In response to the uncertainty surrounding President Donald Trump’s recently announced tariffs, brands and advertisers are increasingly seeking more flexible marketing agreements. These new terms would empower companies to quickly adjust their budgets or pivot to alternative marketing strategies as they navigate the implications of the tariffs.
Discussions between media firms and advertisers over the past few weeks have centered around this need for adaptability, reflecting the concerns of many in the industry about fluctuating economic conditions. Trump’s decision to implement a minimum 10% tariff on all imports, with even steeper rates applied to countries like China and Vietnam, has amplified these dialogues.
The ambiguity in recent administration communications has only heightened the call for flexible arrangements from chief marketing officers and media executives. “Amidst this uncertainty, there’s a marked shift toward performance-based advertising that allows brands to rapidly adjust their expenditures as circumstances evolve,” stated Jonathan Gudai, CEO of Adomni, a programmatic video advertising platform that utilizes artificial intelligence. The trend towards programmatic buying continues to rise, with AI playing an increasingly central role in the process.
Economic volatility typically leads to reduced advertising expenditures, as companies often pull back during uncertain times. The anticipated downturn in the advertising market highlights the broader effects of tariffs, even for businesses that may not face direct cost increases.
However, tariffs are only one of several factors prompting advertisers to reassess their budgets, according to Kate Scott-Dawkins, global president of business intelligence at GroupM, part of WPP’s media investment group. “We held an optimistic view of ad spending growth in our December forecast for the U.S. However, we now expect to adjust that forecast down, given the current mix of inflation, layoffs, unemployment, and the tariffs,” Scott-Dawkins remarked.
GroupM’s latest projections anticipate a 7% growth in U.S. ad spending by 2025, following an expected total of $379 billion in ad revenue for 2024, excluding political advertising.
For media firms, this uncertainty follows a period of strained ad budgets during the pandemic. Although advertising has rebounded for many media outlets, especially in the streaming sector and those with live sports coverage, traditional television networks still experience declines in ad revenue as viewers increasingly abandon traditional cable bundles in favor of digital alternatives.
Certain advertising sectors, particularly the automotive industry, continue to lag, leaving marketers uncertain about how tariffs will influence their spending. There have been frequent discussions with automobile industry chief marketing officers, especially regarding the 25% tariffs announced by Trump on imported cars and certain auto parts.
This shift in advertising dynamics comes on the heels of the annual Upfront presentations, where media companies typically showcase their offerings to advertisers. “All indications regarding the Upfronts and general market conditions are cautious,” noted Jonathan Miller, CEO of Integrated Media, which specializes in digital media investments. “There is a heightened demand for flexibility and a bit of a pause in spending growth, translating to a slight overall growth reduction.”
Gudai also identified traditional television as particularly susceptible to budget cuts, suggesting brands will need to broaden their customer engagement strategies in light of rising prices. “Tariffs could lead to a dual effect — inflating costs that might constrain advertising budgets, while simultaneously increasing the necessity for targeted marketing strategies as brands compete on metrics beyond just price,” he explained.
While media executives are willing to accommodate flexible terms, they are also emphasizing to brands the long-term advantages of advertising during difficult economic periods. Some companies, especially those without physical retail presence, are encouraged not to curtail their ad spending, as traditional media outlets remain one of the most effective channels for reaching consumers. Scott-Dawkins noted that for many businesses, investing in TV ad placements could still be beneficial.
“In times of heightened scrutiny over every dollar, brands must prioritize connection over mere sales. Purpose-driven marketing has become essential; it’s a crucial element in gaining consumer trust and establishing lasting relationships,” remarked Andre Banks, founder and CEO of NewWorld, a marketing strategy consultancy. “During uncertain times, consumers gravitate toward brands that embody authenticity. Those advertisers who recognize this will not only weather the downturn but emerge stronger in its aftermath.”
