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Plus: Advertising Spending Projected To Drop As Tariffs Raise Costs

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A federal government shutdown over cuts to healthcare spending started today. Consumer confidence is falling, with individuals’ views of their current financial situation posting a huge month-over-month drop, and more than two-thirds saying the U.S. economy is fair or poor. Tariffs are also beginning to impact businesses, sometimes drastically increasing the cost of goods with new taxes on items and components made outside of the U.S.

All of this is taking its toll on advertising. Last week, the Interactive Advertising Bureau revised its outlook on advertising spending for 2025, rolling the projected spend back 1.6 percentage points. Companies are now expected to spend just 5.7% more this year on advertising, down from the initial projection of 7.3% more.

The main reason behind the revision is tariff concerns. More than nine in 10 media buyers have been concerned over the new import taxes and their impact on the industry, and many have been working to adjust strategies.

“With tariff impacts starting to roll through the supply chain, there is a lot of hesitance as to where the economy and consumer sentiment will go over the coming months,” IAB CEO David Cohen said in a statement. “Marketers are laser-focused on maintaining the utmost flexibility while driving short-term performance that delivers on their business goals.”

The imperative of meeting business goals and making every advertising dollar count is shifting how brands will allocate their funds. IAB expects double-digit increases in media that people spend more time with today: social media (14.3%), retail media (13.2%) and CTV (11.4%). Likewise, IAB predicts legacy media will see steeper declines, especially linear TV, projected to see 14.4% less spending instead of the 12.7% projected at the beginning of the year.

With the rise of digital advertising, technology to ensure that ads appear at the right time and for the right audience is more important. I talked to Lisa Utzschneider, CEO of measurement and optimization platform Integral Ad Science, about her career and how AI is shaping marketing’s future. An excerpt from our conversation is later in this newsletter.

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Megan Poinski Staff Writer, C-Suite Newsletters

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In todays CMO newsletter:
  • On Message: Why IAS’s leader sees herself as a tech CEO first
ARTIFICIAL INTELLIGENCE
In the last week, OpenAI has made several changes to its suite of AI platforms that both enhance their functions for marketing and creative, and also highlight the growing role that ChatGPT has in our lives. 

On Monday, the company announced a new “Instant Checkout” feature that allows a user to make a purchase without leaving ChatGPT. The feature, which was only available to Etsy merchants at launch, comes up when users are doing shopping searches. OpenAI charges a small fee per sale to merchants, but the chatbot is a middle layer of the transaction, which is fulfilled by the merchant. OpenAI plans to roll out the feature soon to merchants on Shopify, including Glossier, Skims, Spanx and Vuori.  

But ChatGPT has been more than a shopping researcher. It’s also been a conversational companion for many people—and critics say its default toward being helpful may cross some lines, even at times urging people to take self-destructive actions. After a lawsuit from the parents of a California teen who claim ChatGPT encouraged their son to take his own life, OpenAI launched a suite of parental controls that can be used to customize safeguards. Parents could control exposure to sensitive content, manage hours of the day that young people can use the chatbot, and disable features including memory, image generation and voice mode.

On the video generation side, OpenAI released its Sora 2 model on Tuesday. The Sora app can create more realistic videos with sound, synchronizing dialogue and sound effects with video clips. A new feature called Cameo allows users to add likenesses of themselves and friends to videos. OpenAI’s video introducing Sora 2 includes CEO Sam Altman and Sora head Bill Peebles in a variety of situations, from a giant swimming duck race at a crowded race track to a glitzy nightclub with an elephant on the dance floor. 

NOW TRENDING
Jimmy Fallon isn’t just a late night TV host. He’s always bringing something new to the table, from zany characters during his time on SNL to signature sketches on The Tonight Show to books, whimsical products and an album of original Christmas music. Forbes’ Matt Craig talked to Fallon about his newest project: An NBC show where Fallon brings his positivity, humor and creativity to marketing called On Brand With Jimmy Fallon, which premiered this week. On the new reality competition show, contestants with no marketing experience pitch campaigns for big brands, including Pillsbury, Dunkin’ and Southwest Airlines. The winning ad campaigns will air the day after each episode.

Fallon told Craig he thinks this new show will create a new kind of relationship between consumers and brands, and will inject some different perspectives into brand creative work.

“I want every company that we’re working with to write down where they’re at right now and then see where they are after On Brand happens,” Fallon said. “I think their numbers will go up, and that’ll prove that the show’s working.”

IN THE NEWS
In-person sporting events are continuing to hit it out of the park. In this year’s regular season, Major League Baseball had its third consecutive year of more than 71 million people attending games, writes Forbes senior contributor Maury Brown. This year’s growth was very slight—just 0.09% over the 2024 season—but Brown points out that two teams played in smaller stadiums this year: The A’s (formerly of Oakland) are in the midst of a move to Las Vegas and played in a minor league park in Sacramento, California, and the Tampa Bay Rays borrowed the New York Yankees’ spring training facility after their home stadium was damaged by Hurricane Milton.

The Los Angeles Dodgers and San Diego Padres both set all-time attendance records this year. More than 4 million fans went to see the 2024 World Series champion Dodgers for the first time in franchise history. San Diego has broken its all-time attendance record each year since 2023. Meanwhile, the New York Mets and the Arizona Diamondbacks both posted their best attendance since 2008.

IAS CEO Lisa Utzschneider.   IAS, Getty
ON MESSAGE
How IAS’s CEO Found Her Voice And Advanced AI In Marketing
Lisa Utzschneider has spent most of her career pushing, developing and refining digital marketing. Since 1998, she’s worked in marketing and sales positions at Microsoft, Amazon and Yahoo. She became CEO of media measurement and optimization platform Integral Ad Science (IAS) in 2019, led the firm through its IPO, and is now blazing a trail for AI use in marketing and verification. I talked to her about breaking into the traditional boys’ clubs of marketing and tech, as well as the future of the industry. This conversation has been edited for length, clarity and continuity.

Have you found it challenging in your career to be a woman? 

Utzschneider: I’ve been really fortunate. I grew up in tech and Big Tech. In Big Tech, it is so important that you discover your voice early.

What I mean by that is the first 10 years of Microsoft, my whole career was basically out of New York, flying to the West Coast. There was no Zoom. So what that meant was good, old-fashioned conference calls. I was based in New York and the companies were headquartered on the West Coast. They couldn’t see me, they could only hear me. I was often the only person dialing in remotely, and I’ve probably done thousands of calls where I’m the only woman on the call. 

I learned very early: Be completely prepped going on the call. I used to write out: Here are the three points I’m going to make. Make sure I make them in the first 15 minutes of the call, make sure I projected all this stuff and make sure if people were interrupting me, talking over me, I’d call them out on the call. I’d follow up after the call and say, ‘Hey, I don’t know if you realize you just interrupted me. Give me space on the call.’ 

I was very intentional about it in developing that muscle, and the earlier you can develop that muscle, it becomes second nature, so I’m so accustomed to having to make sure you have a presence, you’re prepared, and your voice is clearly heard. 

It’s not like now I walk around thinking I’m a female CEO. I think of myself as a tech CEO. 

IAS has had a great year so far, with revenue growth in the teens for the last several quarters. Tell me about the company’s success and how you’re driving it as CEO.

We have six company values, and one is customer obsession. We are very intentional about what we build, the type of technology we invest in, how we innovate—always on behalf of the customers. 

When you take a look at where marketers are shifting their budgets and testing, it’s two key areas where users are spending their time: social platforms and CTV. 

When you take a look at some of the technology we built, it is incredibly sophisticated. It is powered by AI. We are in the live feeds of the social platforms, we are classifying video, image, audio, text, and we’re processing a lot of data. This is all around to help the L’Oreals and Disneys of the world to make sure wherever they’re running their digital ads on the social platforms is adjacent to appropriate content. 

To give you a sense of how much data we’re processing and the role of AI, two years ago we were processing two years of digital video content a day. Fast forward to today, we’re processing 50 years of digital video content a day. It’s massive amounts of data, massive amounts of signals. The more [high quality] data you process, the more you can train the models, the faster the accuracy of detecting the appropriate and inappropriate stuff at higher velocity. The technology is super cool. 

In terms of identifying things within the platforms or web, we’re also very focused at taking the human out of the loop, training the models to be able to detect without humans. We’ve gotten to a place now that 97% of our model validation has no human in the loop. Our AI labeling is 29x faster and 45% more precise than human annotators.

That tech is a huge differentiator for us. It illustrates the value that we’re driving for our brands and the investments that we’re making in all things tech and AI.

Where do you see digital advertising going in the next few years? 

I think AI is going to play a role. I do think there’s a future where the majority of all creative is created by AI. The major platforms like Google or Meta are investing billions and billions of dollars into their advertising platforms and leveraging AI to drive optimization outcome, higher ROI. 

For brands, there’s less transparency in terms of what’s happening behind the curtain, the black box. The platforms leveraging AI end-to-end, from the creative generation to the media planning, media buying, I think will all be powered by AI.

What does that do for the human workforce?

It will just evolve. The thing is, AI is a tool. It’s a very important tool, and I think that there are plenty of opportunities in the future in advertising for humans to play a role. There are certain things AI can’t do. For example, human relationships, and that’s something brands deeply care about. 

It’s too soon to tell, but it’s incredibly exciting just how fast it’s moving. We are front and center in AI. A third of our engineering org is made up of data scientists, and we’ll continue to invest in AI.

COMINGS + GOINGS
  • Digital logistics platform Uber Freight promoted D’Andrae Larry to its chief commercial officer role. Larry previously worked as the head of intermodal, after holding senior leadership roles at Norfolk Southern Corporation and BNSF Railroad.
  • Retirement services provider Empower tapped Sangita Woerner as its chief marketing officer, effective September 22. Woerner most recently worked as senior vice president of marketing at Alaska Airlines, and has also led marketing for Starbucks and Unilever.
  • Communications agency Allison Worldwide hired Hank Kosinski as chief creative officer and chief marketing officer, effective October 1. Kosinski joins the company from WPP’s VML, where he worked as executive creative director, and he’s also worked in leadership at Gardner Nelson & Partners, McCann and Merkley + Partners.
Send us C-suite transition news at forbescsuite@forbes.com.
STRATEGIES + ADVICE
In times of economic uncertainty, one of the best places to invest is improving your brand’s customer experience. Here’s how Chili’s, Wells Fargo and Starbucks have amped up their CX—and business.

Technology can do a lot for marketing, but nothing beats actual human relationships. Here are some old-school and low-tech ways to build customer trust to stand the test of time.

QUIZ
Football season is upon us, and the NFL announced who next year’s Super Bowl halftime headliner will be. Who will take the stage?
A.Drake
B.Taylor Swift
C.Bad Bunny
D.Post Malone
Check if you got it right here.
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