WARC says the underlying factors for these downward revisions are wide-ranging, but core among them is the rising risk of stagflation — or outright recession — across major economies, compounded by heightened costs being levied on trade by the US. Tightening regulation in the European Union, squeezed margins and low business and consumer confidence are also contributing factors.

James McDonald, Director of Data, Intelligence and Forecasting at WARC and author of the report, says, "The global ad market faces mounting uncertainty as trade tariffs, economic stagnation and tightening regulation disrupt key sectors — leading us to cut growth prospects by USD$20-billion over the next two years. Automakers, retailers and tech brands in particular are now reigning in ad spend amid rising manufacturing costs and mounting supply chain pressures."

“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," adds McDonald. 

Three Scenarios for an Uncertain Future

WARC says its latest global projections are based on data aggregated from 100 markets worldwide and leverage a proprietary neural network which projects advertising investment patterns based on over two million data points. These include macroeconomic data, media owner revenue, marketing expenses from the world's largest advertisers, media consumption trends and media cost inflation. It is believed to be one of the most comprehensive advertising market models available to the industry today.

This capability has allowed WARC to model three scenarios for this report based on differing severities of deterioration in underlying market conditions. These are as follows:

  • WARC's baseline forecast, drawing from current indicators
  • the Organization for Economic Cooperation and Development (OECD) scenario, which assumes 10% universal trade tariffs and cuts 0.5pp from GDP in key economies over three years, as well as adding 0.4 points to inflation, and 
  • a more severe case, which removes a full point from global growth aside from 0.4 points to inflation over the next three years.

Automotive, Retail and Tech Sectors Set to Bear Brunt of Tariff Impacts

According to the report, automotive ad spend is down 7.4% this year as manufacturing stalls and key players pare back on brand building. Retailers are set to lower ad spend by 5.3% as margins tighten and US retailers are vulnerable to disruption among Chinese suppliers. Ad growth is set to halve among tech and electronic brands as barriers to trade impair access to components. 

Online Platforms Shrug Off Regulatory Pressures

The report shows that search will account for more than a fifth (21.7%) of the ad market, with spend rising 8.0% to USD$250-billion in 2025 despite regulatory threats. Social media — the largest single advertising medium globally — is poised to account for a quarter of all ad spend in 2025. Retail media is set to be the fastest-growing advertising medium this year, though trade disruption threatens ad receipts from consumer packaged goods (CPG) brands. 

Economic Outlook Cut Across Key Advertising Markets

The US ad market is expected to post a solid rise this year (+5.7%), though growth is less than half that recorded in 2024 (+13.1%). The Chinese ad market continues to struggle with weak domestic demand and growth is set to slow to 5.3% this year and just 3.5% in 2026. The UK, German and Japanese economies are all stalling and present a severe risk of stagflation over the forecast period, concludes the report.

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*Image courtesy of contributor