The advertising industry, usually a leading indicator of economic health, anticipates a downturn due to trade war pressures, with a survey revealing that 60% of ad executives expect significant reductions in budgets. The previous optimism about growth has shifted to a more solemn outlook, as projections indicate that $45 billion in advertising may be lost. Shifts in consumer behavior may benefit some platforms, like streaming services, while others, particularly social media reliant on Chinese e-commerce, could suffer from escalating tariffs.
While still chirping for now, industry executives told The New York Times on Wednesday that they're expecting pressures from the trade war to spark a pullback in ad spending by sometime this summer.
The mood is "quite somber," Martin Sorrell, former head of WPP - the world's largest ad agency, told the NYT. A February survey of ad executives found a full 60% of respondents are projecting as much as a 10% reduction in ad budgets this year.
Media analysts at MoffettNathanson project that a recession could cause $45 billion in lost advertising, with promoters shifting from traditional television spots toward direct response channels.
While search advertising tends to be fairly resilient because it captures an actively shopping consumer, eMarketer analyst Ross Benes found social media platforms dependent on Chinese e-commerce companies are likely to be hurt by escalating tariffs.
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