Tariffs and broader economic uncertainty are throwing marketing plans into disarray and threatening to derail ad spending. Agencies are hard at work trying to keep clients on track.
As tariff rates and regulations seem to change nearly by the minute, and as the economic picture becomes increasingly hazy, agency executives say they are working on pivoting marketing for clients of various verticals that are facing economic pressure. While many clients aren’t making major changes to their marketing budgets quite yet, execs said they are working to help clients keep the marketing spend work for them in the event of continued tariff uncertainty or a recession.
“As soon as a recession starts to hit, people want to pull their money back almost immediately,” Stephanie Spicer, president of the agency Luquire, told Marketing Brew. “Marketing is like investing in the stock market…As soon as a downturn hits, your immediate reaction is, ‘I want to take all the money out of the stock market,’ but you know that the right thing to do is to keep it in there. It’s the same thing for brand marketing. You’re really investing in the long term.”
Dialing it back
At the agency Kepler, the “dominant theme that we’re seeing across clients is one of caution and preparedness,” Rick Greenberg, who serves as CEO of Kepler and kyu Pulse, said. While he said that thus far, “very few clients have made significant changes,” there’s quite a bit of“scenario planning” going on. That includes planning ahead for various outcomes of the current tariff back-and-forth, which could include the chance that tariffs are fully or partially rolled back, or a scenario where high tariffs remain in place for the long term.
Already, clients with heavy exposure to the high tariffs affecting Chinese imports are dialing back their marketing spend, he said.
“We’ve had one or two clients that are dependent on Chinese manufacturing that have started to pull back as their inventories start to get affected by the current tariff scheme,” he told us. “But aside from that, everyone’s really in…monitor-and-prepare mode.”
There are other sectors that are bracing for the ripple effects of tariffs, including travel and tourism, Spicer told us. With prices rising, consumer spending is expected to take a hit, and Spicer predicts that it will result in people traveling closer to home. That means travel and tourism clients are shifting spend to “closer contiguous markets,” he said.
Measuring up
To help brands weather the current economic climate, agencies like Kepler are helping them evaluate media efficiency, Greenberg said. During economic downturns, CPMs can come down, which can provide an opportunity for brands to shift marketing spend to performance marketing channels if short-term sales are the goal. Other clients, like those in financial services that aren’t dependent on moving inventory could therefore benefit from shifting marketing dollars toward branding efforts. In moments of economic uncertainty, “consumer spending and consumer sentiment become a very big driver of business results” for that sector, Greenberg said.
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“[In a] lot of the categories that we work in, like financial services, consumers tend to make a choice and stick with it for a very long time,” he explained. “These times of dislocation actually create opportunities for brands to tailor their proposition [and] to meet the need of the moment, but also acquire significantly more consumers as consumers are changing some of those longstanding patterns and loyalties during these moments of change.”
Price increases on different goods will be stomached by consumers differently, often depending on the original cost of the items, which will mean different sectors should look to adjust their marketing accordingly, Thomas Walters, co-founder and Europe CEO for influencer marketing shop Billion Dollar Boy, said.
“The impact will probably be higher on items that are already at a higher price point: 20% on a $20,000 or $30,000 vehicle is a lot of money,” he said. “Twenty percent on a bottle of shampoo is not the same kind of price increase.”
Reputation management
It’s not just the domestic economic implications of tariffs that brands are considering, Walters said. Billion Dollar Boy has instructed internal teams to consider the shifting attitudes toward the US when developing global marketing strategies. In Canada, for example, consumers have shown an “active resistance to purchasing American products,” something US-based brands in the country are already grappling with, he said. Kraft Heinz, for example, has emphasized in recent Canada-specific ads that many of its products for the Canadian market are manufactured in the country and made with Canadian ingredients.
While agencies are doing their best to help clients prepare, the situation remains volatile, meaning that brand messaging is changing—sometimes by the hour.
“We sent a summary out to the team a couple of weeks ago just in the aftermath of Liberation Day of, like, ‘these are things to consider internally,’” Walters said. “Then 12 hours later, the administration put a 90-day pause on everything, so we still have to go, ‘Okay, maybe roll back some of those actions, guys.’”