Convincing people to spend money in an age of unpredictable tariffs has proven to be a complicated calculation for the $380 billion American advertising industry.
Should retailers commit to holiday TV commercials for toys manufactured by new vulnerable trading partners? How do social media companies explain the potential disappearance of Chinese companies that spent billions of dollars promoting their products? How do automakers market vehicles that could cost consumers thousands of dollars more than a year ago?
“You're going to introduce uncertainty about the way they make things, let alone what happens to consumers in terms of their buying trends?” said Brian Wieser, a veteran industry executive who runs consulting firm Madison and Wall. “It's going to really help advertisers cut their ad spending.”
The big companies quickly left this month as the administration declared new tariffs, imposed them immediately, reversed the course a few days later, then doubled by targeting China. These advertisers now feel “paralytic.” Some companies have refused to elaborate on their marketing strategies for the coming months or have said they are in “wait and watch” mode.
“We're in the dark about this, as everyone else thinks,” Pattisor said. “It's a very unstable situation because decisions are very unstable.”
A company's willingness to invest in marketing and promotion is often seen as a proxy for the health of the global economy. This is a kind of indicator that indicates whether gross domestic product will grow or contract. Tariffs could potentially cause economic domino effects, causing consumers to close their wallets and businesses could streamline spending and marketing to win back seats, some advertising experts said.
“In a world where the recession is hit by the US, advertising is even more intense, even in a relatively mild and fast recession scenario,” an analyst at research firm Moffettnathanson wrote in an investor's note.
Some companies are circulating ads that encourage consumers to buy before tariffs start pushing prices up. On Facebook, car dealers in California, Michigan and Utah have told shoppers “lock pre-duty pricing before rates go up” and “check for tariff-free prices.” The lingerie brand linked to burlesque dancer Dita Fontees has issued an ad saying, “Taxes are coming. There are still fewer laces up while it can.” Minneapolis household goods merchants offered discounts on vintage Chinese items “Celebration” of the customs tirade.
An executive at Omnicom Group, one of the world's largest advertising agency groups, said in its first quarter revenue call on Tuesday that it is waiting to signal that some of its large clients will move forward with marketing spending when they announce their revenue over the coming weeks. Omnicom also lowered some of its annual revenue forecasts.
“We were planning a glass that could be half empty,” said CEO John Wren. “But we personally really believe in it, we strive for what we have believed in for a long time, and we are optimistic and that it will be half full.”
President Trump's unorthodox trade tactics are clouding the future for an industry that remains heavily leaning towards planning. In a few weeks, industry executives will gather in New York City for their annual upfront presentation. Media giants like Disney, NBC Universal and Netflix will be showing off their new TV and streaming offerings in the hopes of locking up in a few months' ad deal. Comic-Con International, a major event in pop culture marketing, is scheduled for July in San Diego.
Funko spent $51.6 million on advertising and marketing last year, including fees for attending events such as Comic-Con. The company said last month that tariff-related border disruptions could delay delivery trucks and cause marketing moratoriums.
Simply Good Foods Company, which makes snacks, said last week that tariffs are either further behind or “we'll improve our margins.”
Sixty percent of US advertising executives expect tariff pressure to fall at AD budgets of 6-10% this year, according to a survey conducted by trading group Interactive Advertising Bureau in February. Retailers and e-commerce merchants are most likely to cut advertising spending significantly, followed by consumer electronics companies, media, entertainment providers and automakers, with the majority of cuts expected in the middle of the year.
Research firm Warc downgraded its expectations for growth in advertising spending over the next two years by $19.8 billion, explaining that “the risk of long-term stagflation and the risk of a complete recession have grown in a major economy that has been exacerbated by new trade charges.”
Martin Sorrell, founder of S4 Capital and former head of WPP, one of the world's largest advertising companies, said he is governing for now.
“In general, the mood will be very gloomy,” he said.
Because tariffs on foreign-made goods are looms, some companies are genuinely promoting American manufacturing. Ford Motor posted a video the day after the tariffs were announced. This claimed that the company hired the most hourly autoworkers and assembled the most vehicles in the country. The spot, which was closed with the words “From America. For America,” was promoted by Trump on his social media platform, Truth Social.
Stellantis, which owns Jeep and Dodge, also debuted an ad that described the car as being “built” in the US. However, the Dutch automaker was later faced with accusations from Advertising Watchdog that it was quick and lax in the Federal Trade Commission rules that govern products claiming American origin. Stellantis has swapped advertisements for new spots that the vehicle said were “assembled” domestically.
Trade volatility will allow businesses to seek flexibility in advertising transactions, allowing them to reassign budgets and suspend advertising campaigns along the way, several analysts said. Digital ads that allow you to quickly tweak your messages and measure results can also help you maintain costs, they said.
Publicis, a large French advertising agency group, confirmed Tuesday that clients who are “facing extremely difficult situations” about tariffs and inflation can cut their marketing budgets.
However, after Covid and war in Ukraine, the company and its clients are being used for unpredictability, CEO Arthur Sadoun said in an analyst and quarter revenue call.
“Our clients are undoubtedly cautious, but they are also very competitive and looking for opportunities to grow despite the uncertainty,” he said.
