President Trump declared what he called “liberation day” Wednesday afternoon. He announces extensive tariffs that he claims to re-adjust the world trade order, and in his words enrich America.
Many entertainment executives have seen what must have happened intimately, but they don’t feel rich.
The media business may not be built on imported physical goods, but many of its biggest advertisers are, and the advertising business is already beginning to feel pain. Hollywood Reporter.
Key advertising categories such as automobiles, consumer packaged goods, food and drinks are beginning to rethink their spending as they calculate numbers to grasp the potential for an upcoming tariff and full-scale trade war. At the same time, the potential decline in tourism from Canada and Europe could undermine the travel sector, where airlines and hotels compete for consumer dollars.
“It’s really the perfect storm of bad news,” according to one high-level media source, saying that while current spread pricing is fine, the outlook for the rest of the year doesn’t look hot.
Tariffs affect all countries that are set to be affected when electronics and raw materials come into effect from staple foods and cars. Stock market futures plummeted after Trump announced the move.
In the past few weeks, influential ad analyst Brian Vieser and media intelligence company Magna have lowered their 2025 advertising growth forecasts.
Wieser cut its 2025 outlook to 3.6%, down from 4.5% in December. Magna reduced its outlook to 4.3% from the previous 4.9%. Yes, they hope that their advertising business will grow, but they have marked a sharp downward swing from 2024, and essentially all of that growth will come from tech giants like Google and Meta.
“In December, we wrote about the uncertainty of 2025 in the wake of the US federal election, which produced what emerged for us as a negative outcome of the advertising industry, taking into account the clear policy preferences of the next administration,” Wieser wrote. “Now, almost three months after the year, what we can see is the certainty of additional negative factors, such as volatility in trade policy and more extreme threats to supply chains and corporate decisions than we had previously expected.”
“Hopefully, temporarily — confidently Dip is already weakening the dynamics of the advertising market, urging us to revise our 2025 growth forecast,” wrote Vincent Létang, executive VP of Global Market Intelligence. “While total advertising spend is still expected to grow at single distance, digital media ad sales will continue to experience single digit growth. In contrast, most traditional media channels could face a stagnant advertising revenue this year.”
But even the tech giants don’t have immunity. Moffettnathanson’s Michael Nathanson wrote in a note on YouTube on March 31 that even the king of ad-supported streaming videos is likely to have moderate growth.
“While the expansion of the platform among older demographics increases the likelihood of monetization, we believe that an increase in the supply of impressions across the broader CTV ecosystem could put downward pressure on advertising pricing and offset those benefits,” writes Nathanson. “And more, a softer macroeconomic environment could put pressure on advertising budgets across the industry. As a result, we expect YouTube ad revenue to grow in low double digits over the next few years.”
But for many traditional media companies (like Entertainment Giants), advertising anxiety seems to be all rage for now, and dreams will come true with low double-digit growth.
Despite the darkness and fate from executives and advertising analysts, JPMorgan’s David Karnovsky said in a report on March 28 that “softness has not been observed so far” in the advertising market.
Still, if traditional media companies have silver lining, it should feel some protection from any disruption given the continued strong demand for sports programming, which is all leaning heavily. Both buy and sell side sources say demand for live sports continues unabated.
“Sports is still strong, but streaming video is still managing the impact of increased supply in the market,” Bank of America analyst Jessica Leaf Erich added in a report on March 28th.
“In the case of advertising, executives highlighted the continued robust demand for sports in linear and streaming, but news appears strong if they are highly rated. “Linear entertainment was described as great in advance pricing on spray. In general, it appears that the dollar is moving from cable entertainment to CTV for targets for news/sports.
Still, the timing of the tariffs and recession did not get worse for entertainment companies that are starting up up payment conversations with media buyers in the coming weeks. The front is when ads commit billions of dollars to ensure the best prices and best programming.
One entertainment advertising executive believes this year’s presentation is leaning hard towards sports and live events to reduce wider concerns in the market. They also hope to ensure commitment to spend (at least streaming) on entertainment programming from buyers to ensure the key stock of the best sporting events. For example, NBC will sell next year’s Super Bowl, Winter Olympics and NBA return at NBC.
Meanwhile, buy-side sources say clients are beginning to think about where to prioritize if the economy gets worse or if tariffs affect product delivery. Sports are likely to stick, and entertainment spending is more concentrated and likely to become a target. Given the economic trajectory (Goldman Sachs raised the risk of 12 months of the recession to 35% on March 31), some brands could risk increasing their budgets into the spraying market, where prices and inventory are more fluid.
And while that hasn’t happened yet, executives are beyond the fingers that Robert F. Kennedy Jr.’s long-estimated threat of banning drug advertising is not coming true.
Karnovsky said he “had no concern” about the issue, an executive said, “The pushback of lobbying against the ban is intense, with some noting that there is exchange demand (particularly sports) in the worst-case scenario.”
Of course, sports alone cannot carry media companies through the recession. Also, as the buy side sources point out, when times are tough, the ad budget is trimmed first. And the first thing you can feel in a pinch could be a less tech-savvy entertainment company.
