Ecommerce Advertising in a Tariff Economy: What Brands Need to Know

As brands brace for sweeping tariff changes, many are rushing to trim budgets, and advertising is often the first to go. In fact, many sources are already reporting adjusted forecasts that reflect how brands are scrambling to prepare.

• Tariffs may reduce US social media ad spending in 2025 by up to $10 billion
• EMarketer projects a potential 1.0% YoY decline under the heavy tariffs
• Overall US ad spending could fall to just $394 billion under heavy tariffs - a 0.1% YoY decline
• Based on current policies, the industries hit the heaviest due to tariffs would be Auto, Apparel, Electronics, Furniture, and Toys
• 45% of advertisers plan to reduce overall ad spend due to financial constraints from tariffs, according to data from the Interactive Advertising Bureau (IAB). And, as many as 22% of advertisers expect budgets to decline 11-20%.

But in a market where visibility drives sales and customer acquisition is more competitive than ever, slashing your ad spend could cost you more than you save. Is dialing down your ad budget really the smartest move?

Don’t Stop Spending

While tariffs may raise costs and squeeze margins, cutting ad spend during this period can lead to a loss of brand awareness and potentially erode customer loyalty.

• Reduced Visibility: Paid advertising helps maintain visibility in search results, product recommendations, and retargeting placements. Without it, your products may get buried, especially if competitors continue to invest in ads. The result? Lower traffic, fewer conversions, and a potential decline in overall sales volume.
• Decline in Customer Acquisition: If you cut top-of-funnel ad spend (like Amazon DSP), you limit your ability to reach new customers. This can shrink your long-term pipeline, especially for brands that rely on a steady influx of first-time buyers to fuel growth and subscriptions.
• Competitive Disadvantage: Tariffs impact everyone. If your competitors continue advertising while you don’t, they’ll gain market share, boost rankings, and build brand loyalty—making it harder (and more expensive) for you to win customers back later.
• Loss in Marketplace Algorithms: Marketplace algorithms often reward consistent sales and performance. Advertising can help you keep that momentum going. If you pause ads and sales slow, the algorithm may rank your listings lower—hurting organic visibility as well. This creates a harder (and more expensive) uphill battle when you resume advertising later.

Assess and Adjust

Rather than slashing ad spend completely, consider optimizing and reevaluating strategic investments to maintain brand presence and build resilience.

• Focus on High-Performing SKUs: Instead of spreading your ad budget thin across your entire product catalog, concentrate spend on the top-performing SKUs—those with proven high conversion rates and strong margins. These products are likely to deliver the best return on your limited ad dollars. Brands can use Amazon’s reporting tools (like Brand Analytics or the Advertising Console) to identify high-ROAS products and categories less impacted by tariffs. Allocate more budget to these listings to maintain profitability while scaling back spend on lower-margin items.
• Retargeting and Branded Campaigns: Retargeting campaigns focus on consumers who have already interacted with your brand, increasing the likelihood of conversion. Likewise, branded campaigns target users searching for your specific brand name or products. Leverage Amazon Sponsored Display Retargeting and Sponsored Brands campaigns to reach shoppers already familiar with your products or actively searching for your brand. These typically offer better conversion rates and stronger ROAS, helping you stretch your budget.
• Dayparting and Bid Modifiers: Dayparting allows you to schedule your ads to appear during peak performance windows—times when your audience is most likely to shop. This level of control can stretch your budget further, ensuring you're only investing in ad impressions when the likelihood of conversion is highest. Brands can implement dayparting through Amazon’s rules-based bidding and apply modifiers based on performance by placement, device, or geography.
• Double Down on Organic: With ad budgets tightening, make every product page work harder. Optimize product listings with relevant keywords, compelling images, clear titles, and enhanced brand content to improve visibility in marketplace search results. Use A+ Content to build trust and engagement, encourage customer reviews, and optimize fulfillment speed to boost your organic rankings. This helps offset any temporary dip in paid traffic and sets you up for long-term growth.

Additional Ways to Cut Costs

Beyond cutting back on advertising or reallocating budgets, brands can drive even greater impact by focusing on a more strategic area: the supply chain.

• Diversification: Establishing relationships with multiple suppliers across different regions can also create more flexibility and reduce exposure to future tariff fluctuations or geopolitical instability.
• Pricing: Rather than sudden price hikes, brands can consider gradual adjustments or use creative tactics like product bundling, tiered pricing, or offering limited-time promotions to maintain perceived value.
• HTS Codes: Harmonized Tariff Schedule classification plays a major role in determining duty rates. Working with a tariff mitigation specialist can help reclassify goods into more accurate or cost-effective categories.
• Nearshoring or Onshoring: Moving production closer to the US can reduce tariff exposure and support high-margin products. While this may require upfront investment, it can lead to more resilient and agile supply chains over time.

In the face of economic pressure, smart brands won’t simply slash—they’ll strategize. By doubling down on high-performing SKUs, refining campaign tactics, and optimizing their supply chains, businesses can stay visible, competitive, and resilient. Tariffs may be unavoidable, but losing market share doesn’t have to be.