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Will Trump’s tariffs crash TV’s spring ad-selling party?

BBG News

The unpredictable changes in President Trump’s tariff plans, coupled with economic instability, may prolong the shadows of doubt over the yearly pitches by TV networks and streaming services as they aim to secure billions for advertising slots during the upcoming year.

In the near future, executives from advertising firms and media outlets will gather at various locations in New York for polished presentations and a series of social events, commonly known as the upfronts. These events, starting next week, will offer them a sneak peek into the TV shows and streaming content coming from networks like Amazon Prime Video and Netflix in the fourth quarter of 2025 and beyond. This helps these companies decide where to invest their advertising budget.

However, due to the unpredictable implementation of tariffs by the Trump administration towards China and various countries, it presents a challenge for advertisers to make firm promises since the current situation fosters uncertainty, making it difficult for businesses to strategize and allocate their advertising funds effectively.

David Campanelli, president of global investment at Horizon Media, said it’s quite confusing going back and forth like this. He mentioned that advertisers are still trying to grasp the effects of tariffs on their businesses and how these might influence consumers’ readiness to pay more.

Campanelli stated that so far, he hasn’t observed any budget reductions due to tariffs in the plans of his clients, who are actively strategizing for both optimistic and pessimistic outcomes.

According to Brian Wieser, a principal at Madison and Wall, Trump’s tariff policies caused him to revise his advertising expenditure prediction for 2025. He now expects ad spending to rise by only 3.6%, which is lower than the 4.5% growth he anticipated in December.

As a follower, my greatest concern is the potential for an economic recession, which could bring catastrophic consequences to the media industry that’s already grappling with changing consumer trends. In challenging financial times, companies frequently prioritize cost-cutting measures, and marketing and advertising are often among the first targets on the list.

Last week, Moffett Nathanson, a media analysis company, warned that if a recession occurs in the U.S., the advertising industry could experience significant impacts, even under a moderate and swift recession scenario.

According to Moffett Nathanson’s prediction, a potential economic recession in 2025 might lead to a decrease of approximately $45 billion in total ad spending. This reduction is expected to impact online advertising significantly, with around $29 billion potentially being lost, and television advertising seeing a decline of about $12 billion.

In the year 2024, Moffett Nathanson projected that U.S. ad spending would reach a staggering $316.2 billion, marking a significant jump of 14.5%. This increase was the largest in over four decades. The sector experiencing the most growth was streaming video, which climbed by 42% to reach $13.8 billion. Traditional TV also saw an uptick, increasing by 4.3% to $45 billion. Lastly, online advertising showed a robust growth of 16.3%, amounting to $204 billion.

During the last recession, ad spending fell 20% between 2007 and 2009.

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Over the past year, the subscription costs for services like Netflix, Disney+, Hulu (Max), and NBC’s Peacock have gradually increased. In response, an increasing number of viewers are opting for the ad-supported, free video-on-demand streaming platform that belongs to Fox.

Traditional television networks might face a harsher impact from a decrease, as their share of advertising revenue from upfront deals has been shrinking yearly since the onset of the pandemic in 2020. Streaming platforms have now become the dominant source of TV viewing, surpassing both broadcast and cable, according to Nielsen reports.

TV networks tend to sell most of their ad spots before the fall season, when they debut new programs and have a lineup of popular NFL games. Advertisers often purchase these slots in advance to secure viewership numbers and price assurances. Buying ads closer to airtime can be pricier, depending on demand.

Given the unpredictability of the future, some advertisers might choose to pause their spending or boost it on digital platforms like internet-linked TVs. This is because these platforms offer them greater agility to adapt their investments according to economic circumstances. Conversely, network TV upfront buys are fixed contracts, meaning that changes are less straightforward.

As a movie enthusiast, I’d put it this way: “Advertisers today seek adaptable companions who can effortlessly shift with the tides,” I, Michael Shaughnessy, CEO of Kargo – a New York digital advertising specialist, shared. “Upfronts are all about anticipating where your brand is headed and selecting the ideal shows and networks for visibility. However, due to tariffs, advertisers aren’t as confident about their products’ future trajectories.

Television commercials are typically employed for extensive promotional campaigns aimed at increasing brand recognition. On the other hand, digital ads are commonly utilized when instant, quantifiable outcomes are desired, which might be preferred by advertisers during challenging financial periods, according to advertising professionals.

In recent times, a significant number of younger audiences have abandoned conventional television and instead opted for social media platforms and free, advertising-supported streaming services. Economic uncertainty could potentially encourage advertisers to allocate larger portions of their budgets towards these alternatives.

According to Moffett Nathanson’s observation, transferring more advertising dollars towards digital platforms could deal a harsh blow to traditional television, which has faced challenges as audiences increasingly turn towards online streaming services for their video content.

If budgets continue to move faster towards Connected TV and other digital platforms instead of linear TV, there could be a lasting redistribution of funds away from linear TV, according to the report. Notably, terrestrial radio and print media have yet to fully recover from the economic recession in 2001.

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2025-04-16 13:31

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