Persuading people to spend money in a period of unpredictable prices turns out to be a complicated calculation for the American advertising industry of $ 380 billion.
Should a retailer engage in vacation television advertisements for toys manufactured by newly vulnerable business partners? How do social media companies explain the potential disappearance of Chinese companies that have spent billions of dollars to promote their goods? How can a car manufacturer cost consumers thousands of dollars more than a year ago?
“Are you going to find out about how they do things, not to mention what will happen to consumers in terms of propensity to buy?” said Brian Wieser, a director of the veteran industry who heads Madison and Wall, a consulting company. “This will lead advertisers to really carry out their advertising expenses.”
Large companies were left in the LURCH this month, the administration said that new prices quickly imposed them, reversed the course a few days later, then doubled to target China. Now these advertisers feel “paralyzed,” said Jay Pattisall, principal analyst at Forrester, a research firm. Several companies have refused to develop their marketing strategies for the coming months or said they were in “waiting and seeing” mode.
“We are also in the dark about this that I think everyone is,” said Mr. Pattisall. “It’s such a volatile situation because decision -making is quite volatile.”
The will of companies to invest in marketing and promotion is often considered as an indirect indicator of the health of the global economy, a kind of indicator to find out if the gross domestic product could develop or contract. The prices could potentially trigger an economic domino effect, which has closed its portfolios, the companies to rationalize their expenses and their marketing take a rear seat, said several advertising experts.
“In a world where a recession strikes the United States, advertising will be more difficult – even in a relatively soft and rapid recession scenario,” Moffettnatnathanson analysts wrote a research firm, in an investor note.
Some companies circulate advertisements urging consumers to buy before prices start to increase prices. On Facebook, car dealerships in California, Michigan, Utah and elsewhere have told buyers to “lock pre-tariff prices before the increase in prices” and “consult our prices without a price”. A lingerie brand linked to Dita von Teese, a burlesque dancer, publishes advertisements saying: “The prices arrive. Lace less while you can.” A home merchant at home in Minneapolis offered discounts on vintage Chinese articles “in * Celebration * of the tariff tirade”.
The leaders of Omnicom Group, one of the largest advertising agencies in the world, said on Tuesday during the company’s first quarter of the company, which he expected that some of his greatest customers report how they planned to continue marketing spending when they announced their own income in the coming weeks. Omnicom has also lowered part of its income forecasts for the year.
“We were planning a glass that could be half empty,” said John Wren, managing director. “But we are personally looking for what we really believe and that we have been believing for a long time, that we are optimistic and that it will end half full.”
President Trump’s unorthodox commercial tactics have darkened the future of an industry that is still based on planning. In a few weeks, industry leaders will converge in New York for initial annual presentations, where media giants such as Disney, NBC Universal and Netflix show their new television and streaming offers in the hope of locking in one month advertising contracts. Comic-Con International, a major event for pop culture marketing, is scheduled for July in San Diego.
Funko, a company that manufactures collectibles linked to popular entertainment brands such as Pokémon, spent $ 51.6 million last year in advertising and marketing, including costs to participate in events like Comic-Con. The company said last month that the border disturbances linked to the prices could delay delivery trucks and cause marketing breaks.
The setly Good Foods Company, which makes snacks, said last week that if the prices were delayed or left, “our margins would improve, but it is likely that we will reinvest this in the company, probably in marketing.”
According to a survey, sixty percent of American advertising leaders provides that pricing pressures will lead to a decrease of 6 to 10% in advertising budgets, according to a survey carried out in February by the Bureau of Interactive Advertising, a commercial group. Retailers and electronic commerce merchants are the most likely to reduce advertising expenses, followed by consumer electronics companies, media and entertainment suppliers and car manufacturers, with most of the discounts that should occur in the middle of the year.
WARC, a research company, has downgraded its expectations of growth in advertising expenses over the next two years of $ 19.8 billion, explaining that “the risk of prolonged stagflation – and outright recession – has developed in key savings, exacerbated by new trade rates.”
Caution will reign for the moment, said Martin Sorrell, the founder of S4 Capital and former WPP chief, one of the largest advertising companies in the world.
“Generally, the atmosphere will be quite dark,” he said.
As prices on foreign manufacturing goods, some companies announce their good American manufacture. Ford Motor published a video the day after the announcement of the prices which said that the company used the most cars every hour and gathered the most vehicles in the country. The spot, which closed with the words “of America. For America, ”was promoted by Mr. Trump on his social media platform, Truth Social.
Stellantis, who owns Jeep and Dodge, also made his debut on the advertisements that described his cars as “built” in the United States. The Dutch car manufacturer, however, then faced charges of advertising dog surveillance which he played quickly and out of the rules of the Federal Trade Commission governing the products which claim an American origin. Stellantis exchanged his announcements for new places that said that vehicles were “assembled” at the national level.
Commercial volatility will force companies to seek the flexibility of advertising transactions, which allows them to reassign their budgets or suspend advertising campaigns in half, have said several analysts. Digital advertising, where messages can be quickly changed and results are easier to measure, will also help maintain costs online, they said.
Publicis, a large group of French advertising agencies, admitted Tuesday that customers “confronted with a very difficult situation” around prices and inflation could reduce their marketing budgets.
But after Covid and a war in Ukraine, the company and its customers are used to unpredictability, said Arthur Sadoun, the director general, during an appeal with analysts on income from the first quarter.
“Our customers are definitely cautious, but they are also very competitive, and they are looking for growth opportunities despite uncertainty,” he said.
