In the face of mounting economic pressures, marketers are increasingly pivoting toward lower-funnel strategies that prioritize immediate conversions over broad brand awareness, according to a recent report from the Interactive Advertising Bureau (IAB). This shift reflects a broader caution in ad spending as fears of tariffs and a slowing economy loom large for 2025. The IAB’s updated outlook, released just days ago, revises its forecast for U.S. digital ad spending downward to $248 billion for the year, a 10.3% increase from 2024 but notably trimmed from earlier projections due to macroeconomic headwinds.

Advertisers are channeling more resources into tactics like performance marketing on platforms such as social media and retail media networks, where measurable returns are king. This comes as upper-funnel efforts, which build long-term brand equity, take a backseat amid budget constraints. As Marketing Dive reported, the IAB’s findings highlight how 70% of ad buyers are now focusing on lower-funnel metrics to justify expenditures in an uncertain climate.

Navigating Tariff Fears and Ad Spend Revisions

The IAB’s September update paints a picture of an industry bracing for impact, with tariff concerns cited by 40% of respondents as a top risk factor influencing 2025 strategies. This has led to a projected slowdown in ad growth during the second half of the year, particularly affecting sectors like retail and consumer goods that rely on imported materials. Social media advertising, however, is expected to surge by 15%, driven by its efficiency in driving direct sales, while connected TV (CTV) and retail media also see upward revisions in spend allocation.

Insights from recent news underscore this trend: IAB’s own detailed study notes that advertisers are doubling down on data-driven channels to mitigate economic volatility, with retail media projected to grow by 20% as brands leverage first-party data for targeted conversions.

Economic Headwinds Reshaping Funnel Dynamics

Beyond tariffs, broader economic indicators such as inflation and consumer spending slowdowns are forcing a reevaluation of the traditional marketing funnel. Posts on X from industry figures like e-commerce strategists highlight a consensus that full-funnel approaches, while ideal in boom times, are giving way to “digital gravity” models where content and ads converge on high-intent audiences for quicker wins. One common sentiment shared across these posts is the obsolescence of linear funnels by 2030, as predicted in an earlier IAB UK report, emphasizing adaptive strategies in a flagging economy.

This pivot isn’t without risks; overemphasizing lower-funnel tactics could erode long-term brand loyalty, as evidenced by historical downturns. Yet, as Marketing Week explored in a 2022 analysis that remains relevant, brands that balance short-term performance with some upper-funnel investment tend to emerge stronger from recessions.

Emerging Trends in Retail and Social Media

Retail media networks are emerging as a bright spot, with the IAB forecasting them to capture a larger share of budgets thanks to their full-funnel capabilities powered by shopper data. A Q&A from IAB Europe illustrates how these networks enable brands to engage consumers from awareness to purchase, even in tough times. Meanwhile, social platforms are seeing innovative uses, such as tiered influencer strategies where micro-influencers drive lower-funnel conversions, as noted in various X discussions on 2025 advertising tactics.

The economic impact extends to operational efficiencies: brands are advised to diversify supply chains and lean on platforms like Meta for 70% of spend, per e-commerce experts sharing strategies online. This reflects a broader push toward resiliency, with AI integration highlighted in a BCG publication as essential for optimizing media buys amid uncertainty.

Outlook for 2025 and Strategic Imperatives

Looking ahead, the IAB warns that without adaptation, ad spend could contract further if tariffs materialize, potentially shaving billions from the market. Yet opportunities abound in areas like CTV, expected to grow 14%, and e-commerce funnels tailored to privacy-first trends, as detailed in Instant’s 2025 guide. Industry insiders on X emphasize testing continuous ad runs and content matrices over outdated sales funnels to build trust and sales velocity.

Ultimately, the acceleration of lower-funnel marketing signals a pragmatic response to economic realities, urging brands to measure impact rigorously while preserving some investment in future growth. As the year unfolds, those who master this balance may not just survive but thrive in a constrained environment.