Fries" and "The Best Combo Meal on the Worst Night of My Life."

The lead song has generated more than 450,000 streams on Spotify, and the announcement gained hundreds of thousands of likes on Instagram.

Wendy's CEO Bob Wright named marketing as one of the company's key areas of focus during its most recent earnings call.

"We have one of the most recognizable brands in the industry, and we need to make our messaging, media and creative drive a meaningful connection with our customers and drive traffic to our restaurants," he said.

That need is particularly true as younger consumers gain spending power.

"Cultural relevance moves the entire purchase funnel — especially for Gen Z," United Talent Agency said in a report released in June. "Consumers who perceive a brand as culturally relevant are more likely to notice it (90% of Gen Z), think favorably of it (87% of Gen Z), consider it (81% of Gen Z), and ultimately buy from it (68% of Gen Z) — proving culture's ROI extends far beyond brand perception."

E.l.f.'s marketing spend

At E.l.f., O'Keefe said the company uses the concept of unaided awareness, or a consumer's ability to name a brand without being prompted, as a metric to measure its marketing's success. Unaided awareness of E.l.f. Beauty has tripled in the last five years, rising to 45% from 13%, he said.

The company reported that profits doubled during its most recently reported quarter, which became the cosmetics brand's 30th consecutive quarter of growth.

At the same time, the company has prioritized spending on innovative marketing campaigns. More than 20% of net sales in the fiscal first quarter were reinvested in marketing and digital, according to the company's most recent earnings call. That percentage is expected to rise throughout the rest of the year, the company said.

The increased marketing push will be funded in part by tariff refunds. The company received $50 million in the three months that ended June 30 after the Supreme Court struck down President Donald Trump's "liberation day" tariffs and a federal judge ordered the money to be returned.

"Our plan is to fully reinvest that money in both pricing, to have a superior value proposition, as well as increased marketing across our entire portfolio of brands," CEO Amin told CNBC in an interview in August. "We feel we never should have had the tariffs to begin with, so let's invest in our brands to drive the strength that we see."