British and European marketers trim ad spend in the face of Trump’s tariffs

Ad spend is expected to rise by 6.3% in 2025 to reach £45.2 billion ($60 billion), 0.6% less than January predictions had suggested. According to James McDonald, director of data, intelligence and forecasting at WARC, it’s a consequence of low economic confidence, businesses reacting to tax rises, which kicked in at the start of the month, and the tariffs.

“The way that’s manifesting at the moment is hesitancy to commit budgets,” he said.

The figures follow a recent survey of British marketers by the Institute of Practitioners in Advertising, which found 24.2% said their budgets had been cut, up 5% on the previous quarter.

“More U.K. businesses have adopted a cautious, ‘wait and see’ approach to marketing spend this quarter,” IPA director general Paul Bainsfair said in an email.

The U.K.’s not the only market affected, though. European firms that advertise in the U.S. and are concerned either about tariffs hitting their supply chains or consumers’ wallets are on the hook too.

They’re caught on the horns of a marketing dilemma as well as facing hard logistical choices. “You don’t want to advertise something you can’t supply,” noted Ruben Schreurs, Ebiquity CEO. “At the same time, suspending all advertising has an impact on your brand equity … it’s an incredibly complicated balancing act.”

According to European media agency executives, marketers are wary of current conditions, and, in some cases, are even canceling project work, delaying major campaigns and redirecting media spend toward performance channels.

“The market has again become quite nervous,” said Erwin Bossers, vp of creative and media at Dept, an agency network that is headquartered in the Netherlands.

While Dept’s clients in Europe, the Middle East and Africa haven’t yet shifted media spend in their home markets, he said European clients that export to America — including several from the fashion and consumer electronics sectors — were considering reallocating marketing budgets from the U.S. and into markets where conditions were more favorable. Bossers didn’t name the clients.

“Discussions are happening on double digit media budget reservation or reallocation,” he said. “Some of our clients are aggressively looking into new distribution channels in markets where they might have less presence … some really big strategic decisions are back on the table.”

More often than not it’s the uncertainty sparked by the tariffs, not the tariffs themselves, that’s driving those decisions. Remember — although reciprocal tariffs have been paused, the blanket 10% levied by Trump is still in place, as are the indirect effects unleashed during the political drama.

For example, the rising value of the euro (a consequence, in part, of the dollar’s fall) is expected to depress the earnings of European exporters, eating into their profit margins. Beverage advertiser Pernod-Ricard, for example, credited unfavorable foreign exchange rates and U.S. tariffs together as hitting its third-quarter sales earlier this month. Meanwhile, the IMF cut its January forecast for global growth by 0.5% last week, blaming tariffs for a “major negative shock.”

Though next quarter’s WARC projections for the French and German markets are still being compiled, McDonald told Digiday he expected to see downgrades there too.

“We’re working on the same assumptions of the trading conditions will be far more challenging than there were in January,” he said.

The tariffs have had a “clear impact,” on the market, according to Fabian Prueschenk, managing partner, global CFO and COO of Munich-headquartered Serviceplan, the largest independent agency network in Europe.

Though he said there hadn’t been a net reduction in media activity across the network’s Europe-wide roster, automotive customers had been affected and budgets allocated to creative projects were “on hold” across the sector.

Just as with Brexit, it’s difficult to pick apart the fibers of cause and effect. European economies weren’t exactly going gangbusters before Trump’s tariffs came into play — with high energy prices in particular hitting customers’ enthusiasm for spending. And unless you’re in the business of shipping out French champagne, Greek olives or luxury British cars, it’s unclear whether budget cuts are a response to rising supply costs or some other pressure.

That doesn’t mean, however, that marketers are sitting on their hands. “We’re seeing brands in the U.K. and Ireland recalibrate rather than retreat, responding to global signals — tariffs included — with smarter, more agile investment strategies,” Gemma Knox, U.K. group managing director of M&C Saatchi, said in an email.

WARC’s latest figures show one indicator of that agility — in the form of reduced spending on search and online display ads. Year on year, projected investment in search and digital display slowed from previous double-digit rates to 8.2% and 9.1% growth, respectively. According to McDonald, that’s likely a sign of early marketing budget cuts showing up in channels that can be turned on and off faster.

In the long run, those channels may likely return to higher growth rates as marketers look to channels with easily proved links to commercial outcomes. “Money tends to move into performance media during times of economic uncertainty,” McDonald said.

“This isn’t about panic; it’s about precision. There’s a sharper focus on channels that prove return, and on creative that drives performance,” added Knox.