The retail media squeeze: Navigating tariffs, budget cuts, and performance pressure

No matter when or how they land, President Donald Trump’s tariffs will shake up retail and digital media.

Retailers are expecting higher prices and tighter consumer wallets, while advertisers are preparing for smaller budgets and a push toward performance-driven strategies—which puts retail media in a tricky spot.

Here’s how.

1. Ad budgets will tighten and retail media could suffer

Nearly half (45%) of advertisers plan to reduce overall ad spend due to financial constraints from tariffs, according to February 2025 data from the Interactive Advertising Bureau (IAB).

• Nearly three-quarters of advertisers expect ad budgets to shrink less than 10%.
• However, 22% believe ad budgets could decline by 11% to 20%.

This will affect how much ad spend flows into retail media.

• Retail media ad spend could range between $56 billion and $61 billion in 2025, depending on how aggressively tariffs are implemented, according to our “Impact of Tariffs on US Businesses” report.
• If heavy tariffs are enacted, spending could fall by 8.1% compared to our limited tariffs scenario, which aligns with our current baseline forecast.

2. Performance will be the focus, but brand can’t be neglected

In a tighter spending environment, advertisers will double down on what works. This means focusing on tactics that deliver measurable performance and ROAS.

• Only 16% of US advertisers expect to cut paid search budgets, per IAB data.
• Compare that to 41% expecting cuts to social media and 24% to linear TV.

At the same time, advertisers shouldn’t abandon brand-building efforts. In fact, as pricing becomes more volatile, brand equity may become a major differentiator.

• Brands with a strong value proposition will stay top of mind with consumers.
• Consumers looking beyond price are likely to gravitate toward trusted brands and familiar products.

3. Retailers will have to fight harder for their retail media dollars

To counter a dip in consumer spending, retail media networks (RMNs) must go all-in to retain advertisers’ budgets.

“With advertisers spoiled for choice, RMNs must differentiate by improving service, transparency, and performance insights,” wrote our analyst Sarah Marzano in her “Future-Proofing Retail Media for the Next Chapter” report.

• Better self-serve tools, clearer reporting, and proactive account management can make retail media investments easier and more rewarding for advertisers, according to Marzano.
• RMNs may expand their monetization strategies beyond on-site media to include off-site media partnerships, audience extension programs, creative services, and full-funnel measurement solutions.

This was originally featured in the Retail Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.