Episode 686: How CMOs & Marketers Can Profit From Trump’s Disastrous Tariffs

Click here to Listen, Subscribe, and Review Perpetual Traffic on iTunes!
Click here to Listen, Subscribe, and Review Perpetual Traffic on Stitcher!

Ralph and Lauren break down the immediate and long-term implications of the recently imposed tariffs—and what savvy marketers and business owners must do right now to stay ahead. From navigating rising costs of goods to uncovering massive ad spend inefficiencies (including a shocking $1.2 million in wasted budget), they share cutting-edge tactics for scaling during economic disruption. You’ll hear real-world client insights, why now might be a golden moment for ad buying, and how to tap into the “Warren Buffet mindset” when everyone else is pulling back. This episode is your playbook for profitable marketing during uncertainty.

Chapters:

  • 00:00:00 – Kickoff: Inside the Minds Behind Perpetual Traffic
  • 00:00:32 – Tariffs Are Here: What It Means for Your Business Today
  • 00:03:16 – Winners and Losers: How Different Industries Are Getting Hit
  • 00:04:13 – Adapting Fast: Smart Marketing Moves When the Rules Change
  • 00:05:06 – Where Your Budget’s Bleeding—And How to Stop It
  • 00:09:29 – Chaos = Opportunity: Why Now’s the Time to Be Bold
  • 00:17:08 – Reinvent or Retreat: The Innovation Edge
  • 00:20:14 – Closing Power Plays: What to Do Next Before the Market Shifts Again

LINKS AND RESOURCES:

Thanks so much for joining us this week. Want to subscribe to Perpetual Traffic? Have some feedback you’d like to share? Connect with us on iTunes and leave us a review!

Read the Transcripts:

How CMOs & Marketers Can Profit From Trump’s Disastrous Tariffs

Ralph: [00:00:00] hello and welcome to the Perpetual Traffic Podcast. This is your host, Ralph Burns, and the founder and CEO of Tier 11 alongside my amazing Chicago based co-host.

Lauren: Lauren e Petillo, founder of Mongoose Media.

Ralph: So glad you joined us here today. Lauren is still in Chicago, recovering from podcast Evolution Shop Talk. , south by Southwest, You’ve been on like a worldwide journey here, and while all that’s been happening, have you been watching the news?

Ralph: ‘ cause I know I have and we’ve seen some fallouts of like, well first off, if you have been living under a rock for the last, I don’t know. Let’s say, when was he, you know, inaugurated? January

Lauren: January was inaugurated, but it was February

Ralph: like the Google search [00:01:00] volume on tariffs is through the roof. It’s the most search term as of right now, as of the recording of this date.

Ralph: And we’re now seeing this constantly evolve here. And the question comes back to me like when I get on, calls with business owners. Is what impact this is gonna have just in general on the market and the, and as well as in the marketing industry. And obviously it’s going to be very, very industry and company specific, but there has been a whole lot and just, within the last four hours, China just did a counter tariff, 34% on all imports of US products starting April 10th.

Ralph: So that is hot off the presses if you’re listening to this. What’s been the impact for you? What have you seen? Because people are saying, all right, what’s the impact of terrorists, but also what’s the impact on marketing just in general, and what are you seeing in your business as of today?

Lauren: I mean right now it’s like a lot of discussions with clients of ours that have had products that were pulled from Canadian shells that have, [00:02:00] ingredients or resources that are imported from various other locations. So their cost of goods is increasing their inventory and sales channels outside of the us.

Lauren: Is Well, the sales channels are decreasing and then the inventory is there sitting. so I have a lot of clients and even like conversations that we’re talking about is if you’re selling a physical product, your costs are gonna change. another client of ours that has like a brick and mortar store, the peril that they order like Tommy Bahama Brands and other things like that, like those.

Lauren: Shirts are now gonna go up 80 to $90, and they’re already at a price point where, they’ve said sometimes it’s surprising how much their consumer is currently already paying for these shirts, but now we have to ask them to pay even more because they have to pass that cost along. Some of our clients are evaluating ways where they can trim.

Lauren: That increased costs without passing it to the consumer, which of course is often thought of first at marketing. So that’s an awkward conversation where people are [00:03:00] decreasing their ad spend because their cost of goods is going up, and then they’re also trying to evaluate what do they do with the surplus of inventory that’s either being shipped back or not being reordered.

Lauren: So that’s, that’s the conversation landscape I’m having right now with regards to all of the tariff implications

Ralph: Hmm.

Ralph: Yeah, and I think, there’s very different answers to that depending on what the product is. So for example, like we’re in talks right now with a bunch of software companies, we’re really not something that’s gonna impact them. So it’s not even a topic of conversation. However, I.

Ralph: Companies that actually manufacture in the US and then import their raw materials from China in particular Steel. And one particular case has been a hot topic of conversation for about two to three months now with a client of ours. that obviously is going to be a major concern.

Ralph: However, on the software side, less so. So it’s very industry specific is what I’m finding. So, we just had a conversation with a very large multinational, American based brand that is [00:04:00] all American made, however. Some of their raw materials are imported from other countries, not specifically China.

Ralph: So the impact there, they really didn’t know. They hadn’t figured it out quite yet because the landscape is moving so much. What we’re seeing just in a general sense now though, is that especially with new prospects that we discuss, we don’t necessarily look at, and this is the reason why we shifted our model from.

Ralph: An ad spend based model, which is we make more when we spend more to a flat fee based model. Because first off, it’s a cost. Yes, it’s technically, I guess it’s a cost of goods sold, but not really. ’cause it doesn’t vary with the amount of volume which you push. Cost of goods sold is technically anything that is related to the sale of your product or the delivery of your product.

Ralph: Agency fees is really sort of like an operating expenses, the way that we look at it. But it’s gotta be something that’s factored in ’cause it’s an increase potentially if they don’t have an agency bringing it over to an agency. Something they have [00:05:00] to factor into their cost of goods sold, or their end cac really more specifically their cost to acquire a new customer.

Ralph: So what we’re seeing is with a lot of our analyses is that when we go deep into the business, we’re not only seeing uncertainty around The cost that they can actually pay to acquire a customer. But then we go deeper inside a lot of their ad accounts. We’re seeing a tremendous amount of waste wasted spend overspend in areas, and in fact, in one particular client, it was particularly hard hit by these tariffs.

Ralph: We looked back and we did all of their meta advertising and we did a deep dive analysis for about. Two weeks. You know, I had some of the smartest people in tier 11 on this and determined that they were far overspending on brand and on Amazon. And that’s usually the places where a lot of agencies overspend and make themselves look good.

Ralph: ’cause it’s it’s easy to overspend on brand ’cause you’re like, Hey, look at my brand campaigns. Hey, they’re [00:06:00] producing X amount of roas. Hey, look at my Amazon. it’s presuming X amount of row because I’m really, I’m just bidding on the brand name when in fact there are strategies belie beneath that, that you can actually use to save money on overspending an advertising.

Ralph: And I think it’s one of the biggest mistakes that a lot of agencies make right now to make themselves look good, is plump up their own metrics. And in this case, we found $1.2 million. And wasted ad spend on an annual basis that was 80 some odd thousand dollars. And that’s just what we found. Not even managing the accounts, a tremendous amount of spend.

Ralph: And when I look back on that, it’s almost criminal. Their agencies were spending that amount passing it on to this business because that’s more that we could have spent on top of funnel in order to create more new customers for them. And that’s the model that I think is going away because what were they incentivized by?

Ralph: They were incentivized by spending more. [00:07:00] And it’s counterintuitive, and I think that’s a thing that really has changed is it’s got to change in this industry. So I’m coming at this from an agency standpoint. When I look at businesses, they have no idea this is happening. it’s time. We all lift the veil on that.

Ralph: So I think that’s one of the big things. In this particular case, they were very hard hit by the China tariffs on steel imports. and they were looking for, you know, double, triple, quadruple that in just. Cost savings, but we could ship 25% away from that almost immediately through just some normal tactics and also get them the growth that they were looking for.

Ralph: So that’s what we’re seeing. It’s like, you gotta look at this stuff differently now. It’s not about spend more, make more. It’s about spend less or the same and make more, but do it in a smart way, especially if you understand your metrics.

Lauren: It’s efficiency of ad spend and management. I.

Ralph: A hundred percent. And I think there’s just way too much waste. And I think, the platforms themselves, we [00:08:00] both know this, like Meta and Google, like what do they want to do? those are the two big platforms that we talk about the most on this show. Right. And, obviously we also love TikTok, Snapchat, LinkedIn, all the other ones.

Ralph: But those are the big two that we really talk about here the most. What they want is they want themselves to look good too. So they are going to, no matter how many exclusions you do for your database and people who have visited your website or you upload your customer list, meta is still gonna find people that are most likely to convert.

Ralph: And then those are probably, in most cases, repeat users or people who have, are aware of your brand or have at least engaged with your brand in one way, shape, or form, because they’re looking for the best way in order to make themselves look good so you continue to spend money. So yeah. You know, not to be all conspiracy theory here, but this is the first time we’ve talked about this.

Ralph: So how that impacts tariffs from my standpoint is a lot of companies are looking to figure out ways in which to cut back spend, if they decrease marketing overall, where does that leave them?[00:09:00]

Ralph: My

Ralph: sense is that there’s, there’s a lot long term it screws you

Ralph: really you know, if you don’t take our proposal to spend, you know, like save you 1.2 million, what are you gonna do?

Ralph: what’s your alternative? So are you gonna shrivel up as a business and die? Or are you going to sort of double down and do it in a smart way? And I think that’s what we’re finding right now. ’cause there’s a lot of uncertainty and a lot of trepidation when it comes to these tariffs. And the news cycle is just constantly churning out new, updated information on it.

Lauren: Yeah, I mean, I think it’s a really unique situation, all of Covid and the pandemic, where I think it’s almost like a pandemic 2.0. And so we have cycles. In marketing and in business and in industry, to have another one so close to the previous pandemic where a lot of brands pulled out and then saw that because they pulled out those that stayed in and even doubled down.

Lauren: I think they’re like more millionaires made during the pandemic than any other year previously. it’s just, there’s a lot of opportunity and I’m not. [00:10:00] A lawyer. I’m not a tax strategist, I’m not an economist. I’m not like a super purveyor of news consumption. But what I’m seeing, at least with the conversations of tariffs and with the impact.

Lauren: Two, the sales and marketing process, especially with the like withdrawal of funds. I think this is another opportunity of a feast or famine type of situation where I totally understand like when you need to make cuts that you don’t wanna pass the consumer because you don’t wanna destroy the brand. I understand that, but I think now is.

Lauren: Honestly a really good time to spend because more people are pulling out. I know it depends like too of where your company is based and where you’re selling to. Canada has been Pro Canada products since February where there are grocery stores that have completely pulled all Amer, like Kentucky Bourbon, California wines.

Lauren: there’s just massive stores that now have like Canadian only aisles. They’ve done this huge push for buying local, where my conspiracy [00:11:00] theory is I’m hoping to God that there is a strategy behind all the tariffs and that maybe it means that American goods are gonna become luxury because it’s gonna be harder to find and more expensive.

Lauren: So it’s gonna create like an elitism kind of thing. I don’t know if that’s the strategy that’s, one of the only positives I can see. Potentially coming out of this, but there’s just so many people that are pulling back. So a lot of this depends on where your products are being sold and who your market is for.

Lauren: that I think there’s a huge opportunity right now and when there are brands that are finding like. Poor efficiency, like before you cut back on your marketing, look and evaluate were you previously efficient with your marketing? Because you might already have money that you can do that you can put into, as you’ve seen with, I mean 1.2 million.

Lauren: Oh my God, that’s an MI would throw a fit.

Ralph: That’s a million. That’s a million. No kidding. Yeah.

Lauren: It

Ralph: I mean, I guess there is, just from a mindset standpoint, and this is hard to do when you are fearful like Warren Buffet said, be fearful when others are greedy and greedy [00:12:00] when others are fearful. And right now there’s a lot of fear and uncertainty here, which is going to identify an opportunity.

Ralph: I know Warren Buffet is not fearful. Right now he is looking for opportunities because there’s fear and uncertainty. It’s the same reason why he made billions coming out of the pandemic. ’cause he kept his head on. he didn’t overreact obviously he’s sitting on billions. So it’s like, it’s easy for me to say, yeah, Warren Buffet wasn’t fearful in the pandemic because he is already a multi-billionaire.

Ralph: Like, how many billions do you need? Really? And the guy lives in the same house that he’s lived in for like 40, 50 years. Anyway, it’s a really nice house, by the way. But the point is that it’s easy to say that it’s harder to execute on it, and I think what we’re seeing right now is just more uncertainty because like just follow the news cycle every single day.

Ralph: It’s some other thing, what are you gonna do as a business,

Lauren: Yeah, well, I mean if you’re just constantly reacting to, what sells, which is [00:13:00] extremism and, these are really real serious conversations. And I will say from the standpoint of like amongst a lot of my US based friends, born and raised in the United States, this isn’t. As hot of a topic for the non-business owner. Um, so like I’m saying from the consumer standpoint, that’s just limited to like my social circles and the people I’ve encountered, people I’m talking to when I was in Canada and when I’m talking to foreign nationals or when I was just in Mexico. Like the conversations that I’m having with foreigners. non US based people as consumers versus US based consumers is drastically different. Whereas a large part of the United States population that is paying and buying. The products that you’re advertising to are not as engaged in the tariff conversation as business owners or foreign nationals, where, like I said, I go back to the Canadian, like buy and support local Canadian.

Lauren: Like this is a, hot topic of conversations amongst nearly [00:14:00] every Canadian and where this is becoming a hot topic of conversation amongst. Business owners? Well, I mean, it’s been a hot topic, but becoming more prevalent where it’s extending outside of the business owner circle. But I don’t think United States consumers are going to be as frustrated with increased prices as foreigners buying American products abroad.

Lauren: there’s not enough information out there. I think a lot of people living in fear. I think a lot of people are also like living with their head in the sand. there’s gonna be drastic implications for businesses, especially those that are purchasing materials that come from outside the us That could be ingredients, that could be raw materials, that could be assembly outside, this is going to impact the cost of goods.

Lauren: I just think that if you are. Looking at cutting back on marketing. Look first at being efficient with your marketing first and that I really do think that there is an opportunity moment and I love that Warren Buffet quote you just said, because more people are being fearful. I’m like, there’s a huge, huge decrease of CPMs [00:15:00] right now and like we’re finally seeing cost per acquisitions and different verticals start to taper back down because it’s just been.

Lauren: Increasingly growing. Like I think last year they said Meta had a seven x increase of your cost per acquisition compared to a 12 month period. Look back, that’s just my conspiracy theory. Like there’s an opportunity, but you have to make a decision that’s best for your company. I know that, your US based consumers might not be talking about it as much as you, the business owner or, your foreign consumers are.

Ralph: I think a lot of the conversation Has not occurred because it hasn’t hit the US consumer’s wallet yet. It’s how this affects inflation. So there’s the cost of goods part to it, but then there is the other net effect, which is really the uncertain effect right now is what will be the effect on inflation.

Ralph: If there is a 25% import on Chinese steel and you’re buying a refrigerator or a washing machine. That is made with Chinese [00:16:00] steel. It might be manufactured in the US but a lot of the steel, pick an industry that’s gonna be passed on to the consumer. So then therefore, if you’re marketing as a beauty brand, let’s say, and you’re all US sourced, let’s just say that for example, you might not be affected by tariffs, but indirectly because of inflation.

Ralph: Now the discretionary income that your target market has. Could have a profound impact depending on where you are in the market, whether or not you are, a regular brand, a premium brand, or a luxury brand. Probably on a luxury brand. Not quite as much, not really price sensitive, but premium and sort of regular brands, normal brands that we consume every single day.

Ralph: how is that going to impact discretionary income purchases? if you’re selling jewelry, if you’re selling makeup, if you’re selling well, makeup is probably like an essential, but I mean, certain products, like in the health and beauty space, for example,

Lauren: Well, it’s like diapers,

Ralph: head, diapers, [00:17:00] gas, you’re still gonna have to, but then again, you’re gonna start to think of better ways to use public transit if gas prices all of a sudden

Ralph: increase as

Lauren: this is the piece that I’m excited about because in war is when we have innovation, And in war is when the US economy has done well. And I don’t wanna go to war, I don’t want anyone to get hurt. I’m very much like, I feel bad using like ant raid because well who am I determined that those ants can’t live in my bathroom?

Lauren: But, in

Lauren: I know I like. Okay. I know, I, I, I get very sensitive and I’m like, I’ll like pick up a dying bee and like risk being stung even though that exasperates.

Lauren: Anyway, anyways, anyways, um, where I’m excited about it is. Yeah. Oh no. where I’m excited is like the force innovation because then what if, what if there’s another material that’s more sustainable than steel or something that like we can use I think 3D printers and plastic, like recycled plastic.

Lauren: I was literally looking at like, we’re buying pill bottles, like prescription pill bottles that we put are [00:18:00] like take to a day until you see an erection in your sales amongst media tchotchke things. Um, obviously it play off the little blue pills. You know how much I lean into this, like. Say like, I have custom condoms for my business cards.

Lauren: Um, and I’m like looking at like, well, if I have to pay $3 a unit and son, I could just take plastic that we’re not using anymore and I can just 3D print it myself. Like, I think there’s gonna be, Innovation and new materials that we can use. innovation with more cost effective materials, and also innovation and like recycling materials.

Lauren: ’cause there’s a lot of Ikea cardboard stuff. Like what if there’s a way that you can use all that shipping hardware, all those Amazon boxes to be made into a material that you can 3D print a plastic like solution. So I think that that’s where I’m a little bit excited into what, The frustrated individuals in the world will do when they’re deprived from something that was easy.

Lauren: So that’s like the positive that I’m like, oh, I believe in the brilliance of different people. When [00:19:00] you’re frustrated, you in innovate and I’m glad that we could potentially see a massive increase of new types of product, new resources, new ways to use existing, you talking about using public transportation, that’s leveraging existing resources available to you that were often neglected.

Lauren: And then if we have mass. use of public transportation will have mass men for better public transportation. I live in Orlando where the public transportation, it’s garbage. You cannot get to the airport. Successfully and I will vent about that all day long. But that’s where I’m like, is there a chance?

Lauren: What’s the good out of what is a very serious and uncomfortable grave conversation that we’re having with business owners and we’re seeing like the marketing line it costs, but on the bright side, like, Hey guys, imagine if the more Amazon boxes your wife purchases, the more raw materials you have to make your figurines and you don’t have to buy $60 and you can help reduce the carbon footprint of Amazon boxes like.

Ralph: Yeah. Although cardboard is the most recycled, commodity on earth, which is actually pretty amazing when you think about it ’cause it’s so easy

Lauren: Is it, [00:20:00]

Ralph: But yes, e either

Ralph: way,

Lauren: stickers and the

Ralph: the

Ralph: stickers and

Ralph: the

Lauren: of how

Ralph: that gets thrown.

Ralph: Yeah.

Lauren: cycling versus actual recycling,

Ralph: For sure. Yeah. And plastic, uh, there’s just ends up in Indonesia somewhere.

Ralph: anyway, that’s a whole other thing. So, bottom line here for marketers, I know our time is short here. Like what is your recommendation on where we stand right now with regard to tariffs and marketing in, in specific terms?

Lauren: Your cost of goods are gonna go up, your consumers are gonna know it. If you’re authentic about your brand, like what we had talked about in the previous episode, your consumers are gonna know and they’re gonna wanna support you. You just have to be authentic about who you are and why. You make changes to the price if you’re passing them onto your consumer.

Lauren: Two, the takeaway is you need to start looking at where can you be more efficient. You probably have been lax in a lot of departments. I’m not saying like be Elon Musk and Doge in that capacity, but I think there is an opportunity for everyone to find greater efficiencies within their own companies. And this is a really good opportunity to evaluate if there are AI [00:21:00] solutions that can be layered into your tech stack to help provide greater efficiency.

Lauren: And then the last one is that if you really are like gonna pull back on marketing. just be mindful that, you’re probably along the same mindset as the majority of businesses. So if they’re all pulling out those that stay in may have another pandemic style opportunity of explosive growth.

Ralph: Yeah, I would say I reiterate that on the efficiency side. if you have a marketing team or an internal department or even an agency, this is the time for you to say, okay. let’s 80 20 this. Where am I getting the biggest bang for my buck? And then figure out efficiencies that are in and around there.

Ralph: And I would say in the media buying space, it’s usually having anything to do with selling again to your same customers. And. That should be something that is almost a zero cost. I mean, if you have a email agency, you can certainly do that. It’s one of the biggest things that we see whenever we do [00:22:00] an analysis.

Ralph: I know you do the same sort of analysis on like SMS and email and obviously on chatbots. It’s a great way of increasing average order value, but also lifetime value, getting more out of the clients and customers that you’ve already paid for. it’s a major opportunity almost. Every single client call that I’m on, they can improve there.

Ralph: And then you backend out, it’s like we’ve already got the customer. How can we improve their lifetime value? How can we actually improve their experience with our brand? And that’s something that you can do for almost zero cost. you are hiring an email agency, like we have an email service that we use and we add it in after the fact is like this is a force multiplier once we actually do acquire the customer and then doubling down on a data solution, and I know we’ve talked many, many times about tier 11 data suite here, but even if you get close to that, and if you look at your CRM, we used to do it all manual, like really see like which channels are the ones that are the ones that are pulling for you.

Ralph: Sometimes it [00:23:00] is indirect and it’s harder to do it, but like you’re. If your agency or your internal team isn’t using real data from your CRM where you actually capture the money, that is a big wasted opportunity. ’cause if you’re using the platforms themselves to show exactly what you’re doing or how great you’re doing, chances are you probably have a tremendous amount of waste there.

Ralph: And that’s what we see when we go deep into these ad accounts. So I, think there’s a lot of things to do here, but also maybe even switching your model from a. pay by ad spend model. It’s like, it’s all of these things in general, like there is a wave of change that’s gonna come in the marketing space.

Ralph: In my opinion. It’s already started to take hold. And I think this, event like this nobody saw this really coming. Nobody really thought it was gonna happen, but it’s happening. What the downside of it is gonna be or what the upside of it is gonna be, what you make of it today. And now is the time to really dive deep and look for efficiencies as much as you possibly can.

Ralph: And don’t stop spending because plenty of clients that we [00:24:00] had to say, oh, I’m freaked out by the pandemic, like a lot of them are not in business anymore. Lauren, they went completely outta business ’cause they stopped doing the number one

Ralph: thing that

Lauren: Yeah. Yeah.

Ralph: their business, which is

Lauren: And so their competition came and took in, swooped their spot. And also it’s like, um, you, you stopped the front end at a time when it was the cheapest to get front end.

Ralph: true. true. like that you bring up a really good point. There is gonna be a lot of fear in the market right now, and then that creates opportunity for you to maybe get those customers at a cheaper price as a result of that.

Ralph: So we’ll have to have this as a continuing conversation here. ’cause as soon as the.

Lauren: There might be new retaliatory tariffs that are gonna come in and like, I think it’s great you and I both have clients, not just in the US but we have, can we have foreign clients? We have can clients in Canada. We have clients in Latin America and we also have clients in Europe. We consult with clients that are in Asia and Oceania area, don’t know how many continents [00:25:00] you count in the world.

Lauren: I didn’t know that it was a different number, but I learned it because.

Ralph: is

Lauren: It is, it ranges from five to seven. I never knew, but, um, depending on that, like, it, it’s really interesting. This is an, , an ever evolving story and how, us really just makes such an impact on the global economy. And who’s to know if it’s gonna be detrimental or a gangbuster

Lauren: item for your business.

Ralph: I think this is gonna be something, but my gut feel is this, and I know we’re right at the end of our time here, is that there is gonna be some kind of government subsidies back to business because of this. That’s gonna be sort of

Ralph: done on the sly. And a lot of smart economists are even predicting that.

Ralph: So Sounds, that this is in America First policy on the front end. Fulfilling campaign promises sounding tough when in fact if business suffers. Those are the same business people that put him in office to begin with. So we’ll have to see how this all evolves.

Ralph: We’ll certainly keep you updated as, the news cycle generates more and more information on this, but. Hold fast, hold strong. [00:26:00] Look for opportunities. Think Warren Buffet.

Ralph: All right. So anyway, for my uh, amazing co-host Lauren e Petillo. Till next show. See ya.

Are You Getting the Most of Our Digital Marketing Agency? Click Here to Find Out

More Episodes

Sign Up For News & Exclusive Opportunities

Privacy Policy

Terms & Conditions

Email Us

©Copyright 2024 Tier 11 – All rights reserved 2024