You’d be hard pressed to find a single projection or forecast for the advertising market released in the past five years which doesn’t have the word ‘uncertain’ woven throughout. And if 2025 ever risked bucking that trend, US president Donald Trump’s ever changing slate of tariffs have ensured the streak will continue for a good while yet.
As the industry looks for some indication for how the year ahead will pan out, financial reports from major advertisers are one of the best places to look, as they’ll sometimes (but not always) give insight into businesses’ plans for their marketing budgets. Even Omnicom CEO John Wren suggested he’d be sifting through a few quarterly earnings reports to get a sense of where marketers’ heads are at.
Statements made in these reports don’t necessarily reflect what actually ends up happening, and many major brands are still trying to figure out how much they’ll be affected. Calculating which items in your supply chain will be affected is one thing; predicting how consumers will react to rising costs and a potential US recession is another.
With that said, looking through April’s set of earnings, there’s a case for cautious optimism in the ad industry. Some major brands were outwardly bullish about their marketing budgets, pledging to keep investing to drive revenues amid the turmoil. Others were more noncommittal, talking up the positives of ad investment while suggesting that marketing spend could be trimmed as part of wider cost cuts. But none of the calls seen by VideoWeek mentioned any active plans to cut ad spend in response to the tariffs.
The spenders
There is plenty of industry research on the benefits of advertising during difficult economic circumstances (and of the dangers of not doing so), and a number of brands look set to follow this guidance.
Food and beverage company Kraft Heinz had already been working to increase its marketing spend as a percentage of revenues. Currently, this sits at 4.5 percent, but the goal is to push this up to five percent, with more of a focus on media. Andre Maciel, Kraft Heinz’s executive VP and global CFO, said the company had previously planned to keep investment at 4.5 percent in the short term, but now it’s looking to accelerate the push to five percent.
CEO and director Carlos Abrams-Rivera summed up the strategy. “I think in moments like this, a company can sometimes be overly cautious and defensive, or play offence,” he said. “We are choosing to play offence with discipline. So we are, in fact, prioritising investments in marketing, R&D, and technology.”
He added there will be more focus on increasing returns on marketing dollars, to ensure spend is driving revenues in the short-term.
Personal care brand Kimberly-Clark had also already been planning significant marketing investments to support new products released through its strategic push on innovation. Marketing spend last year sat at six percent of revenues, and executives said they plan to maintain that level this year, despite an estimated $300 million of tariff related costs facing the business.
Indeed, senior VP and CFO Nelson Urdaneta said Kimberly-Clark is cutting its profitability guidance in order to maintain marketing spend.
“The reason why we are changing our guidance for the year to about flat in operating profit and EPS has to do with the fact that we do not intend to cut investments behind our innovation and our plans,” he said. “For the first quarter of the year, we invested at around a 6 percent level of advertising behind our marketing initiatives and our new products and existing platforms, which was largely in line with the prior year, and we intend to continue doing that as the year progresses because we’ve got significant innovation that’s been put into the marketplace.”
US fast food brand Chipotle has historically spent a fairly low share of revenues on marketing compared to its peers, often hovering around the two percent mark. But that’s started to change — investment hit three percent of sales in Q1, and is expected to be in the high two percent range for the full year.
CEO Scott Boatwright said the company plans incremental spend for the summer months in particular, when in-store traffic tends to dip. This will likely involve a shift away from linear TV towards streaming and other digital channels.
“Beginning in May and continuing through the summer, we will meaningfully ramp up our marketing spend to reach more guests and meet them where they are,” said Boatwright.
Fellow fast-food brand Domino’s Pizza meanwhile didn’t talk specifically about investment as a percentage of sales, but CEO Russell Weiner did suggest advertising will be a tool the company uses to help weather the storm, rather than something it cuts to save money.
Talking about the risk of losing low-income customers in a tough economy, Weiner said that Domino’s has greater supply chain purchasing power than its competitors, which it can use to keep costs low. “When you have low prices, you want to drive a lot of volume,” he said. “How do you do that? You do that with advertising. We’ve got a half billion dollar plus advertising budget that nobody else has.”
Consumer goods business Colgate-Palmolive is a tough one to quantify, since the company has actually rolled back its ad spend plans slightly. That’s not to say it’s cutting spending — the company says it will keep advertising as a percentage of sales flat year-on-year. But previously the company had indicated this figure might tick up in 2025.
However, ad spend was at an all-time high for the company at the end of last year according to CEO Noel Wallace. So in relative terms, Colgate-Palmolive still expects to spend big on marketing in the year ahead.
The non-committers
Some brands talked up the value of marketing investment on their earnings calls, but were less specific on whether this would translate into actual investment.
Starbucks is undergoing a sizeable strategic overhaul under new CEO Brian Niccol, trimming back its menu and working to improve the in-store experience. The company has been investing heavily to promote these changes, including through stepped up spend on linear TV and radio. And Niccol mentioned several times on the earnings call how this investment is already bearing fruit.
When asked directly about marketing plans going forward, Niccol again said that marketing is having an impact, and that he believes Starbucks will “continue to get better […] as it relates to the marketing side of the business,” but he didn’t mention investment levels specifically.
FMCG giant P&G talked up its pipeline of new products, and the importance of investing in advertising to promote those products. “That innovation is best supported with strong communication,” said CFO Andre Schulten. “So media, advertising to our consumers, is the primary vehicle of our investment.”
He added that spend as a percentage of sales has been flat in the company’s fiscal year-to-date so far. But some of his comments suggested cuts wouldn’t be completely out of the question.
“What exactly the dollar spending is, we’ll adjust as we see the plans unfold,” he said.
The potential cutters
As mentioned, VideoWeek hasn’t seen any examples of advertisers explicitly saying they plan to cut ad spend. But a few did mention general cost cutting, which could hit marketing budgets.
Card payments business Visa, for example, was asked about which levers it might pull if it needs to cut costs, and marketing was mentioned specifically by analyst Adam Frisch. Visa’s CFO Christopher Suh said that his company has proven to be resilient during previous economic downturns, meaning that cuts might not be necessary. And he said that Visa will be keen to balance short-term and long-term priorities.
But he added that there is “flex” in expenses, and that management “stands ready to act” if it needs to.
US bank American Express was more explicit. Again, the company struck a relatively positive tone, with CEO and chairman Stephen Squeri saying that the company has a “resilient and differentiated business model”. For the time being, there are no planned changes to the company’s marketing budget, and Squeri said the company won’t “just cut expenses to make the earnings per share number if we see good opportunities for growth”.
But he said the company has “several levers across our marketing and operating expense lines, enabling us to quickly pivot if the environment changes”.
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