Dive Brief:
- Automotive and retail are leading a digital ad spending retreat due to tariffs, according to a new eMarketer report. The researcher downgraded its full-year digital ad spending forecast for the U.S. by two percentage points, foreseeing 9.5% growth year over year to $338.27 billion.
- The auto sector is experiencing the most severe impact from the Trump administration’s trade policy, which has included steep levies on imported parts and vehicles. The industry’s spending on digital ads is expected to grow just 2.2% in 2025, well below eMarketer’s estimates last year that foresaw growth of more than 11%.
- Retail prospects have also dimmed, with the category expected to grow spending 7.4% to $92.64 billion. While other categories are more insulated from tariffs, with some even bucking downward trends, the findings offer an ominous signal ahead of the key holiday shopping period.
Dive Insight:
The extent of tariffs’ impact on U.S. advertising has been hard to pin down, in part due to the on-again, off-again implementation of levies on global trading partners. EMarketer’s latest report provides a clearer view into which businesses are getting hit the hardest, with particularly bleak outlooks for automotive and retail. The report also identifies a larger push into performance marketing channels that can be easier to tie to business results but do little to build long-term brand affinity.
The research looks past the rush in marketing and sales activity that occurred immediately following the Trump administration's announcement of sweeping tariffs, when companies stockpiled inventory and emphasized value ahead of expected price hikes. In auto’s case, demand has “cooled sharply” in the second half, with more brands ramping up a focus on performance marketing, according to Oscar Orozco, forecasting director at eMarketer.
EMarketer tracks retail as a broader category, encompassing everything from home goods (heavily affected by tariffs) to bars and restaurants (much less so). That said, retail also represents a broad swath of discretionary spending, making it vulnerable as consumers feel a pinch on their wallets. The report sets a gloomy atmosphere heading into an uncertain holiday period that can be make-or-break for retailers.
“Overall, retail is responding to cost inflation and consumer caution by pulling back aggressively on large campaigns, while concentrating remaining dollars in highly measurable, sales-focused channels,” said Orozco.
Aligning with the broader shift toward performance marketing, retail media networks were described by Orozco as a “clear winner” from tariff-driven changes, with ad spending expected to increase 18.7% in 2025 to nearly $60 billion.
Travel and tourism are another victim of the pullback in discretionary spending while media and entertainment are experiencing more modest bumps in the road. Digital ad spending for the latter category is expected to surpass $30 billion for the first time as platforms like Netflix, Disney and Warner Bros. Discovery battle it out for viewers who may cull the number of services to which they subscribe.
Meanwhile, CPG is primed to see higher levels of digital ad growth than eMarketer anticipated in 2024, before tariffs were put into motion. The category will increase spending 7.9% to $55 billion versus the 6.1% growth predicted last year. That’s not to say that tariffs aren’t stirring up disruption: While segments like food and alcohol will show “relative strength,” other areas like cosmetics are pumping the brakes on spending.
“The CPG sector is facing heavy tariff headwinds, as global supply chain disruptions and duties on inputs such as aluminum and raw materials have driven costs sharply higher,” said Orozco. “While consumer demand remains resilient in core food and beverage segments, inflation and price sensitivity are weighing on volumes, forcing CPG firms to make trade-offs in spending.”
EMarketer said mobile will command the lion’s share of CPG budgets in 2025 as the category increasingly relies on social media to target consumers, with 35% of the industry’s total digital spend heading for social networks by the end of the year.
