Shutdown and Tariffs Squeeze Ad Budgets; IAB Cuts 2025 Outlook as Spend Shifts to Social, Retail Media and CTV
With margins pinched, CMOs favor flexible plans and performance channels-social, retail media, CTV. AI commerce and verification tools reset media bets.
CMOs: What To Do As Ad Spend Softens And AI Speeds Up
A federal shutdown, shaky consumer sentiment, and fresh tariffs are squeezing margins. That pressure is flowing straight into media plans.
Ad buyers are pulling back on forecasts and demanding flexibility. Your plan needs to protect near-term results while keeping an option on growth when conditions stabilize.
Ad Spend Outlook: Flexibility Over Forecasts
The Interactive Advertising Bureau trimmed its 2025 growth outlook. Expected ad spend growth is now 5.7%, down from 7.3%, with tariff risk cited as the top concern among media buyers.
Spend is shifting to channels with high time spent and clear performance loops: social media (+14.3%), retail media (+13.2%), and CTV (+11.4%). Legacy channels are under pressure, led by linear TV (-14.4%).
As IAB's David Cohen put it, marketers want "the utmost flexibility" while driving short-term performance. Treat this as a working mandate for Q4 and early 2026.
Where To Reallocate Budget Now
- Prioritize channels with verifiable performance. Increase social, retail media, and CTV share; set weekly guardrails on CAC, ROAS, and attention quality.
- Shorten commitments. Use quarterly IOs, monthly lookbacks, and modular creative so you can swap offers, audiences, and formats fast.
- Strengthen verification. Enforce brand suitability, viewability, and attention metrics across social and CTV. Require pre-bid filters and post-bid reporting.
- Lean into first-party data. Expand retailer partnerships, improve product feed health, and refresh lifecycle journeys for repeat purchase.
- Test shoppable formats. CTV with QR, social product tags, and retail media sponsored placements tied to incrementality.
AI You Can Use This Quarter
OpenAI introduced "Instant Checkout," letting users purchase from inside ChatGPT. It launched with Etsy merchants and is rolling out to Shopify brands like Glossier, Skims, Spanx, and Vuori. Expect social-style shopping behaviors to creep into chat interfaces.
OpenAI also released Sora 2 for more realistic video with synced sound and a "Cameo" feature for adding personal likenesses. Useful for concepting, storyboarding, and fast variants. Build a compliance gate for likeness rights and brand safety before wider use.
In response to safety concerns, OpenAI added parental controls for content exposure, usage windows, and feature toggles. If you market to families or teens, sync your guidelines with these controls to avoid misalignment across channels.
Expert POV: AI Verification At Scale
Integral Ad Science's CEO Lisa Utzschneider shared how verification is evolving. IAS now processes "50 years" worth of digital video content per day to classify image, audio, text, and video signals for suitability and fraud.
Key takeaway: more high-quality data means faster, more accurate models. IAS reports 97% model validation without a human in the loop, with AI labeling 29x faster and 45% more precise than manual annotators. For CMOs, that translates to cleaner inventory, fewer adjacency risks, and better performance baselines.
Culture And Channels To Watch
On Brand With Jimmy Fallon puts everyday people in the creator seat to pitch campaigns for brands like Pillsbury, Dunkin', and Southwest. Winning ads air the next day.
Implication: speed and community signal beat polish. Your team should mine social chatter after each episode for message angles and test scrappy concepts in paid within 48 hours.
Live Sports Still Pull Crowds
MLB surpassed 71 million attendees for the third straight season, with the Dodgers topping 4 million for the first time and the Padres setting new records. Two teams played in smaller venues and attendance still inched up.
Allocate budget for in-venue activations, local CTV around game windows, and creator partnerships tied to regional fandom. Sports remain a dependable reach engine with strong brand lift.
Leadership Moves
- Uber Freight promoted D'Andrae Larry to chief commercial officer.
- Empower named Sangita Woerner chief marketing officer.
- Allison Worldwide hired Hank Kosinski as chief creative officer and chief marketing officer.
Playbook: Customer Experience In Uncertain Times
- Fix friction fast. Shorter checkout, clearer pricing, faster support SLAs. Tie each fix to a measurable lift in conversion or retention.
- Be present, not perfect. Human outreach, proactive make-goods, and transparent delay notices beat silent automation.
- Invest where customers linger. Loyalty perks, better post-purchase content, and community events that create stories worth sharing.
- Measure incrementality. Run matched-market or PSA holdouts to validate retail media and CTV impact before you scale.
Team Enablement
Upskill media and creative teams on AI for verification, creative variants, and shoppable flows. Set clear guardrails for data use, brand voice, and likeness rights.
AI Certification for Marketing Specialists
Checklist For The Next 30 Days
- Rebalance mix: +social, +retail media, +CTV; trim low-ROI linear.
- Enforce suitability and attention floors across all buys.
- Launch two shoppable tests (one social, one CTV) with clean holdouts.
- Stand up an AI creative pipeline with legal review and likeness policy.
- Run a CX sprint: remove one major friction point and quantify impact.
