...Advertising Growth Forecasts Cut Due to Market Volatility
Growth projections for global advertising spend have been revised downward for both 2025 and 2026, with this year’s estimate dropping by 0.9 percentage points to 6.7% and next year’s by 0.7 percentage points to 6.3%. This adjustment equates to a $19.8 billion reduction in anticipated ad spending.
The heightened risk of stagflation and possible recession in major economies has compounded market uncertainty, exacerbated by new trade tariffs set to take effect in the second half of 2025. The automotive, retail, and technology sectors are expected to be most affected, with significant pullbacks in ad spending due to rising costs and supply chain disruptions.
Regulatory challenges also pose additional hurdles, with the European Union tightening scrutiny on Google and Apple. Meanwhile, ongoing antitrust rulings in the U.S. against Google and TikTok further contribute to a volatile landscape for media and marketing strategists.
Despite these challenges, the global ad market remains on track to reach $1.15 trillion this year, representing an absolute increase of $72.9 billion from 2024. However, alternative economic models based on a pessimistic outlook from the OECD suggest that growth could slow even further to 6.4%.
WARC Report: Key Findings and Industry Reactions
A new report from WARC, a leading authority in marketing effectiveness, underscores the growing uncertainty in global advertising. The study finds that ongoing trade disputes, regulatory shifts, and economic stagnation are weighing heavily on the industry’s outlook, prompting a $20 billion downgrade in ad growth forecasts over the next two years.
“Despite the growing volatility, digital advertising remains strong, led by three companies – Alphabet, Amazon and Meta – on course to control over half of the market in 2029. Regulatory scrutiny and uncertainty around TikTok’s future in the US further compound risks to growth, however, advertisers must be nimble in order to seize initiative in this shifting landscape.”
Economic Scenarios and Industry Impact
WARC’s analysis is based on data from 100 global markets, leveraging an advanced neural network that assesses advertising trends using over two million data points. This has enabled WARC to model three potential scenarios for the industry:
Baseline Forecast: Current indicators suggest a 6.3% growth rate for 2026.
OECD Scenario: A scenario assuming universal trade tariffs of 10% could cut 0.5 percentage points from GDP growth in key economies over three years and increase inflation by 0.4 percentage points.
Severe Case: This worst-case scenario projects a full percentage point loss in global growth and an additional 0.4 percentage point rise in inflation.
Under the OECD scenario, global ad market growth could be further reduced by 0.3 percentage points, translating to a $4 billion decline in spending. Meanwhile, looming reciprocal tariffs from the Trump administration—set to take effect on April 2nd—could exacerbate market conditions, with additional duties on China, Canada, and Mexico potentially shaving $9.5 billion from projected ad growth.
Sector-Specific Challenges
The automotive, retail, and tech industries are expected to be the most heavily impacted by tariff-induced economic pressure:
Automotive Advertising: Projected to fall 7.4% in 2025 as manufacturing slows and brands scale back marketing budgets.
Retail Advertising: Expected to decline by 5.3% as tariff-related supply chain disruptions tighten margins, particularly among U.S. retailers reliant on Chinese imports.
Tech and Electronics Advertising: Growth is expected to slow to 6.2%, a sharp downgrade from November’s 13.9% forecast due to new semiconductor tariffs.
The automotive industry, which accounted for $54.8 billion in ad spend last year, has already begun reallocating budgets away from traditional TV ads toward digital channels. Major U.S. automakers, including General Motors and Ford, have cut advertising spending despite revenue growth, with GM’s marketing budget now just 1.8% of sales revenue—down from 3.5% in 2013.
Retail, the largest sector WARC monitors, is forecast to spend $162.7 billion on advertising in 2025, accounting for 14.1% of global ad expenditures. However, this represents a 5.3% decline from 2024 due to the tightening effects of trade barriers. Fast-growing retail platforms such as Temu and Shein, which aggressively expanded their ad spend in 2024, are expected to reduce their budgets significantly in response to new trade restrictions.
The tech and electronics sector, which saw a 25% rebound in ad spend last year following supply chain improvements, is also bracing for a slowdown. Growth is now forecast at just 6.2%, far below earlier projections, as semiconductor tariffs impact the industry. Under the OECD scenario, this could further decline to 5.8%, with the most severe conditions reducing growth to 4.9%.
Regional Advertising Trends
Economic uncertainty is affecting ad markets differently across major regions:
United States: Expected to grow 5.7% in 2025 to $451.9 billion, though this is less than half the 13.1% growth recorded in 2024. However, growth could accelerate in 2026 due to increased advertising around the FIFA World Cup and U.S. midterm elections.
China: The Chinese ad market continues to struggle with weak domestic demand, with growth projected to slow to 5.3% in 2025 and 3.5% in 2026.
Europe & Japan: The UK, Germany, and Japan are facing economic stagnation, increasing the risk of stagflation in the near term.
WARC’s latest report underscores the growing headwinds facing global advertisers as economic conditions evolve. With market uncertainty at its highest level in years, brands will need to remain agile in their advertising strategies to navigate the turbulence ahead.
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