The Agency Playbook for Navigating Tariffs Uncertainty 

By Bradley Keefer, CRO, Keen Decision Systems 

It’s no surprise that tariffs are top of mind for agencies. They feel like entire budgets are in limbo as they watch the news of the day cycle back and forth. Further, agencies are worried about how unexpected cost increases will impact media efficiency and budget planning, especially for CPG and retail clients where margins are tight. Tariffs could erode margins, forcing brands to tighten budget accountability. This makes performance visibility, scenario testing, and strategic forecasting critical. While it’s easy to panic and quickly react to market swings, there is no reason to if you take a data-driven approach. 

Below, we’ll discuss what we’re hearing from our agency clients and how they’re planning their budgets amid uncertainty. 

Scenario Planning 

Agencies are not necessarily predicting a recession, but they are indeed preparing for a downturn should tariffs go into effect. We’ve seen that inventory-linked spending plans, fighting strategy optimization during peak vs. off-season, cross-channel interaction effects and brand-building vs. performance tradeoffs are top of mind for agencies right now. By inputting external macroeconomic variables like inflation or tariffs, agencies can see projected business impacts on their client’s plans and how they can adjust their plans to account for tariff-induced inflation and changing consumer behaviors. 

Agencies are also taking learnings from the pandemic to get ahead of the potential macroeconomic fallout. Pandemic-era adaptations, like more flexible budgeting, accelerated digital adoption, and agile scenario planning have carried over. For instance, during the Upfronts season, more deals have cancellation options as marketers demand more flexibility due to market uncertainty. 

Spend Adjustments 

So far, most agencies we’ve worked with are not reacting with panic, but with cautious adjustment. For example, one agency’s client is reallocating spend from retail media and TV, focusing on high-ROI channels while pulling back from Amazon due to profitability and supply issues. 

The key is continuing spending. Companies that continue to invest in marketing during times of uncertainty see long-term growth, according to McKinsey research. By eliminating inefficient spend and focusing on higher performing channels, advertisers can see 5-10% growth.

On that note, agencies have also reallocated client budgets away from oversaturated or inefficient short-term tactics, like underperforming retail media, towards channels with long-term, brand equity benefits, like CTV and YouTube.  

Retailers and CPG brands have especially shown more urgency in adjusting media and trade spend as they’re more directly exposed to tariffs. However, tech and service brands, which tend to have longer sales cycles and more resilience in their pricing power, have had less immediate reactions to tariff threats. 

We’ll see how that tracks over the coming months but overall, we’re seeing agencies advise their clients to prioritize spend flexibility and scenario planning over abrupt cuts and, thankfully, they are listening. 

The Path Forward

As agencies look to navigate the next few months of uncertainty, we strongly recommend that they run dynamic scenario plans that factor in tariff-related price impacts. For brands that are especially vulnerable to inflation, they should focus on distribution and pricing to isolate those effects. This will help them understand the impacts of tariffs on their business, allowing them to adjust their marketing strategies based on the various scenarios they’ve developed. 

Next, we’d advise that they forecast future outcomes, not just historical data. While global trade wars have occurred in the past, the current macroeconomic climate represents a new era. Forecasting can help remove some of the guessing game taking place, giving marketers a blueprint to reference when planning ahead. 

Finally, agencies should emphasize long-term equity tactics to build resilience during inflationary periods. Every dollar spent should be tied to incremental profit and long-term value, not just short-term ROI. This will protect a brand’s value long-term and helps them go beyond just trying to survive a turbulent time period. 

We’re currently in a new economic landscape for agencies. Their clients are nervous and looking for ways to balance  their advertising momentum with rising consumer uneasiness. By planning for all possible scenarios and taking a patient, but strategic, approach to media spending, agencies can help their clients navigate the moment. And at the end of the day, successfully guiding clients through this uncertain time will help future-proof the agency-brand relationship for more challenges to come.