Advertisers are thinking about tariffs, but they haven't cut spending. Check back in a month, says an industry veteran.

Business Insider

30-04-2025

How worried are US businesses about the impact of the tariff wars?
On the one hand: An increasing number of business leaders, like JP Morgan's Jamie Dimon, are warning about the risks of a recession. And retailers like Target and Walmart have reportedly told Donald Trump his policies could result in empty shelves in their stores.
On the other hand: Advertising in the US — an industry that's quite sensitive to economic swings — seems to be holding up. For now.
That's the takeaway I got from a recent conversation with ad veteran Laura Desmond, who has a pretty good point of view on the ad industry. That's because Desmond used to run Starcom Mediavest, a giant ad-planning business. And now she runs Smartly, a smaller business that focuses directly on digital advertisers, who tend to be more nimble and reactive to trends than those in traditional media.
Desmond says her clients are thinking about what might happen when Americans really see the impact of tariffs, perhaps in a month or so. But for now, they're mostly acting as if it's business as usual.
And when it comes to other big potential changes to her industry — like the potential for an actual TikTok ban, or government-mandated breakups of Google or Meta — there's even less appetite to break out the crystal balls.
You can hear all of my conversation with Desmond via my Channels podcast. Below is an edited excerpt of our chat:
Peter Kafka: It seems to me that your industry could be dramatically affected by US government actions. There's a theoretical TikTok ban-or-sell law that was supposed to start in January but has been delayed. The US government is also in court trying to force the two biggest ad companies — Google and Meta — to break up. But it doesn't sound like your clients are spending much time thinking about that.
Laura Desmond: It is business as usual for brands to be focused on their business, what they need to sell, how they need to build campaigns, have companies like Smartly orchestrate those campaigns, and focus on business, focus on the job to do. That is the state of play.
So people who are spending money on TikTok today are not coming to you saying, "Do you have a plan if TikTok goes away this summer?"
Were there conversations like that with some of our customers? Yes. Were they significant or dominant or overwhelming? No. And that's because our technology gives advertisers the opportunity to shift in real time if they felt like they needed to.
It's not like the way ads used to be, where you would buy months in advance, sometimes a year in advance, for television.
That's the era of Mad Men, and we are no longer in that era.
What about tariffs? I was listening to the Comcast Q1 earnings call. They were asked about tariff effects on their business and they said they hadn't seen any yet.
We have not seen any effect.
Even though I'm reading that manufacturing is changing and Shein and Temu ad spending has cratered. That seems like a real change.
Well, a lot of that has to do with the fact that there is very little shipping going on between China and the US right now.
But that seems like a meaningful change. One that would filter all the way through to all of your clients.
I think the next month to six weeks will be key to watch. You saw a couple days ago the big box CEOs from Walmart, Target, etc., talk about a real concern over shelves that will not be full because product will not be able to make it to the stores.
Digital spend tends to be more resilient because it's loved by consumers, they engage, it's trackable. You know what a purchase looks like, where it comes from, and how it occurs. And so you can make more precision decisions about where to put the next dollar, or what creative will work.
And with so much digital spend now commanding the budgets of big brands and even medium-sized brands, you look at them continuing to spend.
But the next four to six weeks will be a big decision point. Because if there's no product on the shelves, then that's gonna change anybody's advertising campaign. And it should.
What about the notion that consumers might not feel as good about spending under current conditions?
All indications right now are that consumers want to be resilient, too. And while sentiment is going lower and lower by the week, [consumer] spending that our clients are telling us about is staying solid.
Does anyone come to you and say, "We're still spending, but we're gonna pause a little bit," or, "We're going to delay a decision for a week or a month because we want to see how this shakes out?"
I think there's scenario planning that largely is happening now that will be kicked into gear, if it needs to, over the next four to six weeks.
But the point on consumers is important. If interest rates go back up, that is going to cut into pocketbooks. That's going to cut into people's ability to feel like they can purchase one more thing or have one more experience or take one more trip. And that will directly impact advertising.
Some of the data that I've seen predicted digital ad spend to grow around 12% for 2025. And we haven't seen a lot of down-ticks to that. Maybe a point or two.
But if tariffs really kick in across the board, as sweeping and as large as what we've been hearing, you could see advertising forecasts drop as much by 50%.
That's five-zero. And that includes digital, right? Digital does not get out of this unscathed?
Yeah, you could see it.
So day-to-day, then: Do you just go say, "We're just plugging ahead. We've got plenty of stuff to take care of — we just cannot spend much time thinking about what might happen in a month or a week?"
That's a CEO mindset. That is a focused mindset: Control what you can control, and do your best to scenario plan. Understand where you're going to spend your next dollar. Understand how you're gonna make your creative even more effective, so that it converts consumers and people engage.
That's what you do if you're a CMO. That's what you do if you're a CFO and you're CEO. And that is what we're seeing across the board.