Advertising in the Eye of the Storm: How Marketers Are Navigating Tariffs, Budget Cuts & Digital Disruption
- Amy Kauffman
- Apr 21
- 5 min read
The advertising industry is facing increasing turbulence in 2025. A perfect storm of sweeping tariffs, inflationary pressures, and shifting consumer behaviors has forced marketers to fundamentally rethink their strategies. According to the Interactive Advertising Bureau (IAB), 94% of advertisers are concerned about tariffs' impact on their budgets, with 60% expecting cuts of 6-10%. Meanwhile, digital innovation, AI-driven optimization, and the rise of retail media networks (RMNs) are reshaping where and how brands allocate their dollars.
This overview explores the key trends, budget reallocations, and strategic adjustments advertisers are making to navigate this volatile landscape.
The Tariff Effect: Budget Cuts and Strategic Shifts
President Trump's April 2025 tariffs—a 10% universal levy plus reciprocal tariffs up to 125% on Chinese goods—have sent shockwaves through the economy. The advertising sector is feeling the pain:
41% of advertisers plan to cut social media budgets, while 24% will reduce linear TV and gaming spend
Retail and e-commerce are the most vulnerable sectors, with 40% of advertisers expecting cuts, compared to just 5% in packaged goods
Auto advertising is already down 7%, mirroring declines seen during the 2018-2020 trade war
Brian Wieser, CFA of Madison and Wall has revised U.S. ad growth forecasts downward to 3.6% (from 4.5%), stating: "When margins are tight, advertising is often among the first things businesses cut. But smart marketers don't just cut—they reallocate strategically."
Key Impacts on Advertising
94% of advertisers are concerned about tariffs’ impact on budgets, with 60% expecting cuts of 6-10%
Retail and e-commerce (40% cuts) and consumer electronics (33%) are hit hardest, while CPG brands (5%) remain more resilient
Auto advertising has already declined 7%, mirroring drops seen during the 2018-2020 trade war
Why Advertising is First on the Chopping Block:
Tariffs increase production costs by 12-18% on average, squeezing margins
72% of consumers are more price-sensitive, making performance-driven ads essential
65% of brands are delaying upfront TV commitments amid economic uncertainty
How Advertisers Are Adapting
Adjusting Messaging for Inflation-Weary Consumers
Emphasizing value: Brands like Ford Motor Company launched campaigns touting “From America, For America” to appeal to tariff-sensitive buyers
Bundling & loyalty perks: Instead of discounts (hard to sustain amid rising costs), brands are offering value-added promotions
Doubling Down on Data & Flexibility
Programmatic and AI-driven buys are rising as advertisers seek real-time optimization
Smarter measurement: Advertisers are scrutinizing SKU-level performance to allocate budgets efficiently
Exploring Tariff Workarounds
Localizing supply chains: Some brands are shifting production to USMCA-compliant (U.S., Canada, Mexico) sources to avoid tariffs
Lobbying for exemptions: Industries like publishing secured tariff exemptions for books, but others (like furniture and apparel) face steep hikes
Budget Reallocation:
35% of advertisers are increasing performance-based campaigns
SKU-level ROAS analysis is becoming standard for retail media
AI-driven programmatic buys up 42% year-over-year
Measurement Evolution:
Clean room adoption growing at 57% CAGR
First-party data now drives 73% of targeting decisions
Full-funnel attribution demanded by 89% of major advertisers
The Great Channel Shift: Where Dollars Are Moving
Biggest Losers:
Social media (41% cuts): Meta and Google face pullbacks as Chinese advertisers retreat
Linear TV (24% cuts): Ad revenue slipped 0.9% in Q4 2024 as streaming grows
Gaming (24% cuts): Despite metaverse hype, budgets are shrinking
Resilient Channels:
Retail media (Amazon, Walmart): Grew 17.2% in 2024 but faces headwinds
CTV/streaming: Netflix's ad-supported tier surged 24% in Q4
Paid search (16% cuts): Remains strong with 13.3% growth in Q4
"Successful brands won't just cut ad spend—they'll pivot to proven digital strategies," notes Daniel Meehan, CEO of PadSquad.
Retail Media's Make-or-Break Moment
While retail media was once the golden child of advertising, it now faces serious challenges:
Growth slowing to 10.6% in 2025 from 13.6% in 2024
Amazon's ad revenue growth dipped to 18% in Q1 2025 (from 22% in 2024)
62% of advertisers demand better ROAS tracking from RMNs
How RMNs Are Adapting
Expanding off-site & in-store ads: Lowe’s launched in-store audio and digital displays, while Hy-Vee partnered with Grocery TV for 10,000 in-store screens
AI-driven personalization: Lowe's Companies, Inc. uses AI for Style Your Space, letting shoppers visualize products in their homes
Standardization push: Advertisers want cross-network measurement, but Amazon and Walmart dominate 84% of RMN spend
Innovation Imperatives:
Off-Site Expansion: Walmart-TikTok partnerships
Clean Room Solutions: For true incrementality
Full-Funnel Approaches: Kroger's CTV+in-store blends
Self-Serve Tools: Lowering barriers for SMBs
"Retail media networks must innovate or risk losing dollars to search and CTV," warns Sarah Marzano of EMARKETER. "Better measurement and off-site expansion are non-negotiable."
2025 demands a fundamental rethinking of marketing's role.
Success will go to those who:
View tariffs as a catalyst for innovation
Reject false choices between brand and performance
Demand unprecedented accountability from partners
Put consumer value at the center of every decision
Key Takeaways for Marketers
Reallocate to high-ROI channels: Search, CTV, and transparent retail media
Reframe messaging: Stress value, durability, and local sourcing
Demand accountability: Push RMNs for better measurement
Leverage first-party data: Combat signal loss with owned insights
Stay agile: Monitor tariff changes and adjust quarterly
"In uncertain times, consumers gravitate toward brands that stand for something real," says Andre Banks, CEO of NewWorld. "Now isn't the moment to go silent—it's time to reinforce why you're worth the price."
Agility Wins in Volatile Times
The 2025 ad landscape is defined by scarcity, scrutiny, and strategic shifts. While tariffs are forcing painful cuts, they’re also accelerating trends already underway—the rise of retail media, the decline of linear TV, and the dominance of performance marketing.
Brands that adapt quickly—reallocating budgets, refining messaging, and embracing flexibility—will not only survive but thrive. As history shows, advertising rebounds, but the winners will be those who navigate this squeeze with data-driven precision.
Brands that balance short-term ROI with long-term brand building—while demanding more transparency from partners—will emerge stronger.
As Procter & Gamble's Marc S. Pritchard notes: "The winners will be those who invest smartly, not just cut deeply. This is marketing's moment to prove its worth."
Exclusive Invite: CMO Room Events – Chicago, LA, Seattle & Portland
The marketing
landscape is evolving at lightning speed. Between tariff impacts, budget reallocations, and retail media’s make-or-break moment, CMOs need a space to share strategies, swap insights, and build connections that matter.
That’s why we’re bringing CMO Room to four cities this spring/summer:
Why Attend?
Intimate peer discussions on tariff-proof budgeting, retail media innovation, and AI-driven targeting
Actionable takeaways from Fortune 300 CMOs facing the same challenges
Unmatched networking over curated dinners—no sales pitches, just real talk
“CMO Room is where marketing leaders cut through the noise. The connections here have directly shaped our 2025 retail media strategy.”
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