Persuading people to spend money in a time of unpredictable tariffs is proving to be a complicated calculation for the $380 billion American advertising industry.
Should a retailer commit to holiday television commercials for toys manufactured by newly vulnerable trading partners? How do social media companies account for the potential disappearance of Chinese companies that have spent billions of dollars promoting their wares? How does an automaker pitch vehicles that may cost consumers thousands of dollars more than they did a year ago?
“You’re going to introduce uncertainty about how they make stuff, let alone what’s going to happen to consumers in terms of their propensity to buy?” said Brian Wieser, a veteran industry executive who runs Madison and Wall, a consulting firm. “That’s going to cause advertisers to really curtail their ad spending.”
Major companies were left in the lurch this month as the administration declared new tariffs, soon imposed them, reversed course a few days later and then doubled down on targeting China. Now, those advertisers feel “paralyzed,” said Jay Pattisall, a principal analyst at Forrester, a research firm. Several companies declined to elaborate on their marketing strategies for the coming months or said they were in “wait and see” mode.
“We are as in the dark about this as I think everybody else is,” Mr. Pattisall said. “It is such a volatile situation because the decision-making is quite volatile.”
Companies’ willingness to invest in marketing and promotion is often viewed as a proxy for the health of the global economy, a sort of indicator of whether gross domestic product might grow or contract. The tariffs could potentially trigger an economic domino effect, causing consumers to close their wallets, corporations to streamline their spending and marketing to take a back seat, several advertising experts said.
“In a world where a recession hits the U.S., advertising will be hit harder — even in a relatively mild and quick recession scenario,” analysts for MoffettNathanson, a research firm, wrote in an investor note.
Some companies are circulating ads urging consumers to buy before the tariffs start pushing up prices. On Facebook, auto dealerships in California, Michigan, Utah and elsewhere told shoppers to “lock in pre-tariff pricing before rates go up” and “check out our tariff-free pricing.” A lingerie brand linked to Dita Von Teese, a burlesque dancer, put out ads saying: “Tariffs are coming. Lace up for less while you still can.” A home goods merchant in Minneapolis offered discounts on vintage Chinese items “in *celebration* of the tariff tirade.”
Executives at Omnicom Group, one of the largest advertising agency groups in the world, said during the company’s first-quarter earnings call on Tuesday that it was waiting for some of its larger clients to signal how they planned to proceed with marketing spending when they announced their own earnings over the next few weeks. Omnicom also lowered part of its revenue forecast for the year.
“We were planning for a glass that could be half empty,” John Wren, the chief executive, said. “But we’re personally striving for what we really believe and have believed for a long time, that we’re optimistic and that it will wind up half full.”
President Trump’s unorthodox trade tactics have clouded the future for an industry that still leans heavily on planning. In a few weeks, industry executives will converge in New York City for the annual upfront presentations, where media giants like Disney, NBC Universal and Netflix show off their new TV and streaming offerings in hopes of locking in monthslong advertising contracts. Comic-Con International, a major event for pop culture marketing, is scheduled for July in San Diego.
Funko, a company that makes collectibles tied to popular entertainment brands such as Pokémon, spent $51.6 million last year on advertising and marketing, including fees to participate in events like Comic-Con. The company said last month that border disruptions linked to tariffs could delay delivery trucks and cause marketing pauses.
The Simply Good Foods Company, which makes snacks, said last week that if the tariffs were delayed further or went away, “our margins would improve, but it’s likely we’ll reinvest that back into the business, probably in marketing.”
Sixty percent of American advertising executives anticipate that tariff pressures will result in decreases of 6 to 10 percent in ad budgets this year, according to a survey conducted in February by the Interactive Advertising Bureau, a trade group. Retailers and e-commerce merchants are most likely to slash ad spending, followed by consumer electronics companies, media and entertainment providers, and automakers, with the bulk of the reductions expected to happen in the middle of the year.
WARC, a research firm, downgraded its expectations for ad spending growth over the next two years by $19.8 billion, explaining that “the risk of prolonged stagflation — and outright recession — has grown in key economies, exacerbated by new trade tariffs.”
Caution will reign for now, said Martin Sorrell, the founder of S4 Capital and a former head of WPP, one of the world’s largest ad companies.
“Generally, the mood is going to be quite somber,” he said.
As tariffs on foreign-made goods loom, some companies are advertising their American manufacturing bona fides. Ford Motor posted a video the day after the tariffs were announced that claimed the company employed the most hourly autoworkers and assembled the most vehicles in the country. The spot, which closed with the words “From America. For America,” was promoted by Mr. Trump on his social media platform, Truth Social.
Stellantis, which owns Jeep and Dodge, also debuted ads that described its cars as being “built” in the United States. The Dutch automaker, however, later faced accusations from advertising watchdogs that it was playing fast and loose with the Federal Trade Commission’s rules governing products that claim an American origin. Stellantis swapped its ads out for new spots that said the vehicles were “assembled” domestically.
Trade volatility will force companies to seek out flexibility in advertising deals, allowing them to reallocate their budgets or pause ad campaigns partway through, several analysts said. Digital advertising, where messages can be quickly tweaked and results are easier to measure, will also help keep costs in line, they said.
Publicis, a large French advertising agency group, acknowledged on Tuesday that clients “facing a very challenging situation” around tariffs and inflation could cut their marketing budgets.
But after Covid and a war in Ukraine, the firm and its clients are used to unpredictability, said Arthur Sadoun, the chief executive, during a call with analysts about first-quarter earnings.
“Our clients are definitely cautious, but they are also very competitive, and they are looking for opportunities to grow despite the uncertainty,” he said.
