The Trump administration’s trade war has sent shockwaves through the economy, including the media industry, with executives anxious that the tariffs could cause a slowdown in the advertising business.
“It’s pretty bleak,” Ari Paparo, CEO of Marketecture Media, a publication covering the ad tech business, tells The Outcome about the outlook for the media industry.
The prevailing fear is that the tariffs will increase prices, sparking a recession, causing brands to pull back on ad spending. When brands aren’t spending, every other component of the media industry — social platforms, retail media networks, ad tech companies, publishers — feels the pain.
“Tariffs set off a chain reaction in the economy. They create uncertainty that causes companies to slow spending and decisions,” Brian Morrissey, founder of the media industry newsletter The Rebooting, says. “The economic uncertainty becomes a self-fulfilling prophecy that slows the economy.”
Media would seem to be one of the few industries unaffected by tariffs — you can’t tariff a banner ad, after all — but advertising is a discretionary expense, and any economic slowdown would have an enormous effect on the ad market. It’s nice to invest in advertising when business is good and brands can justify the inherent risk that comes with running splashy, sophisticated cross-channel advertising campaigns that aren’t guaranteed to deliver a return. In times of economic uncertainty, however, advertising becomes a target for businesses looking to make short-term budget cuts.
“Advertising has the shortest planning timeline compared to manufacturing or anything else to run your business,” Paparo says. “It’s the easiest thing to cut.”
Advertising is more than directly correlated to gross domestic product, the total value of all goods and services produced by a country and a key indicator of the country’s economic health. During the 2008 recession, GDP fell 2.5 percent, while advertising decreased 14 percent, Paparo says. With the stock market crashing and widespread fear of a looming recession, media executives worry another downturn might be in the near future.
The volatility in the stock market is projected to have cost the U.S. advertising market $45 billion in sales, according to one report from market research firm MoffettNathanson.
With so much volatility, advertisers are being forced to justify every dollar spent — and that means shifting priorities toward performance and proof.
“In times like these, every advertising dollar is under a microscope,” says Brian Mandelbaum, CEO and Co-founder of purchase data platform Attain. “When economic uncertainty sets in, marketers can’t afford guesswork—they need to prove that their media investments are driving real business outcomes. Accountability isn’t a luxury anymore; it’s a necessity.”
There is already evidence of brands drastically reducing their ad spend. China-owned e-commerce giant Temu, one of the biggest ad spenders in the world, completely stopped advertising on Google Shopping, according to data provided by performance marketing agency Tinuiti. From March 31 to April 12, Temu’s share of impressions in Google Shopping auctions plummeted to zero percent.
Shein, another China-based online retail and also a major ad spender, has also cut its Google Shopping spending. The drop in ad spend from these Chinese e-commerce behemoths will also hurt Facebook and TikTok, two other platforms where users readily buy Temu and Shein products.
There are some opportunities presented by the tariffs. Performance advertising tends to do better during tough economic times, and Temu and Shein reducing their ad spend on the major tech platforms should make impressions there more affordable for other brands.
“This is probably great for certain markets like the secondhand sector, and it’s great for any companies that can afford to squeeze margins on products that can be considered high value to most consumers,” says David Berkowitz, founder of the AI Marketers Guild and a long-time ad agency veteran.
Still, the outlook is more negative than positive. Paparo compared it to the Cormac McCarthy novel The Road, about people wandering a scorched, post-apocalyptic earth, with brands “wandering the streets, looking for cannibalistic feasts.”
“Unpredictability isn’t good for most anyone. We have no clue what tariffs will be in place a month from now, let alone the holiday season. We have no clue what consumer demand will be like.”
In the absence of certainty, lies anxiety.
