Advertising firms prepare for cuts as tariff woes persist

Advertising firms are preparing for a potential reduction in clients' marketing budgets as the outlook for 2025 grows increasingly uncertain. 

WPP and Interpublic Group, have not yet seen a significant impact on client spending, although WPP has warned that its sales may remain flat or decrease by as much as 2% this year.

Publicis CEO Arthur Sadoun highlighted the difficult economic context, citing rising inflation, volatile geopolitics, and tariff uncertainty as key concerns. While this uncertainty has not yet affected the company’s performance, Sadoun warned that marketing budget cuts could materialise later in the year as clients across various industries face financial pressures.

Some companies, particularly in the automotive sector, have already begun tightening their budgets. Forvia, a supplier of automotive parts, announced cuts to marketing and travel expenses, anticipating the negative effects of tariffs. The car industry, notably vulnerable to trade disruptions, is expected to be among the first to reduce ad spend, with analysts suggesting that advertising budgets are often the easiest area to trim in times of economic uncertainty.

Omnicom, in response to the shifting landscape, revised its growth forecast, lowering the bottom end of its organic growth range to 2.5% from the previous 3.5%. Publicis, meanwhile, maintained its guidance for organic net sales growth of 4% to 5%, with CEO Sadoun describing the 4% figure as a "solid floor" given the current economic climate.

Others, including WPP and Interpublic Group, have not yet seen a significant impact on client spending, although WPP has warned that its sales may remain flat or decrease by as much as 2% this year. Both companies emphasised that the ongoing economic uncertainty is contributing to a cautious business environment.

While advertisers may be reluctant to make deep cuts in their marketing budgets, especially after lessons learned from the financial crisis and the COVID-19 pandemic, many are expected to adopt more tactical approaches. These strategies may focus on digital-first campaigns, retail media networks, and AI-powered tools, while scaling back on traditional advertising channels like television.

The advertising market’s performance in the coming months will likely hinge on the broader economic situation, with digital ad companies like Alphabet, Meta, and Amazon facing heightened scrutiny from investors as they report their earnings.

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