Tariffs and Ad-Budgets – Are Media Companies at Risk?
The Trump administration’s new wave of tariffs is stirring widespread concern across industries – and media companies are not immune. While the direct impact of tariffs might appear concentrated in manufacturing and trade, the ripple effects are likely to hit the advertising economy, cutting deeply into the revenue pot media owners rely on.
05.15.2025
The Problem
In short: tariffs drive up the cost of goods, which businesses either eat and take a hit on their margins, or they pass it off to consumers at the risk of decreased demand. Either way, businesses that are anticipating slower growth and thinner margins will start tightening their belts, and marketing budgets are typically among the first to go.
In a report released in April, media analysts at Moffett Nathanson estimated that we could see a potential $45 billion reduction in ad spending for 2025, a staggering reversal from 2024’s record 14.5% growth in ad investment. While we all hope a $45 billion reduction is an exaggeration, it is not an unreasonable estimate. During the Great Recession from 2007 to 2009, ad spending fell nearly 20%. If a similar pattern follows the introduction of tariffs and a potential economic slowdown, media owners could be staring down a serious revenue contraction.
Linear TV is the Most Vulnerable
Linear TV and ad-supported streaming platforms may be most at risk here. Linear TV is especially vulnerable, as smaller ad budgets tend to push marketers toward highly targeted, conversion-focused platforms. In times of uncertainty, every dollar needs to demonstrate ROI – and platforms like Facebook, YouTube, and TikTok offer the data-driven tools advertisers have come to expect when they are targeting conversions.
Even streaming platforms with ad-supported tiers (FAST and SVOD) could find themselves squeezed just as they are starting to gain traction. While these platforms offer more ad personalization than linear TV, they still lag behind digital giants in conversion tracking and audience granularity.
The takeaway? This is not doomsday quite yet – media companies don’t need to overhaul their entire revenue models or distribution strategies based on recent trade volatility. However, the recent changes in trade policy are yet another reminder of just how many variables can impact IP revenues and the importance of a highly diversified distribution strategy. The shifting ad landscape in response to economic pressure is nothing new – but the pace and scale of change this time around is certainly something to continue monitoring.
Sources: wsj.com latimes.com
